ICO law 101
Are you planning to launch your own ICO business? If so, there are so many things that you need to consider – from creating the product, hiring the right team, and marketing it. It can be quite overwhelming and frustrating at the same time.
At the same time, there are some regulations that you have to follow. You have to take note that laws vary per location so it would be better for you to do your own research beforehand. Here are some of the basics that you need to know before you launch your ICO business.
Look for lawyers who specialize on ICO
Hiring an attorney who specializes in ICO law is a foolproof way to keep you within the legal limits. In the United States, there are three law firms that specialize in ICO laws which you can look into.
• Perkins COIE
• K and L Gates
• Cooley Law Firm
Setting up your ICO business
The first thing that you should consider when creating your ICO business is the type of operations that you will have. Most companies would often times create two businesses, one is for operations of the business itself and the second one is for selling tokens.
Deciding Which Jurisdiction to Choose
Remember that cryptocurrency is still quite a new concept and countries have different regulations regarding that. It is important to do prior research where your company can reap the most advantage. Choosing the best one would definitely give a positive impact so choose wisely.
Regulations for the Security of Your Token
The type of tokens you offer will also affect the laws you have to follow. You can check the SEC for regulations for security tokens but as mentioned before, laws vary by country. One way for you to check if your token is classified or not is to subject it to the Howey test.
Know Your Customer Law (KYC) and Anti-Money Laundering Law (AML)
ICO is a risky business. It requires you to ask people to invest in currencies that currently do not have values. Before launching your own ICO, it is best that you check the AML and KYC laws in your country. This financial surveillance laws usually vary from one country to another.
The AML and KYC laws usually ask customers for their IDs and proof of address to verify their identities. You are also required to keep this information confidential unless the authorities ask for these important details.
Laws on Crowdfunding
Although ICO is a new concept, crowdfunding is a common funding route for many businesses. It is important that you check the laws with regards to crowdfunding in your country. It is also possible that it varies from one state
Business models are usually taxed depending on the jurisdiction of the tax laws of the country it is operating in. Depending on the country’s jurisdiction, your ICO business will be taxed in accordance with its tax regulations.
Laws on Advertising
Another law that you need to know about is on how you can advertise your ICO. There are certain laws in terms of language and delivery of what your ICO token is. It is very important that you take note of this law. This regulation will guide you on how to promote your ICO product without any problems.
Patent Your ICO
Since ICO is a competitive and revolutionary product, it is very important to patent yours. This is to stop other blockchain companies to use your product for their own gains. Legal experts consider your white paper as an Intellectual Property Disclosure.
Laws are indeed important. They do not only protect your business but your customers as well. It is very important that you research and review these relevant laws for better understanding. In this way, you will be able to understand the legalities of your ICO Company.