ICO projects, products and tokens
Since we have already written about cryptocurrency, the legal status of the same and the ways in which other jurisdictions regulated this area, we will now write about Initial Coin Offering (ICO).
As we previously defined the ICO, as an unregulated method of fundraising to secure a new project through a cryptocurrency, we have also found that the core of the problem (some would even say advantage) lies in non-regulation. Therefore, in this text, we will pay more attention to the emergence of ICO, then ICO products, tokens, potential directions of development, and finally whether its application will find an adequate place in today’s legal system.
Initial Coin Offering projects have emerged along with the rapid development of cryptocurrencies and blockchain, and the very first problem arose in their definitions, actually in a question whether they, as such, issue their own cryptocurrency in exchange for new money or the same can issue any cryptocurrency. Why is it significant? Precisely because, for example, the Chinese industrial regulator considers that in that way new digital money is issued, while in accordance with its regulations, governing currency and the market China prohibits issuance of cryptocurrencies through ICO projects. On the other hand, the relevant regulators in the United States consider that issuing refers to new tokens or vouchers that have their nominal value in already known currencies. It is precisely for this reason that the US allows ICO projects to function despite the lack of clear rules, but lead by the fact that their status is not fully defined yet there is no basis for taking any measures against the same. The reason is mostly related to the fact that the majority of these companies can legally bar themselves by a prominent disclaimer of liability, the rules of use, and the emphasis on noting that ICO products are not securities.
However, the reason why we often associate ICO products with securities is that those who invest become ICO projects investors, and the fact that very success of an ICO project and its profitability depends on the performance of the company that issues cryptocurrencies. Therefore, in the same
Author: Tijana Milacic, e-mail: [email protected]