The rise of new technologies is changing the way companies raise funds. In 2017, the use of Initial Coin Offerings (ICOs) rapidly grew, allowing companies in places such as the US, Europe, and Asia to raise more than $5 billion. Thus, ICOs are starting to be perceived as a funds raising tool for developing projects, while trying to circumvent the constraints of initial public offerings regulation. In a typical ICO, a company raises cryptocurrencies giving ‘tokens’ in return. The unique features of such ICOs present challenges to securities regulators, which have been addressed in a disparate manner across jurisdictions. For example, the US, Switzerland and Singapore require companies to comply with existing securities regulations. China has prohibited ICOs, and Mexico has subject ICOs to a system of full control ex ante. ICOs additionally present challenges from an accounting, finance and corporate governance perspective. This presentation seeks to provide an understanding of such challenges as well as some suggestions for how regulators and policy-makers might address these issues.
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