Ripple, one of the largest cryptocurrency-linked companies in the world, has made an enlightening statement this week. According to their CEO, members of the legal community will be the real winners of the booming practice of initial coin offering (ICOs).
Lawyers Hone in on Crypto Legality
ICOs are used as a means by various companies in order to raise funds. Here, unlike an IPO, there are no stakes offered in the company. Instead, investors exchange digital currency, such as bitcoin or ether, for a token issued by the firm.
During the Money 20/20 conference in Singapore on March 13, 2018, Ripple CEO Brad Garlinghouse said that he previously pointed out to a few entrepreneurs looking to issue digital tokens that they should ‘save some of those proceeds’ as they could be sued if their token lost money.
Garlinghouse also added, “Entrepreneurs need to be [going in with their] eyes wide open. [The] winners are going to be the lawyers, because they’re going to help you issue the token and then they’re going to help you defend it.”
The CEO further explained that it was better sometimes to focus on solving real problems for real customers, and not worry about running infrastructure for a token issue, getting listed on exchanges and all the steps that come with that.
Despite his warnings, the ICO market is a fairly substantial one; firms managed to raise around $5.6 billion in the past year, according to a report in Business Insider.
But due to the novel fundraising method, many Investors and companies in the space are not nearly as protected by the regulatory frameworks in place in traditional financial markets.
Garlinghouse also weighed in on a recent move by the U.S. Securities and Exchange Commission (SEC) requiring platforms looking to trade digital assets to register certain assets that fall into the category of securities.
“I think most of the ICOs you’re seeing are not real token use cases. They’re really securities, so I think the SEC should regulate that.”
And as we wait in anticipation the growing network effects of cryptocurrency, we know for a fact that lawyers are waiting to celebrate the same outcome.
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