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Stratis makes setting up an ICO a breeze

Stratis makes setting up an ICO a breeze

 


When it comes to initial coin offerings or ICOs

— crowdfunding events in which participants buy digital tokens from a startup — the London-based Stratis is one of the original gangsters. The company launched a successful ICO in June 2016, way back before the ICO craze, selling its STRAT tokens for $0.007 each. The price of STRAT has skyrocketed to $6 since, earning early investors who never sold it more than 80,000% in returns. The coin's market cap currently sits at $592 million, making STRAT the 41st largest cryptocurrency out there. But Stratis, which describes itself as blockchain for the enterprise, has been fairly quiet since in those two years, which is a very long time in cryptocurrency world. 

Not anymore. This month Stratis launched its ICO platform, which aims to make the process of both running and participating in an ICO simple and fool-proof. The company also has big plans for the future, as it aims to launch smart contracts on its blockchain later this month. As numerous cryptocurrency startups can attest, an ICO can be a very lucrative funding route, but running it well is a tall order. It's near impossible to find an ICO that hasn't run into some sort of problem, be it technical glitches, interfering scammers, or poor communication with investors. 

The Stratis ICO Platform aims to streamline this by offering a sort of a "white label" solution for startups wishing to run an ICO. The platform offers design customization, the ability to accept funds in more than 50 cryptocurrencies and U.S. dollars, as well as an integrated KYC (know-your-customer) service (from partnering startup Onfido) for checking participants' identities. The use of the platform is free, and two startups, Gluon and BeyondGlobalTrade, are already slated to use it for

their upcoming ICOs. 

On Stratis, developers can build projects in familiar environments like C# or .NET.

Stratis also plans to expand its blockchain, whose main differentiator is that it allows to build native apps in commonly used C# and .NET programming environments, to allow for smart contracts. But the competition in the space is fierce: Well-funded startups such as Cardano and EOS are racing to create a next-generation smart contract platform. "We've never done a serious marketing push until now," Trew told me. "We've been extremely frugal with our funds". These funds are considerable, as Stratis own a sizeable portion of its own tokens. Now, Trew and his team seem to be ready to tackle the largest projects in the space. 

The first big push this year comes in the form of Stratis' ICO Platform. "It's a web app. Somebody can come along, deploy in Azure and do their own ICO. It's free to use, and the fact that the person can deploy it themselves means they're using their own infrastructure, which means there's no trust placed upon us," said Trew.

Stratis' competitors in this space include Bitcoin Suisse and Lykke. But Stratis claims its platform is easiest to use. "Somebody can very easily deploy an ICO with one click, fill out a few options, and their ICO is up and running," said Trew. The platform utilizes ASP.net and runs on Azure, which should make the ICO secure and robust. This is important, since a typical popular ICO will have thousands of investors trying to fill out forms and send their funds roughly at the same time. "We hope we'll see a lot less of these ICOs where people try to invest and can't do so because the site has gone down," said Trew. 

The ICO platform is just one part of Stratis' master plan. The company plans to launch an alpha version of its smart contract platform on May 16. That, along with upcoming solutions for scaling, which include sidechains and a promising technology called TumbleBit, should make Stratis a lot more like the leading decentralized app platform, Ethereum. And Stratis is already using a proof-of-stake (PoS) consensus mechanism, meaning it does not require energy-intensive coin "mining," while Ethereum is planning to gradually switch to PoS in the future. 

It's awfully hard, even for experts, to judge which blockchain project is further along when it comes to securely implementing all this bleeding-edge tech. Stratis hasn't been boasting its technological achievements as loudly as some other projects, but on paper it appears it's up there with the best of them. Stratis' primary focus, however, is the enterprise. New Ethereum-based startups show up daily, but building on Ethereum means learning a new programming language called Solidity. On Stratis, which has a partnership with Microsoft, developers can build projects in familiar environments like C# or .NET. 

Stratis' strategy sounds impressive in a year in which seemingly everyone, including major companies such as Facebook and JPMorgan, is looking at building something on the blockchain. Competitors include Lisk, which lets developers build blockchain apps in JavaScript, IBM Blockchain, and, of course, Ethereum itself, which has an enterprise-oriented alliance in place with companies such as Intel and Accenture on board. Trew believes Stratis is well positioned to tackle them. 

