Managing Risks in ICO Investments

In this ongoing series, we ask members of the team critical guiding questions that drive the way we approach our work with ChatQ. In this piece, Corporate Planner Kiley Tan discusses how to manage risk in approaching ICO investments from a user standpoint.

Hana: Hi Kiley, today we’re talking about risk management, from the user perspective what consumers can do to ensure their own safety, and from a company perspective. Let’s start with users: what are steps that users can take to manage inherent risks associated with investing in ICOs?

Kiley: First of all, investing in an ICO is not something that is suitable to everyone. The first thing a person needs to do is to speak to their professional advisers such as their financial adviser, lawyer, accountant and tax consultant. Once they’ve done that and they are good to go, the next thing is to look at the underlying product that the coins/tokens support. At ChatQ, our coins are there to support our work to capture market sentiment from the community, for the community. This is a project to enable our community to obtain information that had previously been hidden behind large merchant banks. And, the reality is that the knowledge of the community should not be underestimated! They know so much and our platform will allow our community to share that information with one another in a way which incentivises them to do so.

Another thing is to look at is the people behind the product. These are the people who are going to drive the development of the product. Look at their experience and knowhow and see how that fits.

Speak to the the people — do it directly by email or through social media. At ChatQ, you can engage with us on Twitter, Telegram, and via email at support@chatq.sg. Ask us questions and challenge us. We want to engage with our community because this will only work if we know what the community wants.

Do some research. The internet is full of information and chat rooms talking about ICOs. Apart from that, look up the people behind the product and check their credentials.

Only communicate with the team. Scammers are everywhere and if you’re in doubt, always contact the team to find out more.

Finally, it’s worth remembering that the value of coins go up, as well as, down. The coins are traded like any commodity and it is important that investors realise that.

Hana: Amidst the tensions surrounding strict regulation towards companies in order to decrease consumer risk, like Google taking a stand to ban all ads related to cryptocurrencies and ICOs, what are the most important risk management principles for companies conducting ICOs?

Kiley: I think that Google banning ICO ads is really short sighted. ICOs are here to stay whether people like it or not. I think that most people fear it because they don’t understand it or they fear that regulation will come in and would change the situation overnight.

From our perspective, we take great measures to ensure that we are compliant with existing laws. In fact, one of our greatest expenditure is in obtaining tax and legal advice! We want to make sure that we are, as far as it is humanly possible, compliant with all regulations which affect us.

We want our community to feel safe in the knowledge that we take this seriously and that we are here for the long term. For us, our job starts after the ICO and ends when we have built a great community of users. So, it is in our interest and that of our community to ensure that we get things right first time round.

I have a phrase for this: There is no do over!

Hana: Would you say that the landscape has changed in the past 6 months with regards to approaching risk management for ICOs from user and company perspectives? How do you envision it changing in the next 6 months?

Kiley: I think that there is a greater understanding in relation to how ICOs are run and what they represent both from the side of the community and the company. There is greater scrutiny and some regulatory clarity.

By that way, I think that these are good things to have.

ICOs are a legitimate method of raising funding for a company. I think that, as with any disruptive technology, there are vested interests in the business world who are purposefully discrediting ICOs. This is led by a lack of understand and fear, and also, in some cases, the lack of clarity when it comes to the regulatory framework regarding crypto-currency.

So, in the last six months, ICOs have taken its fair share of bad press and most national governments are trying to wrap their heads around this whole issue.

I think that the next six months could see the tightening up of the regulatory framework but I suspect it would be a progressive move rather than a knee jerk reaction.

Again, I think that that’s a good thing if it protects the community. However, governments are not known for their speed or efficiency when it comes to regulating industries that are constantly evolving.

Hana: Is there room to be as flexible and innovative within the risk management space as needed in this ever-changing environment of ICOs and cryptocurrencies?

Kiley: Yes. I think that the ICO space is dominated by disruptors and innovators and as a result, the borders are always being expanded. Most founders running ICOs are responsible people but there are bad elements who will try to take advantage of new innovation.

At ChatQ, we want to make the experience as safe as we can and we are constantly striving to ensure that our community are safe.

Hana: Last question, how would you suggest that companies balance the need for risk management and customer protection with all other business goals?

Kiley: For me, it’s a no brainer — customer protection wins every day, all day. Protecting our customer has to be top of every business’s list of priorities. Customers are the lifeblood of a business, not profits. Most businesses get that wrong and allow profits to take an all consuming priority over everything else. In my estimation, that’s wrong.

Of course, profits are important but never at the expense of customer protection.

For us at ChatQ, our customers are part of our community. They will be the most important part of what we do. If you like, we are building a large mansion. But, the purpose of that mansion is not for us to display on a glossy brochure. Rather, it is a gathering space for people, our community. The community make us and that’s why they’re important.

Hana: Thank you so much! I learned a lot.

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