Gibraltar Token Sales - an Ideal Solution?

A token sale, sometimes otherwise referred to as an initial coin offering is the process by which many Crypto projects trigger the launch of their project to an intended user base.

Why a token sale?

People often understand that token sales are used as a means to raise capital. However, an often overlooked aspect of a token sale is that they can help up and coming projects, or sometimes existing and successful projects to create an extended user base and enhance user interactions with their project or a specific new product. Creating a demand and committed consumer base with interests in the project before it has even launched can be priceless in terms of development. Therefore, we often see well-funded or already successful projects undertake token sales.

In addition, although often representing a small portion of intended capital for a project, a token sale allows those projects to raise capital to support the development of their products.

In return for their commitment and payment, participants will receive any number cryptographic tokens which represent future rights to interact with or use those products, whether as a means of payment, discount, to provide access to unique interactivity with the project in question and more. More importantly, users are also committed to the success of that project.

Why Gibraltar and Hassans? 

Reputation 

With the advent of token sales globally, some years ago there were several bad players in the industry who took advantage of this process to extract funds from the public whilst giving little or nothing in return. To counteract this, many reputable projects out there have for years now sought to establish themselves in a reputable jurisdiction with a clear framework of policies and management in order to maintain reputation and user comfort, and we have advised clients on the process of establishing a reputable and compliant token sale in Gibraltar with such frameworks in place.

Last year, the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021 were introduced in Gibraltar. Under these regulations, any entity which intends to sell tokens from Gibraltar must first register with the Gibraltar Financial Services Commission (GFSC) for the purposes of AML/KYC supervision.

Since they were introduced, we have worked with clients, service providers and the GFSC to build a compliant and efficient process, building on structures which we had developed over time, by which local entities can register and complete their token sale in a stable and regulated environment.

Interaction with the financial world 

Although it can sometimes be more time consuming and expensive, completing a token sale in a well-structured and fully compliant manner, in a jurisdiction with a clear legal framework, can be more efficient in the long run. Registration and a clear project structure not only gives participants peace of mind when it comes to committing to a project, it will also give comfort to service providers who will ultimately be required to see a project to fruition (such as banks).

On more than one occasion, we have seen reputable projects come to us because they have set up in a less than reputable jurisdiction, and although they might have ticked all the right boxes, are now having trouble interacting with service providers. Short of re-starting the entire process, in many of these cases it is too late to turn back. However, we do find that they are looking for enhanced regulation and a clear legal framework.

For further info, feel free to contact me: jeremy.requena@hassans.gi