Is it possible to launch and run ICO startups that do not lead to legal, tax and reputational risks?

What is the benefit for a startup from ICO?

The company will receive the necessary capital after 2 - 3 months with a competent structuring of the deal and persistent efforts. The time allotted to the advertising company and the selected jurisdiction are the two main factors having impact on the terms of collecting and raising the necessary capital.

Due to the fact that there is no special regulation regarding the circulation of cryptocurrencies in the Russian Federation, conducting ICO abroad is exactly what Russian companies are striving for.

In comparison with 2016, blockchain technology is rapidly developing. The amounts of contributions are increasing, thus, certain projects raise millions of dollars in a matter of minutes.

ICO Implementation Process

- The first stage is the company's announcement of a new project.

- An official offer is issued by the startup, which contains offering to investors regarding the purchase of tokens. It specifies the start date and duration of the collection/raising funds, as well as the number of issued tokens and other details. At this stage, the company aims to present its project to the widest possible range of potential purchasers.

- After that, there are launching of ICO, flow of cryptoinvestments and distribution of tokens between cryptoinvestors.

Claims can be made on the part of counterparties and regulators, if the company does not take into account all legal aspects, which can lead to damage to its reputation.

Jurisdictions and necessary documents for carrying out ICO

High legal risks in the territory of the Russian Federation make it difficult to conduct ICO in this jurisdiction. Due to the foregoing, ICO structuring takes place in countries that have more favorable tax regime and legislative framework.

There are the following jurisdictions:

- Switzerland;
- Singapore;
- Isle Of Man;
- British Virgin Islands;
- And others (selection of jurisdiction depends on the peculiarities of the project).

In order not to make mistakes in the selection of jurisdiction, You can contact the lawyers of Law & Trust International who will provide assistance in the selection and answer all the questions of interest.

White Paper is an information memorandum that is the main marketing document according to which investors decide to invest in a start-up project. White Paper contains information about the objectives of the project, the team of creators/founders, partners, mentors and other persons involved in the development.

Terms & Conditions is a public offer, which is addressed to an undefined number of persons. This document contains detailed terms of the contract with the cryptoinvestors, thus, it should be prepared with the utmost responsibility and attention, as it contains the main obligations to investors.

Privacy Policy is the policy of processing personal data.

Information on the Tax Aspects of ICO

If ICO is properly organized, it may be exempted from taxation in the country of conducting ICO.

The organizers of ICO select jurisdiction, where local corporate taxes will not be imposed on the profits of the issuer's company.

The organizers also take into account the tax residence of the beneficial owner.

Obtaining taxable profits when placing tokens depends to a large extent on the structure of token and the obligations that the organizers of ICO are prepared to take on.

Risks for reputation during ICO

In course of ICO, the reputation of the seller and buyer of digital tokens  may be impaired.

Fraud and misappropriation of funds will irrevocably undermine credibility and drastically impair reputation.

In addition, reputation of the startup project directly depends on the extent of fulfilling contractual undertakings.