Fiona Chan and Alison Thomson, members of Appleby's Global Technology and Innovation Group recently attended the SPOT conference in Hong Kong which showcased a variety of talks and panel discussions from the world's leading cryptocurrency and token exchanges.
The discussions were lively and interesting, and of particular interest was the importance of stringent due diligence for all involved in a token sale transaction, from the lawyers to the exchanges themselves, which we explore further below.
Token due diligence
One of the panel discussions featured some of Asia's leading cryptocurrency exchanges. With the market capitalisation of ICOs increasing and stabilising at a high level at the start of this year, due diligence in assessing the new crypto asset has become more important than ever, particularly for digital exchanges that choose to list certain ICOs and tokens. One key aspect to evaluating the long term success of a project is the limit to which a token economy can grow, which is usually determined by its token economics.
The panel, which consisted of well recognised digital asset exchanges and a leading financial regulatory lawyer generally agreed that there has been a slow-down in project speed for execution particularly as regulators are taking a closer look at crypto assets and with increased competition over ICO issuers, digital exchanges are now undertaking more rigorous forms of due diligence when deciding which tokens to list.
Regulators, institutions and looking to the future
One of the salient issues that most blockchain and crypto based companies face is not knowing how the jurisdiction they are domiciled in will regulate digital assets and not knowing how they will be governed.
Digital asset exchanges have evolved significantly over the last two years and will continue to evolve and innovate in the future. Certainly, the digital asset exchanges on the panel were all in discussion with the local regulators in their home jurisdictions: rather than avoiding regulations, they are embracing them as the way to get ahead with the belief that compliance provides a competitive advantage over their competitors.
With technological innovation transforming offshore businesses and markets, Appleby has led the way amongst the offshore firms by launching a dedicated Global Technology and Innovation Group. With experts in Hong Kong and across its network of 10 offices, the group supports clients across a broad range of emerging technologies.
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