ICO. The INITIAL COIN OFFERINGS issue...
can be considered as an alternative form of crowdfunding that has emerged outside of the traditional financial system. This model has helped a lot of successful projects and companies get the funding required to start their business. In 2013, over
The momentum behind crypto remains powerful. Bitcoin is still worth seven times what it was just a year ago. In the first quarter of this year, according to CoinDesk, a news service, $6.3bn was raised through initial coin offerings (ICOs), a form of funding in which firms issue digital tokens, more than in all of 2017.
Up till July of 2017, the total dollar amount raised in Initial Coin Offerings (ICO) was a staggering USD$1,252,676,352. That’s over a billion dollars raised within a span of 7 months. With a total market capitalization of over USD$100 billion, the cryptocurrency market has attracted the attention of many, from traders wanting to make a quick buck to experts that are concerned with its lack of transparency.
Today there is no consensus on what a crypto-asset is.
Even within countries, authorities disagree on how to classify them. Are they a commodity, a currency, a security or their own, peculiar asset class?.
There are currently more than 1,000 coins available on different exchanges, with hundreds more in the process of being listed on exchanges. It’s important to understand that not all cryptocurrencies have their own blockchain, as most are issued on top of another Blockchain.
A good example is ERC-20 tokens, which represents a standard of interoperability within the Ethereum Blockchain. Ethereum is a general purpose blockchain where different tokens can be issued on top of its blockchain without creating their own infrastructure.
In America the Securities and Exchange Commission has hinted that it will treat most tokens issued through ICOs as securities. FINMA, which in February said it would base treatment on their actual function—ie, whether they are used for payments; as a utility token that gives its holder access to a specific service; or as an investment. This also means a token’s classification can change over time.
Such decisions point towards how to deal with day-to-day crypto-risks, from money-laundering to consumer protection. Regulators should demand that these exchanges apply similar standards to those of banks. These include requiring identification from all customers and keeping a record of unusual transactions.