- Utility Vs. Security Tokens — ICO
$$$ BitCoin, Blockchain, Ethereum…
All you see if everyone with dollar signs in their eyes!
So you want to get funding for you business and you think that launching an ICO is the right way to do so. Well before you jump on the train lets as a few questions.
- Does you platform in someway use blockchain technology?
- Is it using a decentralised market place?
In short “Blockchain” is a digital and decentralised ledger that records all transactions. when somebody buys digital coins on a decentralised exchange, sells coins, transfers coins, or buys goods or service with virtual coins, a ledger records that dealing, usually in a encrypted fashion, to safeguard it from cybercriminals. These transactions are recorded and processed while removing a a third-party supplier, that is typically a bank.
I’m sure you all are by now aware of whether your business should or should not launch an ICO, let’s decide whether it’s a Utility Token or Security Token you should be focusing on.
Utility tokens, additionally referred to as user tokens or app coins, these represent future access to a company’s product or service. The shaping characteristic of utility tokens is that they’re not designed as investments; if properly structured, this feature exempts utility tokens them from federal laws governing securities.
By making utility tokens, a startup will sell “digital coupons” for the service it’s developing.
According to US regulations, If a crypto token derives its worth from an external, tradable asset, it’s classified as a security token and becomes subject to federal securities laws. Failure to abide by these laws might lead to expensive penalties and will threaten to derail a project. However, if a startup meets all its regulative obligations, the protection token classification creates the potential for a large type of applications, the foremost promising of that is that the ability to issue tokens that represent shares of company stock.
While in Australia it is highly likely that you will need to conform to a Crowdfunding ASIC license when launching your ICO, however it still is the land of cowboys so get in while it’s hot, just remember if you’re looking to have your company survive you’ll need start predicting the trends in regulation.
Understanding whether your ICO is a Security or Utility token will determine whether you will possibly be in a soon to be highly regulated vertical of the cryptocurrency space or not. No matter what you choose launch your ICO as you will need to ensure you stay up to date with each tokens regulatory legislation
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- Date of publication:
- Wed, 02/14/2018 - 14:30
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