Do ICOs provide a potential new source of finance or reason for caution?

Nov 29, 2018, 10:30 AM

Debate 2: Do ICOs provide a potential new source of finance  or reason for caution? 

Viewpoint 1: Raj Uttamchandani, Executive Director, Trade Finance Market

Interest in initial coin offerings (ICOs), the process of using  cryptocurrency to raise money for trade lending, is growing as companieslook for alternative ways to fund supply chains and raise capital. Simplerand faster than traditional cross-border fundraising, removing much of the complexity around different currencies, settlements and payment consolidations, ICOs help provide SMEs and start-ups in particular with greater access to a more diverse pool of potential investors, with blockchain-based screening solutions enabling quick funding and derisking of transactions. 

Viewpoint 2: Kim Kit Ow, Partner, Bird & Bird

The unregulated nature of ICOs provide inherent risks,  with concerns over sources of funds and financial crime leading to close monitoring. If the industry is seriously thinking of building ICOs up as a long-term alternative to fiat currency it needs to start working on serious and specific regulations. Companies and individuals keen to get enter theICO market need to ensure they have the right expertise in the correct jurisdiction. With ICO volumes so far miniscule when compared to themarket gap and with additional concerns over integrity, greater clarity is still needed to ensure the potential is not lost.