06 Mar The ICO Whitepaper is Dead
The ICO whitepaper as we know it is dead. Here are a few reasons why:
Marketing Over Technology
Whitepapers are becoming less technical and more streamlined. As the technology becomes more ubiquitous and tokenized under more popular platforms (like Ethereum), you are likely to see less technical inputs and more arguments for “why our token” vs. here’s a completely novel concept that requires massive technical inputs, including ties to IOT, etc.
While the masses may again be locked out of some of the hottest initial coin offerings (due to accredited investor requirements), it is likely we will begin to see more and more interest from a broader swath of investors around the world as such offerings become more popular. The masses are less likely to be atune with some of the more technical aspects of the traditional whitepaper model. Flashy colors, a nice marketing slick with broad overtones will become more the norm over time. We are seeing it already.
Traditional Investment Banking Creeping In
As regulation creeps its way in, you will see more investment bankers and broker-dealers stack hands with coin and token issuers in offering new cryptocurrencies to accredited investors. As this takes place, the investment bankers are much less likely to refer to any offering document as a whitepaper. You will see more “offering memorandums” and “investor presentations.” As token offerings begin to be treated as securities, the offering documents presenting a case for “why our token” or “why our deal” will look more like traditional investment banking pitches and offerings.
This is even more true as we are likely to see more initial coin and token offerings include hybrids of both equity and the token itself. This will lend itself to more whitepapers combined with traditional exemption offering documents (including Reg D, Reg A+ and Reg CF) and perhaps a SAFT or SAFE. This shift will further take issuers away from the whitepaper model for ICOs.
Thanks to some of the regulation that was bound to impact coin and token offerings here in the United States, the market has begun a bit of a cool, but that is a good thing. It is likely to take away the irrational exuberance and put more of an onus on investors to take a long term view of these types of offerings, which will include typical investor holding periods per Rule 144. As token offerings and the technology that backs them matures, we are more likely to see the offering documents include more traditional language and exclude some of the more technical components of the whitepapers of 2016 through 2018. Long live the ICO, but some of the traditional processes surrounding its success are changing and will continue to do so.