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Expert Opinion: Mark Beeston from Iluminate Financial on Investment

The UK hasn’t got round to regulating ICOs properly – does this put London’s status as a leading fintech hub at risk? 

Absolutely not. Global regulation of ICOs is evolving relatively rapidly by regulatory standards. It’s important to recognise that the ICO market as a funding option exploded onto the scene quite recently, and well considered regulation takes time. We are seeing emerging hubs away from the major capital market hubs (NYC & London), including Zug ‘crypto valley’ in Switzerland. However, for ICOs to be adopted as a mainstream source of raising capital from the capital markets, regulation in these markets will need to be addressed.

Does the private equity world need to change itself in order to compete with ICOstyle funding?

I don’t believe so. Firsty, a number of companies where the ICO actually represents a meaningful and useful utility token were actually already funded by the VC or PE industry. Secondly, the investment industry brings many other tools and values to the table besides the investment capital itself: governance, coaching, networks, talent, introductions to future funding sources, guidance on eventual exit. ICOs offer little if any of these functions.

ICOs will become one of the many funding mechanisms (equity crowdfunding, kickstarter, industry consortium, strategic investors, accelerators, etc.) that early stage companies and VCs use to grow companies, therefore it is likely that you will see this mechanism included in VC mandates going forward, as it becomes regulated.

Do you see cryptocurrencies becoming legitimate payment methods? If so, in what time frame?

Some limited number of cryptocurrencies are already legitimate payment methods, so that moment has already arrived. However, they remain the exception rather than the rule across the thousands of new coins we have seen come to market.

Read more about which funding model is best for a growing business, ICO, VC, or PE.

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