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ICO Outline

According to CoinSchedule, there have been 675 ICOs (initial coin offerings) so far in 2018. With the top fundraiser (EOS) taking in four billion dollars, the ICO is grabbing corporate interest around the world.

The term ICO refers to a planned release of a new cryptocurrency (think bitcoin, ethereum and ripple, for example) with similarities to an IPO (initial public offering) for stocks. Typically a whitepaper outlining the concepts of the coin, a website and various forms of marketing are combined with a buy-in period leading up to the coin release. During the buy-in period, interested parties purchase coins, generally by payment with a standard cryptocurrency such as bitcoin (BTC), ethereum (ETH) or litecoin (LTC).

After the buy-in period, investors receive their coins (sometimes weeks later). Cryptocurrencies do not have a physical form, so the coins are sent using digital means and stored in a wallet (software or hardware). More accurately, the private and public keys (codes) needed to access the coins on the blockchain are sent to the investors, who can then use various means to keep their coins safe.

Because government regulation has lagged behind progress in the cryptoworld, much confusion and concern surrounds ICOs. In the United States, for example, whether an ICO is categorized by the Securities and Exchange Commission as a security or not can have dire consequences, as securities fall under a plethora of regulations that do no apply to non-security ICOs.

One of the ways to avoid such potential problems is to execute the ICO in a foreign country. Smaller countries and territories, such as the British Virgin Islands, Gibraltar and Malta, for example, are finding their size to be an advantage, as they can more easily provide a regulatory framework than larger governments with sprawling bureaucracies and complex political processes.

Many such smaller countries and territories also have low-to-no corporate tax, making them even more attractive as ICO sites.

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