Coining it In: Icos as the New Fundraising Paradigm?

• Jurisdiction: United States,Federal,European Union
• Publication year: 2018
• Citation: Vol. 1 No. 1

Andrew C. Moyle, Wenchi Hu, Simon Hawkins, and Stuart Davis^*

To date, an estimated 100 initial coin offerings have raised over $1.2 billion. The capital raised from the offer will fund the development of a digital platform, software, or any other project, including robotic and artificial intelligence technologies. The authors of this article explain initial coin offerings, the regulatory climate, and considerations for issuers.

Initial coin offerings ("ICOs") involve issuers offering virtual coins or tokens that are created and disseminated using distributed ledger or blockchain technology. The capital raised from the offer will fund the development of a digital platform, software, or any other project. Holders of virtual coins or tokens may have additional rights over and above those of a cryptocurrency, such as rights to access the platform, use the software, or otherwise participate in the project. In some cases, holders may also have rights to a return on their investment, or rights to participate in a share of the returns provided by the project or by the company backing the project. Post-issuance, holders may resell virtual coins or tokens in a secondary market on virtual currency exchanges or other platforms. ICOs are typically announced on cryptocurrency forums and websites through a white paper describing the project and key terms of the ICO, subscription details, timeline, etc.

To date, an estimated 100 ICOs have raised over $1.2 billion, with a plethora of prospective ICOs frequently reported in industry publications. In June and July this year, ICO funding surpassed that of angel and early-stage...