On Friday, November 10th StartEngine hosted a summit focused on regulated ICOs.
Check out the Top 10 Highlights from the event:
- Management and company counsel might need to consult with local legal counsel in other countries to ensure compliance with rules and regulations of other countries. The level of compliance requirements might ultimately result in eliminating countries from the token offering. For those countries that do not get eliminated, be sure to include relevant disclosures by country (and state).
- There are several possible federal exemptions and securities regulations that can be used, such as 506(c), the Crowdfunding regulation, Regulation A+, and Regulation S. If you’re relying on more than one, be sure you’re complying with the requirements of each, as they may be different. Also, be careful to also comply with state securities exemption requirements, if necessary.
- In order to comply with the advertising rules for US and non-US investors, consider having the tokens sold in the US be different from tokens sold to foreign investors.
- Company should consider as a risk factor what the implications are if their token cannot handle the large number of users at the end of their token sale.
- “Curb your enthusiasm”, meaning what you say today in marketing and advertising can be used against you later.
- When determining whether an investor is accredited, go beyond just a questionnaire. Get bank statements or a letter from their accountant to verify income.
- The variety of possible exemptions and securities regulations all have different resale restrictions to be considered and complied with during token sales.
- Be extra diligent when doing your know your customer (KYC) and anti-money laundering (AML) checks.
- Some investors think there is too much emphasis on who the Company’s advisors are during an ICO. Instead, the focus should be on identifying for investors: (1) who is on the management team? (2) what is the opportunity? (3) what is the smart contract code itself and has it been audited? (4) what is the overall marketplace analysis? and (5) what is the company’s expectation for the use of proceeds?
- Investors should have engineers and coders on their team to look at the smart contract code during diligence.
If you missed the event or for more information visit: https://www.startengine.com/ico