Not too long ago, we touched on how to structure a Blockchain organisation Post-ICO. In that presentation, we made mention of company hierarchy, legal and jurisdictional set-up amongst other things.
We have also previously touched on things teams need to do to conduct a successful ICO by making sure that ICO team are cognisant of ICO mistakes to avoid. We do come up and develop these based-on research and observations we have made over the years in the ICO space considering we have worked with about 700 projects that have cumulatively raised in excess of $12 billion in token sale. This article will touch on a number of mistakes that ICOs could face even if they execute a token sale successfully.
The first of such is Legal, KYC and AML Oversight. Legalization is increasingly becoming a key-point-of-note in the industry and it is thus imperative that teams critically consider this as they develop a cost-structure pre and post ICO. It is apparent that lately ICO teams are aware of the need for a legal backing, but most avoid it because of perceived cost-implications. This is where the expertise of set-ups like ICOWatchlist come in handy – we are able to get ICO projects linked with our partners and a reasonable payment structure is scheduled. This way, the costs become bearable such that they are able to channel resources adequately to ensure they have a successful token sale and still are legally covered and eventually accrue the much-needed funding and liquidity.
It is very true that good marketing is one factor that helps to ensure that a token sale is successful, but we have heard of projects that could not open a corporate bank account post-ICO, or got their accounts frozen even if they eventually did open one, or ended up paying huge taxes when in fact they could have enjoyed some tax-holidays or paid minimal taxes. Others are getting sued and subpoenaed all because they skipped the need for proper legal guidance. All of these could have been avoided by just engaging the needed professionals within the space.
Tax Liability has also been a major challenge for projects that have successfully raised. This is probably due to the fact that they continued same structure and jurisdictional representation as they did during ICO phase or they were just not aware of the tax implication of their service provision.
To avoid this debacle of possible millions of dollars in tax pay-outs due to lack of attention to legal details, it is important to get the services of a Blockchain lawyer early as well as select the right jurisdiction that best meets both your token sale and post-sale business operations.
Notably, there isn’t a one-cap-fits-all solution for all ICOs. Each ICO is unique in its own way as such legal needs will differ from project to project.
In case you are unsure and need further assistance to help properly set-up your Blockchain business pre, during and post-ICO, we can get you in contact with some of our partners – just email us with your needs at [email protected]
It is increasingly becoming important that a holistic outlook and assistance is given to ICO/Blockchain companies/projects so as to help them avoid needless encumbrances. It is for this reason that players in the space are forging partnerships to help streamline and sanitize the industry.