Cryptoassets can be used to raise funds using crowdfunding, a process often referred to as an ICO. The regulation of ICOs depends on the nature of the cryptoasset, for example whether it represents a security. In certain cases, the fundraise may occur before the cryptoassets are created, in which case investors often enter into a SAFT, under which they have rights to the cryptoassets when they are created. Before holding cryptoassets you should consider how they will be stored, for example if using a custodian you should consider how secure the custodian is. There are other considerations when holding cryptoassets as well to consider, such as how robust the blockchain protocol is and whether there is a business continuity plan in place if it breaks.
Key learning objectives:
How is crowdfunding using cryptoassets treated legally?
What is a SAFT?
What is the role of the custodian?