Cosmecoin, a cryptocurrency token and Blockchain platform for the cosmetic surgery and aesthetic medicine industry, is the first known ICO to complete an ‘as-if-a-security’ regulatory process.
The team behind the ‘Enhanced ICO’, took the decision to be the first to treat their tokens as a financial security to both protect participants and themselves from the potential of retrospective FCA and SEC action. The ICO’s legal advisers, Magic Circle law firm Allen & Overy, have advised Cosmecoin approach their offering in the same way as if an IPO. iConsult and Cosmecoin Founder and CEO Richard Crawford-Small commented:
“Under the advice of our legal consultants Allen & Overy, we took the early decision to approach the Cosmecoin ICO as a financial security in order to protect our investors as well as ourselves. In light of the recent regulatory crackdown on ICOs by the SEC, we are now even more convinced this proved to be the right decision”.
The Cosmecoin will be the native cryptocurrency token of the iConsult Blockchain platform, a decentralized ecosystem directly connecting aesthetic practitioners and consumers. The ICO’s pre-sale, to launch in late March, seeks to raise 500,000 euros and the full ICO has a 5 million euros hard cap.
Blockchain and cryptocurrency companies raised $4 billion (£2.87 billion) through ICOs in 2017. They are controversial because they are unregulated and the companies running them do not have to stick to the same strict rules as regulated investment products. The unregulated ICO environment has led to:
- Numerous instances of fraudulent ICOs
- Concern genuine ICOs are inappropriately marketed to inexperienced retail investors.
- Financial regulators including the FCA and SEC taking, often retrospective, action against ICOs
A recent statement released by the SEC reads:
“The NASAA release also reminds investors that when they are offered and sold securities they are entitled to the benefits of state and federal securities laws and that sellers and other market participants must follow these laws. Unfortunately, it is clear that many promoters of ICOs and others participating in the cryptocurrency-related investment markets are not following these laws. The SEC and state securities regulators are pursuing violations”
Prior to the SEC statement and those of other regulators, including the FCA, the Cosmecoin ICO took the decision to use a legal framework that considered its tokens as securities. The company believes their ‘Enhanced ICO’ is the first to do so. This involves the ICO’s White Paper conforming to rules applied to IPO prospectuses and including:
- A clear and fulsome set of risk factors; and
- Disclosure of the full terms of the instrument.
- Approval by an authorized person
The ICO will show strict compliance to Know Your Customer (KYC) and Anti Money Laundering (AML) processes to vet and exclude potential ICO participants from the USA and any other territories that don’t allow ICOs.
Founded in 2012, iConsult is a patient management software for the cosmetic surgery and aesthetic medicine industry. The new Blockchain platform will build a secure patient medical record and immutable review system on top of this.
Cosmecoins will be used by patients to pay for procedures and reward best practice by practitioners. 61,000 clients are registered on iConsult and 200,000 consultations have been performed worldwide.