Fundraising Vehicles: What’s Going on With Cryptocurrency?

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If you thought cryptocurrency would continue an indefinite slide into obscurity after its extended drop in 2018, you weren’t alone. But cryptocurrencies are still around, and Warren Buffet has even agreed to sit with an auction winner for lunch, a young crypto investor who plans to spend the meal touting the benefits of blockchain to an audience of one. And blockchain technology continues to have significant private and corporate backers.

Here’s what we’ve been seeing with our own clients:

Security tokens

Security tokens remain viable financial instruments. Security tokens are an asset type that either act as a security, or are backed by other securities or assets. They are regulated by securities rules, and may also be subject to money transmission, CFTC, and other regulations.

Underlying blockchain technology

Many of our clients are focusing more on underlying blockchain technology, with the currency or token mechanics taking a backseat to blockchain fundamentals.

Sales to non-US purchasers

Cryptocurrency rules vary widely across the world, and there are a variety of jurisdictions that permit companies to issue and sale cryptocurrencies in a way that is much easier from a regulatory perspective than in the U.S. Many of our clients are choosing to comply with these rules in other jurisdictions, and forego developing a market for their products in the U.S. This may be a good strategy depending on what you’re doing and where you’re located.