First steps in ICO: how to step and not to fall

Let’s speak about something serious in our today's post. Not about the influence of the French Revolution to the Russian classics of literature or Adele lyrics, but about the role of legal advisers in modern ICO. Fundamental role, shall we say. For this reason, we talked with Vladimir Popov, IT and blockchain lawyer.

So, the first mistake committed by novice ICO-teams is to make everything without a lawyer. You can't eat soup with a fork, listen to the tracks of a bad singer without headphones, and have ICO startup without company lawyer.

Secondly, everybody comes with a question about the choice of jurisdiction. It is wrong at all. First of all, if you do decide to go into the arena of world crypto industry, you calculate the economy for the future token (tokenomy), define all its functions, cover its direct legal shell and this is the result: it is the right step. Leave the jurisdiction for the second one.

Another common mistake that beginners make is to hurry with the launch of the company in full operation, release to the crypto-market, to the deep space, wherever they will, but nobody thinks that it would be more logical to look into own bank accounts. Not into active assets, but in general, into cache flow to define the input-output and the fate of money and, in fact, display the whole system of calculation. Once you defeat the Dragon of Financial Institutions, you will be able to open accounts, but, of course, fund transfer must be transparent for bank. That is, as you might already understand, opening of a bank account is the hardest part. But the main thing is to start, as it's said.

Now we go on and collide with a huge pile of various documents. The problem is that hurriers often get stuck. The team wants to start at the earliest possible moment and often takes ready-made pack of basic documents and venture on the off-chance, without taking into account the peculiarity of their unique token. But, there are no ugly women in the world, so there are no ordinary tokens. Your coin may be of different kinds: prepaid, direct digital goods, aspect of property law or any obligation, discount or coupon. And only taking into account the particularities and specializations of the token, you need to change the treaty, to prescribe special conditions. Many teams just do not do it. The tragedy is like "I brought you into this world, and I can take you out of it."

As we started to talk about exclusivity, then take a look at tour disclaimer. Can you say that it is the only one in the world, and it’s fail to find another one? The problem of stereotypeness is known from the beginning of time. Everybody makes standard vapid disclaimers, but this is only half of the problem. It is important that the content does not remain empty, but also provided some concrete action. A promise is a promise. If you banned the fellowship with a country, you should block IP access.

The next step is communication with a lawyer. Human relations are known for their complexity, particularly with representatives of the law. The lawyer must size the possibilities of legal model and advise the team on positioning of the project in the external environment. You need to make sure that your child is learned to walk to let off the child in a big world. The primary task of the lawyer is to formalize the whole process of ICO and make it transparent for investors and founders for not only during token sales, raising money, but even after the moment, when the money has already collected, go into the cache, etc.

In general, the development of legislation with regard to crypto industry comes from somewhere in the East. There is a certain law on cryptocurrency in Japan. It is not only Land of the Rising Sun, but also the Land of Rising Legal Crypto Market now. Further, there is a small regulatory base in Switzerland, Australia, but there is no actually a general law relating to ICO. The only exception is Gibraltar, but there's no any great achievements there yet. In Russia, as you probably know, the legal status of the cryptocurrency is uncertain and changeable. We’re looking forward to April, friends. Everything is in its infancy and it is a big problem that should be solved first and foremost and in a concerted effort.

First steps in ICO: how to step and not to fall

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