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ICO/IEO in Estonia in 2020?

It’s 2020, and the ICO madness of 2017 is slowly slipping into the memories. At least for those who did not lose a considerable amount of money. It’s obvious that most of the investors’ money has gone forever and there’s no early retirement on the horizon for the hopeful ICO investors. On the other hand, many ICO projects made the deal of their lives. They raised more money they would have ever earned if they would’ve actually launched their products. Lack of regulation, too many ICOs to count, and investors residing on the other side of the globe means they could get away with not delivering what they promised. I am not going to sue a Chinese project, which probably doesn’t even have any legal body, to get back my 500€. It’s impossible and it doesn’t make any sense. I know an ICO company which got money from the investors, built some sort of MVP which perhaps fulfilled 10% of what was promised to the investors. Rest of the money was invested in real estate, acquiring several multi-million euro worth of office buildings. I also know people who invested tens of thousands of euros only to lose it all.

Then there are a handful of projects who are real and who are working hard to bring their innovations to the market. Perhaps the success of a few of them will outweigh the failure of the rest.

Estonia, back in 2017, was one of the ICO hotspots in Europe. Comistar is one of the companies who have advised and drafted necessary documentation to the ICO projects. It’s fair to say that ICO market died completely in 2018 and 2019, although there still were few projects who launched their ICOs, and few more who launched their IEOs out of Estonia.

The considerably increased difficulty of doing a successful ICO is good for the market as if it’s not as easy to raise money, bad ones will likely either fail or don’t even try. Utility tokens by nature are a lot more interesting innovation than security tokens, hence, we’re always interested in working with good teams who are trying to make a difference.

From the legal perspective, the process usually starts with analysing the white paper and getting to know the project and making sure the tokens actually qualify as utility tokens (and do not have characteristics of securities). In a comprehensive analysis, we also go over the tax & licensing questions. If this is done and we have clarity on moving forward, we help our clients to incorporate the company, draft the terms & conditions, privacy policy and investor agreements and take care of the accounting of the company.

We usually try to assess the feasibility of the project as well, although we do expect that our clients have done necessary business feasibility analysis on their own.

As for the costs, then it depends on the required services and documentation. The full ICO legal documentation package is generally between 10 000€ and 15 000€, the standard being around 12 000€.

If you have a real project and innovation that you believe in, and the ICO is the desired way to raise capital for the project, we’d be happy to hear from you.

Comistar provides business, legal and tax support for e-residency companies. Our core focus is on Fintech licensing, e-commerce companies, blockchain industry and affiliate marketers. We’ve been operating for over 5 years and have helped more than 300 companies to get started in Estonia.