ICOs have become one of the most popular ways to raise funds for crypto and web3 projects. However, in Ukraine, the sale of tokens is still in a zone of legal uncertainty: the law has been passed but has not yet entered into force.
What is an ICO?
In the field of digital assets, teams are constantly looking for effective ways to raise funds and build a community around a product. An ICO (Initial Coin Offering) is one of the first mechanisms for publicly selling tokens to investors. In terms of logic, it is partly similar to an IPO, but instead of corporate rights, investors are offered digital tokens that can be sold for cryptocurrency or fiat money. ICOs remain attractive to startups, fintech companies, web3 projects, and product businesses that see tokens as a way to simultaneously raise capital, test demand, and scale their ecosystem.
The typical ICO model involves a minimum number of intermediaries: the team independently creates the token, prepares a white paper describing the concept and conditions of participation, publishes information on its own website, and directly accepts contributions from participants. It is this autonomy and technological simplicity that led to the popularity of ICOs in the early stages of the cryptocurrency market’s development. At the same time, the lack of a clearly defined regulatory framework and formalised control procedures created significant legal and compliance risks for founders and related parties.
The Law ‘On Virtual Assets’: what it really changes for ICOs
As of today, Ukraine has virtually no comprehensive special regulation of public token offerings (ICO, IEO, IDO, etc.). The Law of Ukraine ‘On Virtual Assets’ has been formally adopted but is not yet in force, as its entry into force is directly linked to amendments to the Tax Code regarding the taxation of transactions with virtual assets. Accordingly, the market is in a state of regulatory uncertainty: participants are guided by the general norms of civil, commercial, financial and advertising legislation, as well as by the approaches of foreign jurisdictions.
At the same time, this Law outlines for the first time a conceptual model for regulating public offerings of virtual assets in Ukraine. It introduces the concept of a public offering of virtual assets and establishes basic requirements for disclosure of information: details of the offeror, a description of the token and the rights associated with it, the terms of acquisition and disposal, a list of risks, and the procedure for communicating this information to potential acquirers.
In this logic, the white paper ceases to be purely marketing material and is transformed into a disclosure document, the content of which can potentially be assessed by the regulator, banks or courts in terms of completeness, reliability and absence of misleading information.
This approach is developed in draft law No. 10225-d of 24 April 2025 ‘On Amendments to the Tax Code of Ukraine and Certain Other Legislative Acts of Ukraine Regarding the Regulation of Virtual Asset Transactions in Ukraine,’ which was adopted in the first reading. The adoption of this draft law is a key prerequisite for the entry into force of the Law of Ukraine ‘On Virtual Assets’. The document is based on the European MiCA model and introduces the concept of a white paper as a mandatory document for public offering of tokens. It is expected that such a white paper should be reliable, not misleading, contain a detailed description of the issuer, token characteristics, technological model, risks, and directly prohibit statements regarding guaranteed or predicted growth in the value of the asset.
A special authorisation and supervision regime is proposed for certain categories of tokens, in particular asset-backed tokens and electronic money tokens. It covers the definition of eligible issuers, requirements for management structure, internal policies and control procedures, as well as interaction with the regulator (in particular, regarding financial stability risks).
When it comes to a conventional utility token, the key legal focus shifts to the quality of information disclosure and the structure of the offer itself. The focus is on the content of the white paper, the accuracy of marketing materials, the wording of the terms of the offer, the absence of investment promises or guarantees of profitability, as well as the implementation of KYC/AML procedures where applicable. Particular attention should be paid to jurisdictional restrictions (in particular, regarding residents of countries with strict financial regulation) and the proper legal positioning of the token in order to minimise the risk of its reclassification as a financial instrument.
However, if the token is linked to assets or monetary obligations, the ‘simple ICO’ model ceases to be relevant. In this case, we are talking about a regime close to financial regulation: the need for authorisation, increased requirements for the issuer, risk management systems, internal policies and interaction with the regulator. This is a different regulatory logic and a significantly higher entry threshold.
At the same time, it is important to consider another aspect that is often underestimated: even if the issuer itself formally meets the requirements, the issue of infrastructure remains critical: bank accounts, payment providers, exchanges, custodial services. Such entities usually already operate in a mode of authorisation and strict compliance, and therefore will require confirmation of the sources of funds, legal conclusions regarding the nature of the token, a transparent corporate structure, etc.
Practical implementation of ICOs in Ukraine
Despite the absence of specific regulation of ICOs, Ukrainian projects are trying to build token sales through structures that are understandable to investors and counterparties: corporate models, foreign structures, or debt instruments.
1) Corporate model: JSC and operating LLC
A common approach is to formalise fundraising through corporate infrastructure and use tokens as a digital mechanism for recording participation or future rights. In such models, a token may be linked to a product or service, as well as to the possibility of conversion into corporate rights under certain conditions.
This model is chosen when the most classic form of fundraising is required and the logic of participation is clear to the investor, as well as when the project is focused on corporate instruments or further rounds of financing.
The advantage is greater clarity for some counterparties and investors. The disadvantage is the complexity of administration and compliance burden during scaling.
For banks and providers, the key factors will be a transparent corporate structure, documentary logic of fundraising, confirmation of sources of funds, and marketing consistency with the token model. If promises of profitability or profit-sharing appear in communications, the compliance barrier usually increases.
2) Structure through Wyoming DAO LLC (USA)
An alternative option is to use a DAO in the form of an LLC in Wyoming as a holding or issuing entity, while the Ukrainian LLC remains the operating company. This structure can be convenient for organising participant accounting and community interaction, as well as for simplifying mass changes of token owners.
This model is appropriate when a project builds a community-based model, involves a large number of participants, and wants to reduce the administrative costs of accounting for investor rights.
At the same time, this approach is highly sensitive to cross-border risks and foreign regulatory requirements, particularly regarding the status of tokens and the terms of their offering.
3) ICO as a debt structure: tokenisation of bonds
Another way is to raise funds through bonds, where the token reflects the issuer’s debt obligation, including the right to return the nominal value and/or receive income under certain conditions. Funds are raised through a regulated capital market mechanism, and the token is used as a digital form of accounting and circulation of claim rights.
This model is chosen when the project requires a debt model that is as formalised and understandable to the investor as possible, and when the predictable logic of payments and terms is important. The disadvantage is higher formalisation, procedurality, and increased requirements for documentation and disclosure of information.
In each of the models, the key factors are the right structure, legal positioning and compliance: what exactly is being offered, to whom, on what terms and how it looks for banks, payment providers and partners. That is why legal support and compliance preparation are often crucial to ensuring that fundraising is scalable and safe for the team.
Conclusion
ICOs in Ukraine are currently caught between technological freedom and regulatory uncertainty. There is no formal ban on the issuance of tokens, but the lack of clear regulation creates increased legal and compliance risks for companies, banks, and investors.
Future regulation will be shaped by the Law on Virtual Assets and related tax changes set out in draft law No. 10225-d, on which the entry into force of the Law depends. They gradually introduce rules: mandatory disclosure of information in a white paper, control of certain categories of tokens, requirements for issuers and compliance procedures.
In practice, there are various options for implementing an ICO. But to be successful, it is important to correctly determine the type of token, build a transparent structure, prepare detailed documentation, and take into account the requirements of banks and regulators.