"It's been developed from the beginning, targeting the enterprise. Nearly all of our workforce comes from an enterprise background. Myself, I've worked in the enterprise space for 15 years as a technical architect before I started Stratis," said Trew. "We believe we can make a compelling product in this space."

Article Written By

Stan Schroeder

Stan is a senior editor at Mashable, where he has worked since 2007. He's been a pro IT journalist in Croatia for over 9 years, having written for numerous IT publications there. Interested in writing for a global audience he started his (now defunct) blog, FranticIndustries, and he also co-founded (and subsequently sold) whoishostingthis.com, a simple tool for determining the hosting provider of any website. He lives in Zagreb, Croatia, and spends his free time pursuing his many interests, which include speaking at conferences, startups, mobile development, cryptography, collecting band T-shirts, tinkering with gadgets and hardware and generally leading a frantic lifestyle.

https://mashable.com/2018/05/11/stratis-ico-platform/#nPztv.xkXkq9

Thomas Prendergast

The Most Successful ICOs of All Time

In the trendy world of cryptocurrencies,

the greatest levels of hype and anticipation have often been reserved for initial coin offerings (ICOs), the crowdsourced fundraising sales used to launch new tokens, coins and services. ICOs have come to be seen as a significant risk for the everyday investor. They are both highly speculative—since few ICOs actually go on to see the tokens they launch meet with real success—and many ICOs themselves are actually fraudulent. Nonetheless, investors continue to watch the ICO space closely for the next big opportunity. Perhaps they would do well to look for those ICOs that come closest in design to the most successful ICOs. Below, we’ll explore some of the biggest ICO events in history.

NEO

NEO is a Chinese open-source blockchain project that has gone by several different names in its short history. One of the most common is not an official name, however, but rather a nickname: “China’s Ethereum.” NEO gained this distinction by utilizing smart contract applications, decentralized commerce and more. The company had a massive ICO thanks in no small part to support from the Chinese government, Microsoft Corp. (MSFT) and other major companies. From an initial token price of just over 3 cents to an all-time high price of roughly $180, NEO investors who timed their investments right stood to make an incredible amount of money.

Ethereum

Ethereum remains the second-largest digital currency by market cap today. While bitcoin is a cryptocurrency, ethereum is both a digital currency and the foundation for decentralized applications that make use of smart contracts. Ether tokens sold for $0.31 each, and the token now sits around $700, providing a return on investment of more than 200,000% for those lucky investors who bought in during the ICO.

Spectrecoin

The third-most successful ICO on our list is for a cryptocurrency that has not made nearly as big of a name for itself as NEO or ethereum. Spectrecoin launched in November 2016 as a “privacy-focused cryptocurrency.” One of the features of the coin is that it can be sent and received around the world with complete anonymity. Spectrecoin pushes the boundaries of what governments around the world are willing to tolerate from digital currencies, but it has not yet broken through to the mainstream. Nonetheless, an investment of $0.001 per token back in late 2016 during the ICO would be worth close to $0.60 today, marking a significant gain.

Stratis

Stratis is another cryptocurrency that has not yet made it big into the world of leading digital currencies. The company, based in the U.K., prides itself on having a platform that is compatible with various programming languages, allowing businesses the ability to create and design custom applications easily. Microsoft was a prominent supporter of the Stratis ICO, and that led to major success. The project raised nearly 1,000 BTC over a period of five weeks, and individuals paid just $0.01 per token, paying off with a ROI of more than 50,000%.

Ark

Ark is designed to be as efficient as possible. The digital currency platform allows for quick integration of other cryptocurrencies into its own blockchain. With a global focus and a commitment to decentralization, Ark seems to have been destined for success. The initial token price was $0.04 during the ICO. At its highest levels, one Ark token climbed to nearly $11, marking a return on investment of more than 35,000%.

