TLDR
Key points:
- Fundraising in the US via token sales should be avoided to prevent legal trouble with the SEC.
- Alternative ways to raise funds without risk of legal trouble exist.
A lawyer with a16z’s crypto investment arm advises against public token sales in the US due to securities laws regulations from the SEC. The lawyer, Miles Jennings, emphasizes that even though the industry has moved away from public US token sales since 2017, new forms of ICOs have emerged that still present legal risks. Jennings mentions alternative ways to conduct fundraising without violating securities laws, such as public sales of equity and tokens outside the US or private sales of equity and tokens. He urges projects to steer clear of schemes like ‘Protocol Owned Liquidity’ and ‘Liquidity Bootstrapping Pools’ to avoid legal trouble. The advice is to avoid public token sales in the US at all costs to prevent an ‘own goal’ in fundraising efforts.
