Initial Coin Offerings (ICOs)

ICO is a method for crowdfunding. Crowdfunding is a method of raising money where the funds are acquired usually in smaller amounts from a large number of investors to fund a new business. This is done usually via the internet. ICOs has been the method of choice for crowdfunding startups offering new cryptocurrencies and tokens.

ICOs are comparable to the IPO. Just as an IPO is launched to raise capital by a firm, similarly, ICOs are launched to generate money for a startup project. The critical difference is that IPOs are regulated and fall under the umbrella of the securities market (shares in the company), whereas ICOs are unregulated and do not fall under any strict category of already established market structures.

However, there are a few suggestions stating that ICOs should be treated as securities in light of some scam ICO schemes that were launched in the past, as well as growing concerns around investor protection. The Securities...