NXT

In 2013, a developer known by the handle "BCNext" launched NXT. This was one of the earliest ICOs, and it was also one of the very most successful. NXT was designed as a blockchain platform catering to the financial services sector. With tokens selling for just $0.0000168, the NXT development team managed to earn about $16,800 worth of bitcoin at the time of the ICO. This money was focused toward developing the currency associated with the platform. At its peak, NXT tokens reached as high as $2.15 each, giving investors an astonishing 1,477,000% return on investment.

One notable aspect of many of the above ICOs is that the tokens themselves are not particularly well known today. ARK is currently the 64th-most-popular digital currency, while NXT is currently the 90th according to total market cap, for instance. Because the cryptocurrency boom has been largely unpredictable, with prices rising and falling dramatically and at the slightest provocation, it can be incredibly difficult to time the sale of such tokens. Perhaps even more tricky for the budding digital currency investor, though, is identifying which potential new ICOs on the horizon could yield results with the same degree of success as the projects above. For more insight, be sure to consider all of the pros and cons of any ICO before investing, and look to our guide for advice on how to select your next cryptocurrency investment.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.

Nathan Reiff

Nathan Reiff is a writer and musician based in the New York City area. He holds degrees from Yale University and the University of Michigan. Nathan has previously worked for Orion Consultants and Partners in Performance and has written for Internet Brands on subjects ranging from money matters to personal and home development. His interests include technology, travel, and food.

Thomas Prendergast

Binance CEO Calls ICOs Necessary And ‘100 Times Easier Than Traditional Venture Capital’

Binance CEO Calls ICOs Necessary And ‘100 Times Easier Than Traditional Venture Capital’

Changpeng Zhao, the CEO of digital currency trading platform Binance,

said in a blog post May 7 that initial coin offerings (ICO) perform far better than venture capital funds (VCs), even with a high risk of failure. In a blog post titled “ICOs — Not Just ‘Good-to-Have,’ But Necessary,” Zhao expressed his support for ICOs claiming they are

“100 times easier” for raising money than traditional VCs:

“Through my own experience, and watching hundreds of other projects at a close distance, I would say raising money through ICOs is about 100 times easier than through traditional VCs, if not more. With the ease of raising money increased, logic says there may be 100 times more startups, well-funded startups, where ICOs are allowed.”

Zhao said that while some VC investors are real experts in their field, the great majority of “professional VCs” have “no clue” about the projects or fields they invest in. According to Zhao there is a notable absence of startup experience and insufficient understanding of projects’ technologies. Zhao admitted that the ICO market is in its early days and therefore is encountering problems, including scams and failures. He still believes that “compared to ‘traditional VC invested projects,’ a larger ratio of ICO projects will succeed.”

He wrote:

“Most ICOs are new startup projects, and have a high rate of failure, just like in traditional startups. This is nothing new. Most ICO investors already know this. ICO investors are early adopters (and learners).”

Zhao concluded by mentioning that many VC groups are now investing in ICOs. He said that VC groups “have their nose on the money”, adding that they are more “nimble” than other large organizations which are responsible for public wealth; “the faster movers will reap exponential benefits.” Cointelegraph previously reported that American venture capital firm Sequoia sued Changpeng Zhao for allegedly breaching an exclusivity agreement during negotiations of an investment deal. The deal was for an $80 mln, 11 percent stake in Binance which broke down last year.

Article Produced By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.

https://cointelegraph.com/news/binance-ceo-calls-icos-necessary-and-100-times-easier-than-traditional-venture-capital

Thomas Prendergast

46% of ICOs Launched Without a Business Plan

46% of ICOs Launched Without a Business Plan

ICO market research report for Q1 2018 reveals some interesting statistics.

Market research on the initial coin offering

market in the first quarter of 2018 reveals that institutional investors are playing an increasing large part in funding blockchain projects despite many of them having no development before they are launched.The research was conducted by ICO Rating, an agency which (you guessed it) rates ICOs. According to its official website, its analysis team of more than 50 experts “specialize[s] narrowly in evaluating companies in the fields of blockchain, cryptocurrencies and ICOs/ITOs.” It has offices, in Amsterdam, New York, Singapore and St. Petersburg.

