Top 5 ICO-Friendly Countries

“A widescreen computer monitor on a backlit desk” by Redd Angelo on Unsplash

The popularity that Initial Coin Offerings (ICOs) have gained over the past few years is phenomenal. Last year, over 900 companies launched ICOs, raising an astronomical total of $5.6 Billion. Even non-blockchain companies with established businesses and products are using ICOs to finance their business ventures.

The reason for the popularity of ICOs is simple. It has never been easier for a project to access such unprecedented amounts of liquidity in such a quick and efficient manner, and for such a small cost. Some companies have even raised tens of millions of dollars in a matter of minutes, whereas IPOs can take months to finalise and have very high barriers to entry.

It should be noted that the although the ICO industry is filled with amazing success stories, it is also rife with fraud. Of the 900+ companies that held ICOs last year, only 48% of them were successful. Many of the unsuccessful projects then went on to defraud their investors, resulting in hundreds of millions of dollars lost to financial fraud.

For example, the blockchain-based company Benebit raised around $4 million in their ICO last year. The company had all the attributes of legitimacy, including a moderated Telegram chat with over 9000 members, a $500,000 marketing budget and a serious-sounding whitepaper.

However, when someone noticed that the photos of the team members were stolen from a UK school for boys and that the founder’s passport details were fake, the team behind Benebit began removing all internet content related to the “company” and its ICO, including their white paper, website and social media accounts. The team responsible are believed to have walked away with somewhere between $2.7 million and $4 million.

As a result of this kind of activity, many countries have banned ICOs all together. The first country to do this was China. Since then, many countries, including South Korea and India, have followed suit. Considering the current risks, this is understandable. But what is the cost of this restrictive attitude in terms of innovation? There could be somebody with an incredible business idea living somewhere where ICOs are banned; they may not get the chance to fully realise a product or service that could change the world.

Countries that believe in the entrepreneurial spirits of their citizens have decided to embrace ICOs, and are seeking regulations that allow them to be a part of the financial ecosystem that supports their country.

In our search to find the five best countries to hold an ICO in, we will not only be concentrating on legislation but also on the success rate of token sales in those countries. For the purposes of this article, we will be defining “success” with the following parameters: the company must have raised over $10 million, and must still be operating today. Based on these requirements, there are 53 ICOs (as of February 1st, 2018) that can be considered a success.

Top 5 countries by number of successful ICOs:

Singapore: 11

Switzerland: 10

Cayman Islands: 7

USA*: 6

UK: 3

* we will be excluding the US from the comparison in this article because of the SEC’s decision to hal the Munchee ICO. The company was prevented from continuing its campaign due to the SEC’s regulatory beliefs, and because of the unpredictable nature surrounding the SEC’s current decisions aroundcryptocurrency.

What makes these countries so successful?

It seems like generalized ICO success largely comes down to regulation, with a positive regulatory stance on ICOs correlating directly with the general success rate of ICOs within a particular jurisdiction. Countries like Singapore seem to be supporting ICO success by actually taking steps towards regulation of digital tokens. Other countries, like Switzerland, have decided to embrace the whole crypto industry by building a blockchain-based business ecosystem: the Swiss “Crypto Valley”, a response to America’s tech and innovation hotspot Silicon Valley.

Countries with the most lenient ICO laws:

  1. Estonia
  2. Russia
  3. Singapore
  4. Switzerland
  5. Gibraltar

These are the countries that have the most lenient laws when it comes to ICOs. Countries like Estonia and Russia do not currently have any laws surrounding ICOs or the use of tokens and crypto assets, which has allowed them to thrive in the industry. However, many of the countries on our list are currently trying to draft laws to implement in the near future. Gibraltar has recently classified tokens as commercial products and not securities, making the territory one of the world’s best places to launch an ICO.

1. Estonia

With absolutely no laws regulating the use of tokens or the practice of holding ICOs, Estonia is a haven for crypto entrepreneurs and start-up teams alike. The ICO-friendly stance of this country takes it to the top of our list.

2. Russia

Russia has long been an advocator of cryptocurrency, with president Vladimir Putin’s public interest in Ethereum founder Vitalik Buterin and the government’s proposed plan to introduce a national cryptocurrency (the “crypto-ruble”), it is certainly a hub of crypto and blockchain activity. It is also important to mention that Russia is one of the leading countries in crypto because of the vast number of high-quality professional programmers working on the development of blockchain technologies within the country. That being said, the Russian government has ordered an evaluation of laws relating to cryptocurrencies and ICOs. They will soon be announcing their plans for regulation, but if their current stance is anything to go by, Russia should continue to be a hotspot for ICOs and blockchain innovations.

3. Singapore

With such a high number of successful ICOs, Singapore is hard to ignore. Although the country iscurrently drafting some laws regarding tokens and ICOs, they are more concerned with regulation than with instituting outright bans, and are looking for ways to make operations safer for investors.

4. Switzerland

Switzerland is leading the way with its pioneering projects like “Crypto Valley”. With nearly as many successful ICOs as Singapore, it has to be on our list.

5. Gibraltar

Although the number of successful ICOs to date is not as high in Gibraltar as in other countries on our list, the territory’s stance on ICOs has already been publicly stated. Their legal classification of crypto tokens as a commercial product makes it perfect place to launch an ICO.

It seems that the main factor in an ICO’s success is the regulation of the country in which it operates.

This could be because an investor tends to feel safer investing in a company that seems more regulated. A country that has crypto-friendly regulations can influence its population; because the country’s acceptance of crypto projects can make project leaders decide to operate in that country. We wish you the best of luck as you choose the right jurisdiction to host your ICO in.

Sincerely yours,

CINDX Team