ICO?

Initial coin offering (ICO) is an unregulated means of crowdfunding via use of cryptocurrency. The term is often confused with ‘token sale’ or crowdsale, which refers to a method of selling participation in an economy, giving investors access to the features of a particular project starting at a later date. ICOs, on the other hand, sell a right of ownership or royalties to a project. According to Amy Wan, a partner at Trowbridge Sidoti LLP practicing crowdfunding and syndication law, “The coin in an ICO is a symbol of ownership interest in an enterprise—a digital stock certificate, if you will.” In contrast to initial public offerings (IPOs), where investors gain shares in the ownership of the company, for ICOs the investors buy coins of the company, which can appreciate in value if the business is successful.

The first token sale was held by Mastercoin in July 2013. Ethereum raised money with a token sale in 2014. The first ICO was held by Karmacoin in April 2014 for its Karmashares project. ICOs and token sales are now extremely popular. As of May 2017 there were currently around 20 offerings a month, and a new web browser Brave‘s ICO generated about $35 million in under 30 seconds. There are at least 18 websites that track ICOs. By the end of August 2017, 89 ICO coin sales worth $1.1 billion had been conducted during the year, ten times as much as in all of 2016.



Ethereum is (as of 2017) the leading blockchain platform for ICOs with more than 50% market share. Unfortunately, the Ethereum network ICOs have resulted in much phishing, Ponzi schemes, and other scams, accounting for about 10% of ICOs.

In July 2017 the U.S. Securities and Exchange Commission (SEC) indicated that it could have the authority to apply federal securities law to ICOs. The SEC did not state that all blockchain tokens (ICOs) would necessarily be considered securities, but that determination would be made on a case-by-case basis. The SEC action may encourage more mainstream investors to invest in ICOs, although ICOs typically prevent U.S. investor participation to remain out of the jurisdiction of the United States government.

On September 4, 2017 seven Chinesefinancial regulators officially banned all ICOs within the People’s Republic of China, demanding that the proceeds from all past ICOs be refunded to investors or face being “severely punished according to the law”. This action by Chinese regulators resulted in large sell-offs for most cryptocurrencies