ICOs on the rise
In recent years we have seen a significant increase in the number of Initial Coin Offerings (ICO’s) on a global scale and what we are now seeing can definitely be described as the latest trend followed by new businesses but also established companies to raise capital in support of their projects.
ICO numbers are still experiencing exponential growth. As a context, in 2017 we saw ICO’s raise $5.6 Billion, a large number which includes only the successful ICOs in 2017. If we take a look at the numbers for ICO’s in 2018, these have significantly surpassed those of 2017, raising $6.3 Billion in 2018’s first trimester alone! We can only envision that by the end of 2018the numbers reached will be quite impressive.
Why the rise in popularity for ICOs?
The main reason is because ICOs, as the newest form of crowdfunding have helped bridge a gap found in traditional IPOs (initial public offerings) where only venture capitalists had the privilege of being able to invest their capital. In contrast, ICOs are open to the general public, i.e. people in all countries and from all backgrounds that wish to invest their capital in projects seeking to raise capital which they believe will be successful.
Moreover, new businesses or organizations which seek to fund their projects through ICOs, are using Blockchain technology as the basis for their platforms upon which their projects will be built on and function as well as for issuing digital cryptographic tokens. Investors receive such tokens in exchange for their investment or contribution. As one of the latest innovations, Blockchain technology is set to change how the world works by providing security for transactions in the form of decentralized platforms upon which these transactions will take place. That is of course the main idea – Decentralization. The world is gradually moving away the centralization of power.
The Future for ICOs
There are two things which are evident from the growing numbers for ICO funding. It is firstly evident that their popularity is increasing, which means that ICOs are increasingly becoming a trusted means of crowdfunding. Secondly, we can be sure that such numbers will not be ignored by the global market, thus we can be fairly certain that ICOs and blockchain technology are the future.
Should you run an ICO in Cyprus?
In our experience, among the other known jurisdictions for running ICOs, there are significant advantages to running an ICO in Cyprus which is one of the leading countries where companies choose to run their ICOs.
As a member of the European Union, Cyprus’ tax regime is not only modern and attractive, it is also approved by the EU, putting Cyprus in the whitelist of tax jurisdictions. Running an ICO through a Cyprus-based company will entitle the company to reap the numerous benefits which the jurisdiction has to offer but perhaps more importantly, the EU has not yet regulated ICOs, meaning that as per the current status quo companies can enjoy the opportunity of freedom of enterprise.
ICO and Blockchain Legal Services
At Simon Zenios & Co LLC we have been offering Legal and Advisory Services for ICOs, a new and evolving area of legal practice. We have, in the past year advised and assisted numerous of our clients in ensuring the success of their ICO campaigns and in the process we have attended some very significant ICO and blockchain events held not only in Cyprus, but also in Europe and Dubai.
Our experience in the past year has enabled us to identify the key issues and problems which ICOs face during their various stages and especially if they want to subsequently wish to list their tokens on the exchanges. We understand that the sources of all the problems faced by ICOs are for the most part related to non-credibility, lack of transparency and more importantly, poor foundations.
When running an ICO, one of the main issues for which due consideration is required is the design of the cryptographic tokens. It is always the case that the token’s design will be the deciding factor on whether the token is considered a financial instrument or not. If a token is considered a financial instrument, then it will fall under the scope of the Regulator. So this is why it is essential for ICOs to have legal experts on board from the start of their projects and throughout.
There are not many law firms that have specialized knowledge in ICOs and blockchain technology. Simon Zenios & Co LLC is one of the few law firms that do possess that expertise, which makes us qualified to help and advise our clients and to see to it that their interests are protected.
Our law firm offers a full suite of ICO legal services, relevant to startups and to already established companies that may wish to enter the ICO space.
