ICO refers to the initial coin offering or initial currency offering. When funding is done with the help of cryptocurrencies, it comes under initial coin offering. People can use ICO for raising funds for new cryptocurrency offerings. It helps in data protection by giving advice and guidance. Moreover, ICO development companies promote good practice in securing personal data. Those entrepreneurs who want to launch a new cryptocurrency can go for ICO (initial coin offering) with the help of ICO development services provided by these companies. There is no restriction of government on anyone related to the launching of ICO.
Risks and liability involved in raising a fund with ICO
As bit coin and blockchain technology has become a source of attraction when it comes to investment. But there are various financial benefits and risks involved in raising a fund with an ICO. This type of investment can help the people to raise money quickly but it can result in loss of money as well. So people must make sure about the risks when they go for investing in an ICO. Here are some most common risks which everyone must go through to have a safe and secure investment:
Unregulated ICO: one of the biggest risks related to ICO is that it is unregulated. Everyone is investing ICOs at a very quick pace but they do not know that this can have more chances of being unregulated in the upcoming future. There are chances that ICOs can lose their value or sold off in the market. Thus, if anyone is looking forward to raising funds from ICOs, just understand this thing that ICO regulation is not known.
Tax-related issues: apart from non-regulation issues, numerous tax-related issues can easily arise while raising funds from initial coin offerings. This is because ICO tokens can be classified as property, debt, prepaid services, prepaid goods, equity, and others. Each ICO can be categorized as per the need when it comes to tax classification. So always make sure about the holding of ICO token correctly. Commonly, anyone can get tax-related issues with ICO token as the risk related to these tokens are worth taking.
Lack of security: ICO investments are completely dependent on technology and this can be easily affected by cyberattacks. Cybercriminals always keep on trying to find out different ways to hack the systems so that they can steal the cryptocurrency most easily. This creates a greater chance of cryptocurrency being stolen. Moreover, with the help of phishing scams, hackers can steal your identity also.
Fraud: investing in an ICO also has the chances of being fraudulent cases. This involves stolen individual identity by cyber-attacks and it becomes easier with initial coin offering. There are more chances of occurring fraud internationally and thus it increases more risks as compared to frauds happening inside the united states.
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