ICOs: the wild (wild) west?

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Bitcoin’s sharp rise in the past year has been accompanied by a surge of Initial Coin Offerings (ICO) popularity —a process by which tokens or digital currencies are issued in return for funding. These unregulated and controversial rounds of funding have started to grab the attention of the media, investors—and regulators—alike.

This new trend highlights how transformative the underpinning blockchain technology will be across sectors, with financial services and capital markets at the front of the queue.

ICO has recently imposed itself has a disruptive new corporate funding option, outpacing traditional venture capital as the top source of funds for blockchain start-ups[1].

Corporate investors who have traditionally invested in equity or bond issue financing, have now another option available.  This new methodology of funds raising is muddling through shady waters and raising more questions about token valuations, need for transparency and regulation, then it answers.

 The ICO world is assured to experience some major changes. Regulators from all over the world are closely scrutinizing this industry because of its somewhat disruptive nature. 

[1] Kharpal, A.: Initial coin offerings have raised $1.2 billion and now surpass early stage VC funding, https://www.cnbc.com/2017/08/09/initial-coin-offerings-surpass-early-stage-venture-capital-funding.html

SUMMARY

  • THE APPEAL OF AN INITIAL COINS OFFERING.

  • ICO IN EUROPE

  • ICO SOUNDS LIKE IPO … NOT REALLY!

  • THE LIFECYCLE OF AN ICO

  • ADVANTAGES AGAINST RISKS

  • TOKENS VALUATION EXERCISE

  • ALTERNATIVE THOUGHTS AND SOLUTIONS

About the author

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Christophe Gérard have 10+ years of experience in financial markets, during which he developed a transverse and in-depth knowledge of various business sectors: equity derivatives (vol', arb', delta 1), bonds portfolio, private banking, Cash management, MM products, Guaranteed loans, FX).

Christophe had also had the opportunity to co-manage a treasury room business analysts’ team in which he demonstrated his ability to co-manage various projects, defining priorities, planning & monitoring of resources.

Christophe joined Initio Luxembourg in 2018 as Senior Consultant.