Below, is the transcript from my most recent interview from Davis Bourland, an accomplished professional who is currently completing his MBA with the Frankfurt School of Finance & Management. He is in the final stages of finishing his thesis on Cryptocurrency and the ICO markets. Mr. Bourland, wished to cover topics in regards to the future state of blockchain and ICO’s/STO’s (Initial Coin Offerings/Security Token Offerings). Read below.
I had the great pleasure to speak with Joseph Lowe this week about the ICO market and what we can expect from crowdfunding in the coming years. Joseph is Founder of CareParrot, which is a healthcare platform and gamified marketplace currently in pre-sale. He’s bullish on the U.S. becoming the de facto ICO launching pad and shares his thoughts on what makes a successful ICO, no matter how the market looks.
Davis: I thought companies were avoiding doing ICOs in the U.S. thanks to unpopular opinions from the SEC?
Joseph: Actually, the path forward is relatively clear. Ignoring for a minute the idea that all ICOs should be considered securities, the SEC requires that companies be transparent. Depending on how a company wants to structure its token economics, they simply apply for exemptions, such as Regulation D, A(+), or CF. With the right legal advice and planning, ICOs still can be run in the U.S. and attract investors. ICOs will therefore remain a very attractive way to build a network and reward users for their early commitment.
D: So what are companies doing to make sure they follow U.S. law regarding ICOs?
J: Most are applying for exemptions under rule 506(c) of Regulation D to be able to generally advertise to and accept funds from accredited investors. This is the “hybrid” style token that is very popular right now, and for good reason: a company seeks accredited investors through a private sale and builds its community at the same time. Its native token then has a utility on the company’s platform and can be exchanged for data, goods or services. So long as a strong use-case exists for your network, this is a great way to raise money and get people excited about your project.
D: Is this a good thing? Does new regulation have anything to do with the current bear market?
J: I got very interested in tech during and after the dot-com bubble. Sure, there was a ton of hype leading up to the burst, but companies with practical use-cases and adequate roadmaps survived long after. Sobriety entering the scene is ultimately very good for the ICO market. We need to ensure good projects find investors. Wyoming is a great example of how regulation can be shaped to support the ICO space going forward.
D: How so?
J: With House Bill 70, Wyoming is putting a stake in the ground saying utility tokens are a type of property and should not be considered securities. This could pave the way for how the rest of the country starts to think about cryptocurrencies and ICOs in general.
D: You also see room for a new class of tokens?
J: Yes, clearly asset-backed tokens (“ABTs”) represent the next big wave of investment and interest in the ICO world. If you look back at Ethereum’s vision, there was a lot of early discussion about tokenizing ownership rights related to commodities like gold, real estate, etc. We’re finally now seeing the beginning of that shift – look out for an exciting 2019 regarding ABTs.
D: You’ve been a part of quite a few successful ICOs, any advice on what works?
J: An ICO is essentially turbo-fueled crowdfunding, and crowdfunding works when it builds off the excitement of a community. The best projects seek to enhance how people share and exchange things, and the right token structures help people find value in that exchange. To me, going viral is the best sign of something catching the excitement of the crowd. This is what I shoot for when I build projects.
Davis Bourland is completing his MBA at the Frankfurt School of Finance & Management and writing a thesis on the ICO market. He recommends The Brooklyn Project for standards-setting in the ICO space.
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