Initial Coin Offering (ICO)

Initial Coin Offering (ICO) is similar to an IPO, in a way that they are used as a way to raise funds for a business or a project. However, instead of giving out shares, the company offers digital currency or tokens to investors. For small companies, that yet do not have sufficient resources to conduct an IPO, an ICO cryptocurrency offers the perfect alternative. It is also a unique way of funding different projects in companies.

The past few years have seen an exponential rise in the popularity as well as the value of cryptocurrencies – Bitcoin more so than others. As businesses and individuals grow more accustomed to digital currencies, their use becomes more mainstream. Their unregulated nature and the anonymity they afford to their users is what makes financial regulators uncomfortable about their legitimacy.

Why do Initial Coin Offering ICOs Need to be Secured?

In ICOs a number of businesses, particularly startups, have found an innovative yet convenient way to raise capital for their ventures. However, as more and more companies come to rely on this method and the influx of cash it attracts, a number of criminals are also attracted towards it. In 2018, the Wall Street Journal found out that one in every five ICOs was fraudulent. ICOs can be vulnerable in two ways. First, they can be used as a means to lure investors into investing in them. On the other hand, they can also be used as a convenient place to dump illegal money by financial scammers and money launderers.

To avoid ICOs from becoming an instrument for money launderers and scammers, regulators have imposed regulatory requirements for ICOs to be conducted in a secure manner. AML requirements allow businesses to secure their ICOs by verifying and screening each one of their investors. Shufti Pro offers its identity verification and AML screening services to ICO blockchains as well as other e-commerce, financial service and crypto companies. It helps ICOs authenticate their investors in addition to flagging any financial risk they may pose for the company.