This week Forbes Russia has published an article by EXANTE’s Executive Director, cryptocurrency specialist and Forbes Contributor, Anatoliy Knyazev.
In the article Anatoliy made a summary of a new, but a high-potential way of investing, ICO. The mechanism of ICO (Initial Coin Offering) is quite the same as IPO — investors pay money for the ‘share’ of the company, whereas as a result they obtain not real shares, but cryptographic tokens traded on crypto exchanges for various cryptocurrencies. So to say, tokens are linked neither to shares, nor to any other form of ownership.
According to Anatoliy, although being a very promising and easy way of raising funds, ICO implies a number of risks and drawbacks both for investors and company owners. First, the lack of legal regulation makes this mode unreliable as for the rights of investors. Second, it may be troublesome for successful startups to find investors without being able to define shareholders’ rights and guarantee any legal protection.
Notwithstanding, the global regulatory system will inevitably catch up with technology and, as a result, will frame up new legal boundaries for all emerging investment modes including ICO. As for conclusion, Anatoliy noted that ICO in its current form presents just a mere new-born technology, not the brand new financial market itself.
To see the full article in Russian, please visit Forbes.