Findings

The report says that $3.3 billion dollars has been raised so far this year over 412 projects. This figure only counts money raised from completed ICOs (as opposed to pre-sales and unsuccessful/ongoing projects) and excludes the now-discontinued ICO of Telegram which was worth $1.7 billion alone. If these are counted the figure stands at over $6.3 billion.

The vast majority of ICO money in 2017 was the result of only a handful of projects; according to this research this trend continues this year, although to a lesser extent. It says that only half of completed projects in 2018 raised more than $100,000, while over $1 billion was raised by only 20 projects.

According to the report, only 9 percent of ICOs came from pre-existing businesses, while 46.6 percent of these fundraising projects amazingly “had no development before their ICO campaign[s]” – meaning that they raised their money on the strength of an idea only. ICO Rating CEO Sasha Kamshilov said: “Having a traditional business does not always rule out their use of blockchain with their products, however this can sometimes create some discord amongst the perceptions of entrepreneurs.”

Maturing industry?

One sign that the industry could be maturing is that the average time taken to raise the required funds has doubled – now it is two months. There were however projects which raised all of their money in one day; in the past some have been completed in minutes. 65 percent of tokens sold were for their respective company’s product/service (utility or hybrid tokens); only 3.8 percent were for cryptocurrencies. Perhaps this is for the best; according to Investing.com, there are currently 1,685 cryptocurrencies available for purchase in the market. Of fiat currencies there are 180.

Institutionalised

The report notes that “funding during public rounds has started to noticeably lag behind the infusion of institutional capital.” It adds: “Funds are ready to invest in ICOs but they are often deterred by teams’ negligence regarding organization of KYC and AML. These procedures need to be in place, and organized to a high standard, to reduce legal risks.” 25 percent of 2018’s ICOs were not legally registered, which sounds bad until you compare the equivalent figure for the previous year – 76 percent.

The report notes the increasing importance of cryptocurrency investment funds, which now hold $27.8 billion between 119 entities. However, a full 40 percent of these have not published the identity of their CEOs and 9 have already been closed down. The most popular industry by far for ICO projects is, perhaps unsurprisingly, financial services. ICOs related to this sector raised the most money too. The post-ICO value of tokens is fairly dire – median return on investment is 49.32 percent, a significant drop from the previous quarter. Of tokens traded on an exchange, only 17 percent traded above price at sale.

Geography

The country with the most registered ICOs was the US with 59, followed by Singapore with 34 and then the UK with 26. This does not strictly correlate with the amounts raised; the US ($583.9 million) and Singapore ($468.1 million) remain in the top two but the UK ($99.7 million) slides right down behind Switzerland (14 projects, $268.2 million), China (9 projects, $202.1 million), and Estonia (16 prjects, $122.6).

Interestingly two British territories raised more money than their motherland: the British Virgin Islands (5 projects, $158.5 million) and Gibraltar (6 projects, $133.7 million). Another notable point is that while Russia was home to only 13 projects, Russian nationals headed 45 of them – making Russians the busiest nationality ICO-wise, only they don’t do it at home. Overall, by far the most money was raised in Europe (46.6 percent).

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Thomas Prendergast

Colorado Cracks Down On Two Companies For Illegal ICO Promotion

Colorado Cracks Down On Two Companies For Illegal ICO Promotion

The Colorado Department of Regulatory Agencies (DORA)

announced its investigation of two companies for promoting unlawful Initial Coin Offerings (ICOs) to Colorado residents, the Denver Post reported May 3. The Colorado Securities Commissioner said that California-based Linda Healthcare Corp. and Washington-based Broad Investments LLC could potentially be violating Colorado securities law by promoting ICOs.

DORA discovered that Linda Healthcare is promoting a “LindaHealthCoin” token on its website, which ostensibly can be used to purchase Linda Healthcare’s insurance. According to the website, the token can buy telemedical coverage “through an artificial intelligence chat service that creates medical solutions through use of blockchain technology.”

According to DORA, Linda Healthcare offers no warnings that ICOs constitute a security in the state of Colorado. “The Linda Health Insurance network is, to date, not in operation,” officials reported. A March 19 tweet from the firm directs potential customers to consult its white paper.

