Bitcoin’s popularity has also inspired the rise of other cryptocurrencies
, which in turn lead to the development of the initial coin offering in Hong Kong
, or ICOs. This is essentially an online fundraising activity that is used to fund a specific blockchain project.
The ICO project
may have various degrees of success, however, investors are advised to be informed and wary of potential scams. Our Hong Kong company formation agents
describe the process of developing an ICO.
ICO, a fundraising mechanism
The initial coin offering takes place when an operator issued digital coins in order to fund a particular project, related to blockchain technology. The author of the funding proposal will describe the right of the individuals who purchase coins via the ICO in a document called the “white-paper” which is explicitly published online.
Investors can have several benefits from entering into an ICO, such as the right to access the new blockchain platform that will be developed as a result of the fund gathering. Moreover, the ICO can come up with different business propositions, not just access to platforms or software.
The ICO is accompanied by the so-called “white paper” for transparency reasons and so that investors may make a documented decision. A successful ICO project will depend on reach, credibility and the low-risk of the cryptocurrency trading platform
ICO regulation in Hong Kong
The recent popularity of the initial coin offerings has brought this practice to the attention of the Securities and Futures Commission in Hong Kong. The digital coins are not usually perceived as “securities”, however, under certain circumstances, they may have this quality and thus they will be subject to the securities laws applicable in Hong Kong. Those who engage in various ICO activities are advised to seek legal counseling in order to determine what regulatory requirements apply to a particular case.