ICO vs IPO
You may have come across ICO and IPO used during talks involving cryptocurrency like Bitcoin and ICO lawyer services. Though they are quite similar at first glance and seem the same, counsel from an ICO attorney will point out the key differences that exist between them. What they have in common is that they both offer a means to raise funding for companies or start-ups seeking capital for business development.
ICO, or Initial Coin Offering, is a form of IPO (Initial Public Offering) without the strict regulations and transparency that involve IPOs. Recently, companies launching ICOs have been adopting the same organisational structure as IPO companies but do not offer the same mode of operation and returns (dividends) as the latter. An IPO comes into effect when a private company makes its stocks available to the public. In most cases, this is done by companies who are just starting up or companies that are in need of capital with the intent of expanding. Also, when companies want to get themselves on the stock market and traded, they employ the IPO approach.
Why would I need an ICO lawyer?
If you are a start-up company looking to raise some capital or fund a project through crowdfunding, you can hire the services of an ICO lawyer or attorney to help with the paperwork and legalities to ensure all necessary considerations are addressed. The process of regulatory documentation is a very important one and cannot be overlooked. Although for an IPO, due process of registration and regulation is adhered to in accordance with the existing laws of the country, for an ICO they are not subjected to the same thorough regulatory process. The lack of regulations and continuous oversight by government agencies in the new cryptocurrency space of an ICO has created a need for ICO lawyers.
By regulation, applications have to be made with the appropriate authorities such as the SEC (Securities and Exchange Commission) before a company can make its shares available to the public. Regulatory bodies such as this are involved in the issuance of shares by companies to the public. When applying with regulatory agencies, the services of a qualified ICO lawyer or attorney are required. An ICO lawyer or ICO attorney with experience in capital markets and financial institutions would be needed when an application is made by a start-up company to start an ICO campaign. That way, the ICO company would be able to achieve recognition as a legitimate business organization.
Once your ICO attorney has prepared the necessary documentation for you to start an ICO campaign, you can get investors or any member of the public to provide funds to you by way of buying the coins or tokens you have for sale. Usually, these tokens are initially set and offered to the public at a low price, and later the price increases as the campaign to raise funds gathers pace and becomes popular. Unlike the case of an IPO, the tokens bought are not actual shares of the company and owned by the buyers. Typically IPO shareholders are given a share of the profits as dividends. This is the security an IPO offers which an ICO does not. With an ICO, there are no guarantees that your money is safe and cannot be lost. This is because the money gotten by the start-up or ICO company is used to develop and further expand the organisation.