Issuing an ICO in the United States

An ICO, initial coin offering, seems to be what is hot right now in the world of financial technologies. Starting an ICO is the best way to get funding for your project while at the same time taking advantage of the untapped potential that cryptocurrencies have. Even with all the talk in the United States against ICOs, they still remain the preferred method of funding deals.

There has been a surge in the number of ICOs opening worldwide with countries like Singapore, Switzerland, and Estonia being the frontrunners in this field. So far, Europe has been the place to be if you want to open an ICO.

Europe has been more than welcoming to cryptocurrencies and financial technologies altogether. This is the main reason why many crypto based startups are choosing to set up shop there, but this might change.

The United States, the seminal cradle for innovation and technology, has been left behind by putting restrictions on ICO and cryptocurrencies but it is looking to make a striking appearance and return to be a key player.

Now days it’s quite hard for anyone to start an ICO in the United States, but it is not impossible. Every different regulation seems to have their own intake a to what to make of ICOs and for the most part this is not an optimistic view.

Legally speaking you are not able to launch an ICO that allows any type of investor to invest in it. This is one of the many reasons why it is so much of a headache to start an ICO in the United States. You have to navigate through many loopholes and pass through certain regulations to even begin your operation.

Securities Law in the United States is one of the stricter regulations stopping ICOs in the country. Under this law only accredited investors can realize an investment involving securities, which makes it impossible for any regular individual to open an ICO in the United States without first splurging a great deal of cash.

Of course this all stems from the fear that cryptocurrency will eventually make banks and other financial institutions pointless. Banks have been very resisting towards the inclusion of cryptocurrencies and the laws restricting ICOs are in some way connected to that idea.

Still, with all of this laws and regulations trying to outlaw and stop ICOs they have not reached this goal in its entirety. It is completely possible to do an ICO while at the same time following every rule established by the SEC.

The answer to how you can open an ICO in the United States that is approved by the SEC and follows every rule and guidelines established by the Securities Law is a boring one. You have to follow the rules and have your ICO be backed by a product.

ICOs usually fall under the eye of this harsh regulations because they do not have a concrete value to compare the price of the actual coin. Meaning that if you start an ICO backed by a fruitful agricultural season, or real estate, you have a better chance of making it compared someone who just started their own token with nothing to back it up (think vaporware).

This is also the main difference between a crowdsale and an Initial Coin Offering. A crowdsale is similar to what crowdfunding is and an ICO is determined by the value of the business. When investing in an ICO it is important to have the distinction present.

A way to figure out the main difference between the two is by something the Supreme Court of the United States called a Howey Test. The purpose of the test is to determine whether a crypto token is categorized as a security or as a form of crowdfunding.

All of this becomes even more confusing when you realize that the same institution that is slowing down ICOs is the same one that determined that Ethereum is a cryptocurrency. To jumble your brain just a little more I will reiterate that the IRS ruled that cryptocurrencies are assets and are subjectable to capital gains tax.

If the IRS is involved you better make sure that all of your paperwork is on check as anything that is missing or not dealt with may derail the aperture of your ICO. I repeat, every single compliant must be met.

Let me reiterate and state that you must have every detail of what your ICO will be doing clearly defined before you go ahead with the ICO. I have seen ICOs leave stuff to the last minute or miss a minute detail that caused everything to go sour.

Financial technology companies are the rave right now and you better believe that the SEC and the IRS will be checking you every step of the way. I will also recommend to hire an excellent market team to have your ICO gain the most exposure to the public possible.

I just skimmed through most of the details that are required to open an ICO and went ahead and mentioned the basics. To get a much deeper insight into what opening an ICO in the United States entails please feel free to contact us.  

I hope you’ve found this article on ICOs to be helpful. For more information, or for assistance on investing in cryptocurrencies or opening an offshore company, please contact us below by filling out the form, Thank you. We’ll be happy to assist you with your international tax plan and support you.