On April 25, 2018 the Ukrainian forum of Internet activists was held in Kyiv. iForum is the nine main directions with thematic performances that take place simultaneously in several halls. After the official opening on the main stage, the reports continue throughout the day, without interruption. This year the following directions were presented in the program:
- internet business;
- advertising and promotion;
- Internet technologies;
- future educational technologies;
- Blockchain, Digital Fun, CRM.
Due to the fact that the emergence of the new startups on the ICO on the Ukrainian market is very topical today, the representatives of the Finance Business Service have chosen the Blockchain direction.The first performance in the Blockchain direction was the report of the representative of the Swiss office of KPMG Andre Gudel.
The report referred to the publication of the Swiss Financial Market Supervisory Authority (FINMA) of the principles of application of the legislation when considering the requests from the organizers of the ICO. Unfortunately, it is not new information on the regulation of cryptocurrency in Switzerland, but, nevertheless the point is that now, on assessing the ICO, FINMA will focus on the economic function and purpose of the tokens issued by the organizer of the initial coin offering.
The regulator has classified three main types of tokens:
- “Payment tokens” are analogous to cryptocurrency and do not carry additional functions.
- “Utility tokens” are designed to provide digital access to an application or service.
- “Asset tokens” – their economic essence is similar to shares, bonds or derivatives.
Andre Gudel focused his attention on the fact that based on this classification, FINMA intends to process the requests for ICO as follows: when issuing “payment tokens”, the regulator will demand compliance with the rules for combating money laundering and such tokens will not be considered as securities.
When issuing “utility-tokens”, FINMA can refer them to securities, if tokens are exclusively or partially invested in economic conditions. If the only purpose of the issued tokens is to grant the rights of digital access to an application or service, they will not be classified as securities.
On issuing “asset tokens”, they are unequivocally considered by FINMA as securities. Accordingly, they will be subject to Swiss law on trading in securities, including, for example, the requirements for the prospectus.
To sum up, Andre Gudel pointed out that all new initiators of the ICO conduction should correctly determine the character and nature of the token which will be issued during the ICO. To date, in his opinion, like the opinion of most speakers, “utility token” is a token which will not be considered and classified as a security.
The subsequent speakers repeatedly returned to “utility tokens” as tokens, which make it possible to conduct ICO less painful for any new startup.
Marvin Liao, a consultant for more than five hundred startups, as well as Denis Dovgopoly, managing director of the consulting company BVU, also focused on this.
Moreover, the above-mentioned persons called on the initiators of the ICO to work very carefully with the US market, since the US Securities and Exchange Commission or SEC published a report on the case of DAO (Decentralized Autonomous Organization) on July 25, 2017. It means the same block or distributed system, the project based on Ethereum (also blockchain), which first attracted $ 150 million, one third of which was stolen during the hacker attack later.
The report, which aims to secure and protect an American investor participating in the ICO, it is emphasized that blockchain tokens are an investment product (security) and therefore ICO should not avoid the requirements of US securities legislation. Those ICO organizers who think that in order to circumvent the requirements of the Securities Act, it is enough to give vague formulations in White Paper (the description of the project), are deeply mistaken. The speeches at pre-ICO meetings, posts in social networks, interviews with the journalists are subject to analysis, that is, absolutely any activity of the creators of the project since the beginning of preparation for the ICO. Thus, in order to protect its citizens, the United States make it clear to date that almost any issued token is considered as an investment product.
Therefore, in order to attract more investors, almost all “quality” Ukrainian startups, due to the lack of qualified specialists in Ukraine, have to apply to recognized worldwide law firms to analyze their White Paper, as well as Terms and Conditions on how their future token will be qualified. This has been also confirmed at the round table by the leaders of some of the most successful startups in Ukraine: Alexander Kokhanovsky, Alexander Momot, Dmitryi Budorin, and Dmitryi Rosenfeld, who attracted for their ICO from $ 5,000,000 to 20,000,000. To date, this is a new market, new opportunities and directions. And, according to the speakers, we are new to this market, we are forced to learn, change and conform to new realities. However, it was viewed that in less than two years, every self-respecting Ukrainian would conduct his own ICO.
In general, in our opinion, the Forum was very informative, it was held positively, and each one was able to find an interesting direction for himself. As for investors who are interested in the matter how risks can be avoided when investing in the cryptocurrency, only one, in our opinion, correct advice has been given – to pray