UPDATED | December 13, 2017:
A spokesperson for Indiegogo told ETHNews via email that the platform's ICO-fundraisers will accept payment in the form of bitcoin and Ether. He added that the firm will collect between five and nine percent of the contributions that these events garner, and that there is no regulatory limit governing the amount of money that institutional and accredited investors can put into such a fundraiser.
ORIGINAL | December 12, 2017:
Indiegogo, the popular crowdfunding platform that has raised more money than all but one of its competitors since its 2007 debut, has announced its entry into the world of token offerings, also known as initial coin offerings (ICOs).
The firm's website explains that by using its newly unveiled service, companies interested in holding a token offering can "Access a large range of securities & compliance capabilities by conducting token sales through a registered broker dealer and [Financial Industry Regulatory Authority] registered funding portal."
Indiegogo will also help clients register their tokens as securities when applicable. This represents a significant step toward compliance, in light of SEC chair Jay Clayton's recent admonition that companies peddling tokens which act as securities must abide by securities regulations.
On December 11, the SEC issued a cease-and-desist order against a California-based startup which had violated that very standard.
Indiegogo will also support the sale of utility tokens, though Indiegogo co-founder Slava Rubin believes that most tokens listed on the platform will fit the definition of securities.
The crowdfunding company has also stated it will partner with several other entities, including law firms, to vet clients' whitepapers. These documents often contain obscure language or vague statements, a reality that provides cover for unscrupulous firms seeking to defraud investors by misrepresenting their organizations and the services they intend to provide. Indiegogo will also offer participating vendors "investor accreditation," "money transmission," know-your-customer, and anti-money laundering services.
Individuals based in over 200 countries will be allowed to participate in these fundraising events. Small investors' contributions will be limited according to factors that include income and net worth, while the 2012 JOBS Act requires that the sum of these investments not exceed $1,070,000.
A December 12 article in the New York Times reports that these limits will not apply to "sophisticated investors," while it's unclear what kind of restrictions their institutional counterparts might be subject to.
This development, which could drastically alter the token offering landscape in the United States, raises a number of questions. By press time, Indiegogo had not responded to a media inquiry asking whether it would accept contributions in cryptocurrency.
Assuming that it does not, this insistence on fiat currency investment entails certain disclosure requirements, including the abovementioned contribution cap. Registering these tokens as securities will also place formidable limits on the terms of their sale.
Furthermore, Indiegogo collects five percent of funds raised for projects, although the company has yet to announce whether this rate will apply to token offerings. In light of all these apparent costs and restrictions, it's unclear what impact Indiegogo's move will have on the token offering field.
Will companies conducting these sales flock to the platform, or ignore it? If the firm does manage to capture much of the American market, will other companies take their token offerings offshore to avoid the fundraising limitations inherent in an Indiegogo sale?
Rubin reportedly said that the company hopes to "bring I.C.O.s to the mainstream," and opined that the future of investing lies on the blockchain. The first client to use the company's token offering service will begin fundraising this week.