As Denver Post reports, Broad Investments firm is allegedly promoting cryptocurrency using a token that is described on its website as “an equity coin that represents shares of the company, like company stocks.” The token would ostensibly give holders a right to a share in returns from Broad Investments’ strategy, which builds stock portfolios with an algorithm. Officials say that the “math-oriented value system” on the website was not operational.

DORA representatives reported that both companies did not provide any information on the risks of investing in crypto or ICOs on their websites. Colorado Securities Commissioner Gerald Rome commented that investments in ICO tokens should be done carefully: “Investment opportunities being sold through ICOs over the internet need to be approached with the same level of caution as for any highly risky investment venture.”

The firms must now prove why the should not be sanctioned under the Colorado Securities Act, according to which the firms will receive cease and desist orders. Earlier in March, the Massachusetts Securities ‎Division issued consent orders requiring the permanent suspension of five firms’ unregistered ICO sales, citing that the companies were selling unregistered securities.

Article Presented By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/colorado-cracks-down-on-two-companies-for-illegal-ico-promotion

Thomas Prendergast

South Korean Lawmakers Introduce Bill To Legalize New ICOs

South Korean Lawmakers Introduce Bill To Legalize New ICOs

A group of South Korean lawmakers

is working on a bill to legalize the launch of new initial coin offerings (ICOs) and digital currencies, local news outlet The Korea Times reported May 2. Rep. Hong Eui-rak of the ruling Democratic Party of Korea is leading the move along with 10 other legislators to back the bill and have it endorsed this year.

During his speech at a forum devoted to ICOs and blockchain technology at the National Assembly on Wednesday, Hong said that "the bill is aimed at legalizing ICOs under the government's supervision." He also said that the bill was based on collaborative research conducted by his office and the Korea International Trade Association (KITA).

Hong added:

"The primary goal (of the legislation) is helping remove uncertainties facing blockchain-related businesses."

According to the bill, ICOs initiated by public organizations and research centers will be subject to strict supervision by the Financial Services Commission and the Ministry of Science and ICT.

Chung Sye-kyun, a speaker from the National Assembly, underlined the role of lawmakers to eliminate political uncertainties surrounding digital currencies and

blockchain technology:

"Blockchain and cryptos can be used in various public sectors for good causes. Given their potential, we need to work to help reduce political uncertainties they face."

The move is the first parliamentary challenge to the government's ban on the opening of new ICOs, which was introduced late last year to fight speculative investments in cryptocurrencies. In March, 2018 rumors surfaced that certain entities within the South Korean government were considering to release the ban on ICOs, so long as new offerings adhered to strict government standards.

Written By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.

https://cointelegraph.com/news/south-korean-lawmakers-introduce-bill-to-legalize-new-icos

Thomas Prendergast

Australia’s Securities Watchdog Moves to Halt ‘Deceptive’ ICOs

Australia's Securities Watchdog Moves to Halt 'Deceptive' ICOs

The Australian Securities and Investments Commission (ASIC)

said Tuesday that it is taking aim at fraud in the initial coin offering (ICO) market. In a statement published May 1, the agency said that it is "issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive." Additionally, the securities watchdog suggested that it was moving to halt unlicensed activity as well. "As a result of our inquiries, some issuers have halted their ICO or have indicated the ICO structure will be modified," ASIC disclosed, though it didn't say how many token sales have been canceled or changed in light of the agency's actions.

ASIC commissioner John Price explained:

"If you are acting with someone else's money, or selling something to someone, you have obligations. Regardless of the structure of the ICO, there is one law that will always apply: you cannot make misleading or deceptive statements about the product. This is going to be a key focus for us as this sector develops."

As CoinDesk previously reported, the move was perhaps expected. Price spoke about token sales on April 27, declaring the agency's intention to focus on overseas-based ICOs that target would-be Australian investors. "I cannot stress enough that if you are doing business here and selling something to Australians – including issuing securities or tokens to Australian consumers – our laws here can apply," Price said at the time.

