15. Initial Coin Offerings (ICOs)
Global Overview

Initial coin offerings (ICOs) are a new means of raising capital for the financing of commercial projects. The term stems from that of "initial public offering" (IPO). The apparent similarity of the terms IPO and ICO is at least somewhat misleading as it gives the impression that ICOs are comparable to the issuance of shares – this is not the case from either a technical or legal standpoint.

There are currently two forms of ICOs being performed: the first form is based on the use of smart contracts (program codes) or virtual applications (distributed apps/dApps). These, put simply, are programmed agreements where the program code is stored on an existing blockchain, such as Ethereum. Blockchains are tamper-proof distributed data structures in which transactions are recorded in chronological order and mapped in an understandable and unalterable form without any centralised control. The second form of ICOs is based on the creation of new blockchains or virtual currencies. Both forms of ICOs entail the creation of new digital units (a token generating event). In most cases, the tokens generated are sold to interested investors in an unregulated public bidding process (token sale). Although a legal (fiat) currency is sometimes used, investors usually have to pay the purchase price in a virtual currency, often in advance.(https://www.bafin.de/)



Source: CoinDesk, Weekly Cryptocurrency and
ICO Market Analysis and Center for Global Developmen
https://www.cgdev.org/blog/initial-coin-offering-ico-mania-and-its-implications-technology-led-social-enterprise)



Legal and Economic Overview


Chapter Index


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018