The Initial Coin Offering (ICO) process: Regulation and risks

ICOs are very attractive for investors and issuers. ICOs allow funding raising in exchange for cryptographically secure tokens, which are a means of paying for future projects or services. However, there is insignificant regulation of this process all over the world. Some countries have banned crypt...

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Bibliographic Details
Published in:Journal of risk and financial management 2021-12, Vol.14 (12), p.1-7
Main Authors: Karpenko, Oksana A, Blokhina, Tatiana K, Chebukhanova, Lali V
Format: Article
Language:English
Subjects:
Bans
Blockchain
crypto asset
Digital currencies
funding of ICO projects
ICO
ICO platforms
ICO risks
Institutional investments
Jurisdiction
Regulation of financial institutions
regulation of ICO
Securities markets
Startups
successful ICO
Tax rates
White Paper of ICO
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Summary:ICOs are very attractive for investors and issuers. ICOs allow funding raising in exchange for cryptographically secure tokens, which are a means of paying for future projects or services. However, there is insignificant regulation of this process all over the world. Some countries have banned crypto assets; others have allowed the free use of tokens but do not give them official status. In this paper, the authors present an overview of the legal regulation of ICOs in different countries, dividing them into three groups: in the first group are the countries with developed legal norms and rules for conducting ICO, they have the subsequent circulation of tokens on their territory; in the second group are the countries that are most friendly to ICOs; the third group of countries has a wait-and-see attitude. The author connect the insufficient law regulation and risks of ICOs in different countries. The types of ICO risks are divided into three main categories: financial, technical, and analytical. The main ways to reduce these risks, depending on their types, are highlighted in this study. They are connected with the improvement of the legal regulation of the publication of a White Paper, the KYC procedure, and the involvement of escrow agents.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm14120599