Updated on | Posted in Cryptocurrency, Fintech

iBlockchain Bank & Trust: Smart Solutions for a Token Offer…



ICOs, also known as “token sales,” are a relatively new fundraising phenomenon used to launch new companies or fund a development project.

According to ICOStats, nearly $2.3 billion has been raised in 2017 in ICOs. This amount eclipses the amount of money raised by early stage venture capital (VC) funding for internet companies. This type of oversized growth is attracting the attention of folks on Sand Hill Road, but also regulators across the globe.

ICOs are similar in some ways to a crowdfunding campaign, but instead of offering a copy of a product like on Kickstarter, what is being offered are digital “tokens.” These tokens can take two forms: utility tokens or registered securities.



  • Utility Tokens: Companies issue “utility tokens” which are essentially digital coupons giving investors access to the features of a particular project starting at a later date. Tokens do not confer ownership, but they can be traded on the open market providing fast liquidity to those that desire it.

  • Securities: In contrast to utility tokens, some ICOs are already being done as registered securities offerings. Most ICOs do not want to be considered a security because of the incumbent regulations, but many see a bright future with ICOs been categorized registered securities. This means the token offering may include equity or some form of an investment return.

In either case, more and more ICOs are considering voluntary compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations for a variety of reasons.

The ICO Problem –

Regulators in countries across the globe are taking an increasing interest in ICOs. This creates uncertainty for both Offerers and for those who want to invest. Three main issues currently exist in the ICO Crowdfunding space.

1. First Issue

For non US entities that have the potential to sell their token through an ICO to a US citizen, the US Securities and Exchange Commission (SEC) is reportedly preparing to prosecute ICOs which are held without KYC procedures.

2. Second Issue

Cryptocurrency exchanges are beginning to exclude cryptocurrencies that did not properly implement KYC processes. Thus, not running such checks poses a long-term risk to a project.

3. Third Issue

Voluntary compliance is not enough. An ICO has to demonstrate proper KYC within an established regulatory framework for KYC and AML, then it will be possible for all parties to establish credibility with banks and follow Anti-Money Laundering regulations.

4. Fourth Issue

The US dollar remains the world’s reserve fiat currency and US regulators are not shy about punishing parties to any transaction that in any way uses a greenback. Even banks outside America treat US rules as inviolable as getting shut out of the dollar clearing system isn’t an option for any global bank.

IBBT’s Solution –

7 steps solution for a successful Token Event.

1. Establish Credibility with Authorities

IBBT provides a strong KYC during the token generating event which will establish credibility with financial institutions and follow AML regulations. Regulated compliance with transparency and strong guidelines to protect investors in a token sale would give a project a stamp of legitimacy. Many would-be regulators appear to be open to token sales as long as “know your customer” and AML laws are obeyed.

2. Get Ahead of the Compliance Curve

Until the murky regulatory waters become a little clearer, it’s best to be transparent by working with a legally certified organization like Investment Blockchain Bank & Trust. IBBT is a publicly regulated organization and can handle Crowdfunding when dealing with potential regulators. Because regulatory bodies in many large markets (e.g., US, Canada and the UK) are leaning towards classifying ICOs as securities, ICOs must be more proactive and comply with AML/KYC guidelines to operate in these markets.

3. Long Term Legitimacy

Any Token business that offers an ICO and that wants to succeed in the long run needs to understand the existing legal framework and ensure compliance. IBBT can help establish legitimacy by how well the initial crypto-asset and its governance contract are designed and protected under a regulatory framework.

4. Working with IBBT Improves Public Perception

With all the current hype and excitement about ICOs, the lack of explicit regulations makes them a potential haven for fraudsters. The IBBT team aids to communicate the ICO offer and their overall plans, financial structure, use of funds, incentives, associated risks, and other details, the more the public can weigh the value of the offering.

5. Expanded Reach

Voluntary AML/KYC compliance is not enough, IBBT will assure that all regulatory procedures are followed which will help to issue ICO offers reach a larger audience and expand the number of jurisdictions in which they can participate. KYC and AML compliance let ICO owners reach investors in US, UK, and Canada more easily, albeit to a subset of “accredited investors.”

6. Post Funding Tracking

IBBT monitors the KYC and AML process If you’ve opened up your ICO to U.S. investors, for example, you will need to think about how you can prevent them from selling your tokens in the first 12 months (if you raised under Regulation D). If you didn’t accept U.S. investors, how do you prevent them from buying your tokens in the future? IBBT tracks compliance by incorporating AML and KYC processes into the token sale, therefore ICOs issued through IBBT’s platform can better track and communicate with its investors.

7. Avoid Regulatory Fines

In many jurisdictions, the regulatory bodies are levying heavy penalties if the ICO smells like a security because of money laundering concerns. As Jamal El-Hindi, acting FinCEN director, states, “We will hold accountable foreign-located money transmitters, including virtual currency exchangers that do business in the United States when they willfully violate U.S. AML laws.”

IBBT assures Compliance with AML/KYC regulations – even if they are not currently mandated to do so—provides a broad range of advantages to the issuing company and its investors. That’s why forward-thinking IBBT has created a decentralized online identity verification process during the token sale to:

  1. Verify and validate the investor’s identity

  2. Understand the investor’s profile, business and account activity

  3. Assess the potential for money laundering


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