Initial coin offering

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Initial coin offering (ICO) is an unregulated means of crowdfunding via cryptocurrency.[1] 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.”[2]

The first token sale was held by Mastercoin in July 2013. Ethereum raised money with a token sale in 2014.[3] The first ICO was held by Karmacoin in April 2014 for its Karmashares project.[4] ICOs and token sales are now extremely popular. As of May 2017 there were currently around 20 offerings a month,[5] and a new web browser Brave's ICO generated about $35 million in under 30 seconds.[6] There are at least 18 websites that track ICOs.[7]

In 2017 at least 90 Initial Coin Offerings has taken place raising more than a combined $1 billion US Dollars.[8]

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.[9] 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.[10] The SEC action may encourage more mainstream investors to invest in ICOs,[11][2] although ICOs typically prevent U.S. investor participation to remain out of the jurisdiction of the United States government.[12]

See also

References

  1. "ICO Bubble? Startups Are Raising Hundreds of Millions of Dollars Via Initial Coin Offerings". Inc.com. 14 July 2017. Retrieved 2017-07-18. 
  2. 2.0 2.1 "Why Your Initial Coin Offering Is Probably Regulated By Securities Law". Crowdfund Insider. 6 March 2017. Retrieved 27 July 2017. 
  3. Marshall, Andrew (March 7, 2017). "ICO, Explained". CoinTelegraph. Retrieved 2017-03-08. 
  4. "Karmacoin Becomes First Cryptocurrency to Issue Shares". Retrieved 27 July 2017. 
  5. "ICO Alert". www.icoalert.com. Retrieved 2017-05-30. 
  6. "$35 Million in 30 Seconds: Token Sale for Internet Browser Brave Sells Out". CoinDesk. May 31, 2017. Retrieved 2017-06-01. 
  7. "The Ultimate List of ICO Resources: 18 Websites That Track initial Cryptocurrency Offerings". www.startupmanagement.org. Retrieved 2017-05-31. 
  8. "Bankers Ditch Fat Salaries to Chase Digital Currency Riches". Bloomberg.com. 2017-07-25. Retrieved 2017-08-05. 
  9. Higgins, Stan (July 25, 2017). "SEC: US Securities Laws 'May Apply' to Token Sales". CoinDesk. Retrieved 2017-07-25. 
  10. del Castillo, Michael (July 26, 2017). "'Not a Surprise': Blockchain Industry Saw SEC ICO Action Coming". CoinDesk. Retrieved 2017-07-26. 
  11. Mougayar, William (July 26, 2017). "Token Summit Creator: SEC ICO Guidance a 'Breath of Fresh Air'". CoinDesk. Retrieved 2017-07-26. 
  12. Buntinx, JP (July 29, 2017). "Blockchain CEOs Respond to SEC ICO Verdict". THE MERKLE. Retrieved 2017-07-29.