Initiating a new project and raising capital to market the idea globally requires a large amount of financing, usually not at one’s disposal. Be it an up and coming company or a long established one, an ICO is the ideal reward based crowdfunding mechanism to raise funds and kick-start a project by collecting funds from the public at large and in turn, reward the contributors with tokens to be later utilised to access the product or services offered by the project being funded.
An initial and primary requirement prior to commencing with an ICO, is the issue of a White Paper which should serve to outline the project, the details of the ICO and the Token relevant to the project. The White Paper is essentially a marketing document distributed to either the public at large or a set number of targeted persons for their consideration of the project to ultimately decide on whether to contribute towards its funding or otherwise.
There are a number of essential requirements that need to be included in the White Paper including inter alia, a description of the project, the services offered by the company, the nature and use of the token, the token price, time-periods of the ICO, a clear token distribution scheme and an insight into the team behind the project. The aforementioned and further relevant information is required to draft an effective White Paper with the aim of launching a successful ICO.
To draft a White Paper, apart from knowing how to effectively market the project, one must also have full understanding of the underlying legal implications arising from the different natures which can be attributed to a token. Throughout the White Paper there should be a clear and constant reference to whether the token is utilitarian in nature or otherwise a security token. In the case of the latter, which is usually marketed as some form of investment, such token will fall within the parameters of a regulated token as opposed to the unregulated utility token that can only be utilised to access the project being funded whilst having no elements of security rights attached to it.
It is therefore vital for such White Paper to be well-written and inclusive of all the necessary information for it to serve its purpose, to stand out amongst similar projects, and to attract a great number of contributors with clear and correct information leaving no room for doubt as to the nature of the token so as to be in a position to make an informed assessment of the project.
Having advised in over 30 ICOs, E&S Group offers legal services with regards to the White Paper in the form of an initial legal analysis and basic overview of the White Paper with recommendations on how to ameliorate it in terms of the legal implications arising from its content and in terms of the necessary information required to be included. The competent team at E&S Group will efficiently maintain communication with the Client with their feedback, recommendations and necessary legal opinions to ensure that the Client’s White Paper is effectively drafted to reach its desired outcome.