Q1: In which ways is Cofound.it working with the governmental authorities?

A (Irena): Cofoundit strives to follow development in the domestic and international crypto environment. We attend various events on which we often participate as speakers on panels, round tables, workshops etc. We maintain our network at EU level and closely follow development of the environment. We talked to most of the relevant authorities on EU level and regulators in two countries — Malta and Slovenia, sharing our experience related to digitalisation and blockchain regulations. Zenel is right now sharing out experiences in Serbia.

We are always ready to work with government bodies and have sent a clear message that we are at their disposal. Based on this we have already prepared some workshops for various stakeholders aimed at combining the interest of industry and legislation / government.

Q2: Could you give us an overview of each geographic region, who the major players are, and how Cofound.it’s relationships work with them. For example, regulations differ between Europe, Asia, and North America.

A (Irena): Please kindly note there is a flood of information almost on daily basis so keeping pace with this environment is very challenging. For this discussion we just wanted to provide you with some recent highlights, as a complete overview it too wide for this AMA.

To begin with, we are expecting Crypto Regulation Recommendation to be issued by G20 during this month and this will represent the first step toward unified regulation of cryptocurrency.

In the beginning of June, the International Monetary Fund acknowledged the appeal of crypto assets which is a positive sign of moving in the right direction.

A (Marina): The European Union has recently amended its anti-money laundering legislation to cover the crypto world (The “AML directive”). This impacts the banks as they are strengthening the requirements for companies that work in crypto industry.

European Parliament’s Committee on Research, Industry and Energy has passed a non-binding Resolution Supporting Blockchain Technology.

The members have acknowledged the importance of blockchain technology and called on the EU Commission to set regulatory rules for various blockchain use cases that are “innovation-friendly and technology neutral”. It also called on the European Commission to propose a framework for initial coin offerings (ICO), stating they “have a strong potential in funding innovation and accelerate technology transfer”.

In general, the passage of the resolution will open doors for credible and binding laws that will govern the industry.

A (Matevž): Across the ocean, the U.S. Securities and Exchange Commission (SEC) has nominated Senior Advisor for Digital Assets and Innovation — a newly created advisory position that will be responsible for coordinating efforts across all SEC Divisions and Offices regarding the application of securities laws to emerging digital asset technologies. Just recently, ETH was announced not to be a security (anymore) by the SEC.

More spotlight is again given to consumers by lessons through HoweyCoins.com — a fake ICO site. In our opinion a very nice approach — we recommend checking it, it is fun. :) Generally talking the big issue are still security vs utility tokens.

A (Marina): In February, the EU commission launched the EU Blockchain Observatory and Forum in partnership with the ethereum startup ConsenSys.

Q3: There are SAFT, ICO, TGE, airdrops, STOs, pre-sales, private sales. Could we get a quick explanation of the pros and cons of each type of fund raising and when it might be advantageous to use a specific type for a particular situation. It seems regulation defines these types of sales depending on who is eligible to do the buying.

A (Matevž): You have raised a very interesting and complex topic. The fundraising segment has indeed been through a lot of changes in the last 12 months, with new methods and corresponding abbreviations popping up. It is interesting to see how the abbreviation ICO (meaning Initial Coin Offering) was in some cases changed to TGE (meaning Token Generation Event) to try to lose the connection with the highly regulated initial public offerings (IPOs) and stick with the ‘utility’ function of the tokens. For the purposes of accommodating to the newly established trend of security tokens, a new term was coined — Security Token Offering (STO). However, we note that the mentioned terms are not uniform and are yet to be accepted as binding legal definitions. It also appears that a shift in the sources of funding is occurring, as more and more projects acquire the necessary funding in private sales. Private offerings are legally less stringent and appear more favorable to the big investors. The ‘airdrop’ model, which is being utilized as a successful marketing strategy, has been scrutinized from a legal perspective mostly by the national tax authorities.

A (Marina): In regard to the fundraising techniques, Ambrož has already prepared an insightful comparison of several methods (i.e., utility token sale, equity financing, DAICO, security token sale and equity sale combined with utility token distribution) from various important aspects (such as regulatory risk, efficiency of the fundraising procedure, governance and acquisition of future user base) in the following blog-post:

https://blog.cofound.it/fundraising-dilemmas-of-startup-founders-1356e3e2a330

Read the full AMA session!

Thanks for your contributions, we appreciate all the feedback and involvement.