In Tuesday's statement, ASIC indicated that it would be scrutinizing a popular aspect of ICO marketing – the white paper – as it looks into whether those behind such sales are in compliance with Australian law. "In one recent example, ASIC took action to protect investors where we identified fundamental concerns with the structure of an ICO, the status of the offeror and the disclosure in its white paper," the agency explained. "In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme."

Written By

Stan Higgins
stan@coindesk.com

A member of CoinDesk's full-time Editorial Staff since 2014, Stan has long been at the forefront of covering emerging developments in blockchain technology. Stan has previously contributed to financial websites, and is an avid reader of poetry. Email: stan@coindesk.com. Stan does not currently hold value in any digital currencies or projects.

https://www.coindesk.com/australias-securities-watchdog-moves-halt-deceptive-icos/

Thomas Prendergast

US: SEC Official Says ICO Regulation Should Be ‘Balanced’, Congressman Suggests Ban

US: SEC Official Says ICO Regulation Should Be ‘Balanced’, Congressman Suggests Ban

In a hearing at the US House of Representatives

on Thursday, April 26, a regulator from the US Securities and Exchange Commission (SEC) and House Financial Services Committee members hotly disagreed over whether a “balanced approach” could be taken in regulating Initial Coin Offerings (ICOs). At the start of the hearing, entitled “Oversight of the SEC’s Division of Corporation Finance”, William Hinman, the director of the SEC’s Division of Corporation Finance, said that the area of digital assets and

ICOs “continues to evolve”:

“We are striving for a balanced approach, and one that ensures capital formation while maintaining a strong focus on investor protection.”

One purpose of the hearing was to discuss possible reasons for the declining number of Initial Public Offerings (IPO) in the country. Committee member Bill Huizenga asked Hinman if ICOs could be a solution to this decline, and whether all ICOs must be regulated. In response, Hinman said that “in theory, there is a time when a coin may achieve a decentralized utility in the marketplace, or […] there may be coins where that lack of a central actor may make it difficult to regulate.”

Hinman followed previous comments from SEC chairman Jay Clayton that most ICOs should  be considered securities. According to Hinman, the SEC would be consulting with entities releasing tokens to verify that the offerings were either regulated or not qualified as securities. Committee member Brad Sherman (D-CA) disagreed with the idea that ICOs could replace IPOs, as an IPO “provides jobs in the real economy,” and

ICOs do “the opposite”:

“It takes money out of the real economy, it takes people willing to invest and risk, and says ‘don’t use that ability to risk, don’t use those animal spirits to help create a job for a person who needs one, let alone build a factory for thousands, sit there and trade back and forth in the ICO.’”

Sherman then asked why ICOs haven’t been “stopped,” noting that the “balance” mentioned by Hinman will negatively affect the economy:

“When you strike a balance between those who are trying to create a new currency to facilitate drugs, tax evasion, to deprive the Fed of its ability to market our securities and return 100 bln dollars or so to the US treasury, all the balances are for total investor protection, which could be achieved by totally banning.”

Sherman said of the decentralized nature of ICOs:

“Charlatans and scammers have always favored decentralized new enterprises.”

Committee member Tom Emmer (R-MN) took a different approach, saying that there “is a lot of of ignorance about how special this area is”,

he continued:

“The typical attitude too that I get from so many elected officials is that have no idea what they are talking about […] everyone who is participating in [an area they don’t know] is either bad or dishonest, and an official must rush in and help people .”

The SEC and the Commodity Futures Trading Commission (CFTC) held a cryptocurrency hearing in February of this year. They reached the conclusion that ICOs need the most amount of oversight, digital ledger technologies (DLT) like Blockchain the least, with virtual currencies like Bitcoin (BTC) falling somewhere in between.

Written By
Molly Jane Zuckerman
https://cointelegraph.com/news/us-sec-official-says-ico-regulation-should-be-balanced-congressman-suggests-ban

Molly Jane is a Russian Literature major from California with a background in writing. She joins Cointelegraph after working as a freelance journalist and blogger.

