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4 questions you must ask yourself before deciding to raise finance via an Initial Coin Offering (ICO)

Initial Coin Offerings or ICOs (a modern take on the traditional initial public offering IPO in which finance is raised by selling digital tokens instead of stock) are on the rise and industry experts predict more than $7.5bn will be raised via ICOs by the end of 2018.

However, as they currently operate without recognised regulation and are being increasingly targeted by digital fraudsters, ICOs are a risky business. So if you are considering raising capital via an ICO we would suggest you consider the following 4 points before you commit:

  1. ICOs are undeniably popular at the moment is it really the right option for you? Don’t believe the hype, make sure you take discuss what you have and what you want to achieve with advisers who understand the advantages and the potential pitfalls before coming to a final decision.
  2. While legal fees for ICOs are usually much lower than you’d probably pay for a more standard flotation you need to understand that is because your coins/tokens will gain value in the future and cannot offer the same security as stock.
  3. If you are planning to launch your ICO in the EU or the US you need to be aware if your ICO qualifies as a financial instrument, you will need to comply with existing financial protocols or you risk legal action from the relevant regulatory authorities.
  4. France, Switzerland, the Cayman Islands and Gibraltar are in the process of implementing a regulatory framework for cryptocurrency trading so it may be worth exploring the additional protection their efforts will offer you and your investors once they are live.

Expert Digital Currency Advice Solicitors, London

And if you’d like to discuss a potential ICO (or if you’ve been a victim of a scam ICO or any type of digital or cryptocurrency fraud) call us today on 0203 131 0564 or email us at info@selachii.com. Selachii are one of the very few law firms with a proven track record in managing and resolving issues involving cryptocurrency, blockchain and ICOs so we will help.

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