What is an Initial Coin Offering (ICO)?

An initial coin offering (ICO) is the cryptocurrency industry’s equivalent of an initial public offering (IPO). A company seeking to raise money to create a new coin, app, or service can launch an ICO as a way to raise funds. Interested investors can buy into an initial coin offering to receive a new cryptocurrency token issued by the company.

How much did initial coin offerings raise in 2017?

Initial coin offerings have come out of nowhere in 2017 to become the talk of Silicon Valley and Wall Street. Programmers have raised over $3.2 billion this year by selling their own virtual currencies to investors. That is 3,000 percent more than the amount raised using coin offerings in 2016. What is an initial coin offering?

Are initial coin offerings legal?

Initial coin offerings (ICOs) are legal. However, the ICO is illegal if the project and coin don’t pass the Howey Test used by the U.S. Securities and Exchange Commission (SEC) to determine if an offering is an investment instrument.

What are coin offerings?

The name for coin offerings was clearly inspired by the initial public offerings that companies do to sell stock to investors. But unlike stock offerings, coin offerings are generally designed so that investors don’t get an ownership stake in the start-ups.