Fundraising methods with blockchain technology and applicable laws

Abstract

This thesis analyzes and compares conventional fundraising methods such as initial public offerings, crowdfunding, venture capital and angel investors with blockchainbased fundraising methods such as initial coin offerings (ICO), security token offerings (STO) and initial exchange offerings (IEO). It then selects countries where blockchainbased fundraising methods are most actively used and compares the legal approaches and regulations in these countries. While this study is an academic contribution to the literature, it also serves as a professional guide for companies and legislators. The thesis uses literature review and encompassing comparative study of laws as research methods. The research questions: Which blockchain-based fundraising method can be used to replace conventional fundraising methods? What should be done to prepare the legal infrastructure for digital assets? Should new laws be created or can existing laws be applied? The results of the research can be listed as follows: STOs are preferable to IPOs, venture capital and angel investors, equity and lending based crowdfunding as they allow investors to become shareholders in return for their investments and provide the opportunity to borrow like bonds, while ICO can replace donation-based and rewardbased crowdfunding, and IEO fulfills the function of intermediary platforms where crowdfunding is conducted. Some countries introduced new regulations, while others adopted regulations under existing laws. Common steps taken by all these countries include digital asset classification, anti-market manipulation, anti-money laundering, anti-terrorist financing requirements, licensing and prospectus compliance.