Initial Coin Offering (ICO) is

a form of attracting investment in new technology projects and startups in the form of issuing and selling new cryptocurrencies to investors. Today, raising funds in the form of cryptocurrency through ICOs is becoming an innovative area for investment. Despite the fact that this area is little regulated, there are some legal mechanisms available in foreign jurisdictions that can be applied in such investment projects.

What is an ICO?

An initial token offering (ICO) is a way for blockchain-based startups to raise funds in the form of cryptocurrency. Before creating an ICO, let's familiarise ourselves with its advantages:

  • ICO combines the advantages of IPO, crowdfunding and blockchain technologies.
  • Attracting an unlimited number of investors from all over the world, both individuals and legal entities.
  • Investments in ICO projects are available to investors with minimal funds.
  • ICO gives an opportunity to get funding at an early stage of the project.
  • Low cost of attracting investment compared to traditional methods.

For the successful and safe implementation of an ICO project, it is advisable to enlist the help of specialised experts at the early stages of launching a startup. Qualified specialists will not only help in choosing a jurisdiction for registering a company for an ICO, but will also carry out a comprehensive analysis of the project structure and help determine the risks existing within the project. When registering a company for an ICO, there are various legal documents that need to be checked and agreed upon. The following explains the main components, which are emphasised by subject matter experts providing support for ICO projects.

Conclusion on the legal status of cryptocurrency

Today, a legal opinion is one of the key tools for project creators, investors and clients to obtain a qualified expert opinion on the main legal, organisational and commercial issues arising within the company. A professionally drafted legal opinion provides project organisers with the opportunity to:

  • Obtain a professional legal assessment and recommendations necessary to improve the project.
  • To work out the most convenient strategy for project development;
  • Collect a package of necessary documents.
  • Evaluate in advance probable risks and methods of their prevention/minimisation.

Determining the status of virtual cryptocurrency is part of the legal support in ICO projects. The status of a virtual currency depends directly on the jurisdiction in which the project exists. In this connection, special attention in organising work should be paid to studying the legislation of the country in which the ICO project is to be launched.

For example, countries with ‘favourable’ legislation for ICO projects:

  • Luxembourg.
  • United Kingdom.
  • Lithuania.
  • Estonia.
  • Switzerland.
  • Malta.
  • Australia.
  • New Zealand.
  • Singapore.
  • Japan.

Therefore, contingent on the peculiarities of the undertaking and its legal realm, digital money can be contemplated in three disparate facets:

  • An analogue of cash.
  • An analogue of property.
  • An analogue of exchange-traded commodities.

Per the mandates of the legislation and the peculiarities of the endeavor, our experts will draft a juridical opinion on the juridical standing of cryptocurrency in diverse jurisdictions, as well as scrutinize the venture for its legality. Consequently, by collaborating with our cadre, the patron acquires an exhaustive dissection of the endeavor's structure.

Choice of jurisdiction for ICO company registration

One of the key factors in conducting an ICO project is the selection of the right jurisdiction, namely the territory where the company will be registered and within which, in the long term, its main activities will be carried out. The choice of jurisdiction should be based on:

  • The amount of costs required to launch the project.
  • State legislation (whether cryptocurrencies are recognised, whether transactions with them are allowed legally).
  • Fiscal policy of the country.
  • Business climate (e.g. privacy).

Qualified specialists will conduct a comprehensive review of the ICO project and, taking into account its specifics and peculiarities, prepare an expert opinion with recommendations on the preferred jurisdictions in which your project can successfully operate and develop.

Legal model for ICOs

The success of any ICO project can depend on many factors. These include such factors as:

  • Properly drafted project goals and objectives.
  • Collection of a package of documents in accordance with the legal requirements of the jurisdiction chosen for the startup.
  • Determination of the procedure for completing company registration.
  • Properly formulated project structure.

A professionally constructed legal model will help to foresee the potential risks of the project. It serves as a basis for the further successful development of an ICO startup. The legal model of the project assumes the following actions:

  • Assessing the legality of the project being developed.
  • Formation of the corporate structure.
  • Drawing up a project plan.
  • Creation of project economics.
  • Defining the roles of the participants of the future project.

In order to select and build the most suitable legal model, it is recommended to seek the assistance of specialists who offer turnkey ICO services. Within the framework of providing expert advice and support, you will be provided with the following services:

  • Analysing the documents governing the project's activities.
  • Assessing the legality of the project.
  • Assistance in drafting the underlying project documentation.
  • Selection of the most appropriate jurisdiction for the project.
  • Legal support of the ICO project based on the chosen business model.

Required documentation for ICO

As a rule, in order to minimise the risks of a company planning to launch ICO projects, a detailed review of all documentation (including constituent documents) of both the future project and the organisation itself is required. This measure will make it possible to bring both the formal and technical components of the project into compliance with legal requirements.

Professional specialists provide assistance in conducting ICO, within the framework of which comprehensive services will be rendered to develop and prepare a full package of documentation necessary for registration and ensuring the further successful functioning of the company. Such documents include:

  • Site Usage Policy.
  • White Paper.
  • Privacy Policy.

In addition, our specialists provide comprehensive advice on ICO within the framework of KYC (Know Your Client). KYC is one of the international control regulations, the essence of which boils down to the client identification procedure.

Development of White Paper for ICO

One of the main conditions for a successful ICO project is a properly drafted White Paper or White Paper. This is a document that provides the most complete source of information about a particular cryptocurrency and the ICO based on it. The main components of a White Paper include:

  • Commercial and technical description of the nature of the project.
  • Description and assessment of the market targeted by the project to be launched.
  • The main benefits of the project.
  • Functions of the token within the project, etc.

Participation of qualified specialists providing legal support of ICO is necessary at all stages of preparation and creation of White Paper. Preliminary involvement of lawyers will allow not only to competently build relationships with investors, but also to prevent possible negative consequences for the project developers. Based on the chosen legal model and jurisdiction of the ICO, our team:

  • Will analyse the current project documentation required for competent White Paper drafting.
  • Provide professional recommendations on how to supplement an existing White Paper.
  • Provide support in the development of the White Paper.

Services within the framework of the ICO project launch

Our team of specialists provides comprehensive legal support for ICO projects, within the framework of which we provide:

  • Advice on choosing a jurisdiction for registering a company for an ICO.
  • Analysing the project and drafting a legal opinion on the preferred jurisdictions where cryptocurrency transactions are allowed.
  • Assistance in drafting documents to provide a legal basis for project implementation, including non-disclosure agreement and other necessary legal documents (White Paper, Privacy Policy, Terms of Use).
  • Legal support in obtaining a crypto licence.
  • Services on development of AML/KYC project policies in accordance with the legislation of the ICO implementing state.
  • Recommendations on the development of the corporate structure in accordance with the current legal framework on controlled foreign companies, FATCA requirements, etc. in the country of residence of the CEO and beneficial owners.
  • Services on representation of the client's interests in courts in legal disputes related to ICO.

Thanks to our established partnerships, we offer services to support the ICO project at every stage of its launch.