Thomas Prendergast

ILPs May Replace ICOs as a New Form of Fundraising

ILPs May Replace ICOs as
a New Form of Fundraising

Although initial coin offerings (ICOs) are seen as a legitimate means

of raising capital, there are no clear legal and technical controls. Initial Loan Procurements (ILP), are, however, an alternative to the risky ICO model. ILPs enable decentralized crowdfunding opportunities by creating a contractually bound agreement which minimizes the risk of ICOs.

According to Carey Olsen’s senior associate Luke Sayer, instead of coin acquisitions, borrowers and creditors “enter into a loan agreement through legally binding smart contract. With an ILP, a creditor’s investment is contractually tied to the performance of the company.” Therefore, if the company is profitable, the creditor receives annual returns.

Estonia-based startups Blockhive and Agrello have partnered to launch the first ILP called ‘Blockhive.’ Instead of issuance tokens, borrowers have a “contractual entitlement to 20 percent of their annual operating profits.” The goal is to continue decentralized crowdfunding with greater protection for borrowers, improved functionality without the interferences of government regulations.

Problems with ICOs

According to a report by Fabric Ventures and Token Data, startup companies raised $5.6 billion in 2017 through ICOs. While the ICO model of raising capital has great potential for high returns, it has become significantly scrutinized. “I think a lot of what’s happening in the ICO market is actually fraud, and I think that will (eventually) stop,” said Brad Garlinghouse, CEO of Ripple to CNBC.

Unfortunately, many ICOs were scams that extorted money from unsophisticated investors. While they pretended to have a genuine and viable product, once the ICO finished, the website and product information disappeared. Investors, therefore, receive a token that has little to no value. While many ICOs back “high-quality projects… there have been a lot of copycat projects where people copy all the same materials (and) don’t intend to deliver any value to the people buying the tokens,” said Joseph Lubin, co-founder of Ethereum, as he told CNBC.

In response to the high level of ICO scams, the Government of Gibraltar, a British Overseas Territory on Spain’s South Coast, and Gibraltar Financial Services Commission (GFSC) on February 12, 2018, confirmed that they were developing legislation in regards to tokenized assets. “Token regulation is the natural progression following the regulation of DLT Providers, being vital to the protection of consumers,” said Sian Jones, Senior Advisor on distributed ledger technology (DLT) at the GFSC. “One of the key aspects of the token regulations is that we will be introducing the concept of regulation authorized sponsors who will be responsible for assuring compliance with disclosure and financial crime rules.”

ILPs: an alternative to ICOs

Agrello, a legal startup that builds legally-binding contracts on the blockchain, and Blockhive are currently working together to launch the first ILP called ‘Blockhive.’ Blockhive will use the Agrello ID that provides support for all legal requirements which include Know Your Customer (KYC) and anti-money laundering solutions.

Agrello’s agreement also ensures that creditors’ data is encrypted and stored on the blockchain network. Users must register to receive the protocol’s Future Loan Access Tokens (FLAT – transferable loans assigned to third parties) as soon as they lend their funds to Blockhive. Once registered with the tokens, users can access and transact on the Blockhive platform. Unlike ICOs, ILPs can reduce instances of fraud and money-laundering. With new functionalities that prevent scams, ILPs may enable decentralized crowdfunding opportunities without restrictions from regulatory bodies in the future, if it becomes widely adopted.

Authored by
Cindy Huynh

Cindy is a writer, digital marketer and content creator from Australia. She is currently a digital nomad fascinated by blockchain technology. Cindy believes blockchain technology and cryptocurrencies can disrupt existing industries and has the potential to revolutionize the world. In her spare time she enjoys learning new ideas and scuba diving with friends.

Tags – blockchain, cryptocurrency, finance, fintech, ICO, ILP, regulation, startups, technology

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Thomas Prendergast

Cryptocurrency Market Surges to $365 Billion, Start of a Bull Rally?

Joseph Young, author of this article, is a Hong Kong-Based Finance and Cryptocurrency Analyst / Writer. He is Contributing regularly to CCN and Hacked, Offering cryptocurrency news and Insights Into Asian Market (South Korea, Japan, and more).
 
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Thomas Prendergast