The ICO, or "Initial Coin Offering" is not as regulated as the IPO, or "Initial Public Offering." For this reason, you will likely need legal representation if you are starting a company and would like to raise money for it through an ICO.
Requirements for an ICO
When raising capital through an ICO, you will still need to file an application to the SEC before you are able to make shares available to the public. You will need an ICO attorney who has experience with financial institutions and capital markets. They will help your startup become viewed as a legitimate organization.
Once you have created an ICO, you will be able to raise funds from any member of the public by selling tokens or coins. The tokens are not actual shares in the company but are instead are tokens that are expected to go up in value as more investors choose to purchase them.
The Role of an ICO Lawyer
Tokenomics refers to how a coin is introduced into an economic system where it can be used to exchange goods and services. To create a good token, you will need to design it in a manner that encourages others to use it. The token will need to be:
- A token that resists inflation
- A suitable and reliable store of value
- Accepted at exchanges
- Accepted by users in general
One example of how an ICO can be useful is when you create a service that rewards users. For example, when users purchase a product, they might be rewarded with tokens. These tokens can then be used to purchase other products or can be exchanged for another cryptocurrency or for real cash.
An ICO lawyer can help you create a better token ecosystem by ensuring that not too many tokens are given out. A certain percentage of tokens need to be kept within your ecosystem for general upkeep. For example, you may need to use some of the tokens to pay the advisors of the platform. While an ICO can be complex, it can also be a way to raise capital that gives you more control.
Contact an ICO lawyer for more information.