Did you ever hear of an ICO? Here's what that means - ICO stands for “initial coin offering.” It's sort of like an "initial public offering," only instead of selling shares of the company; start-ups are using ICOs to sell cryptocoins in exchange for cash. Essentially if a company creates its own digital token and sell it to investors, it's called an ICO. Investors can then either keep the new tokens or trade them for other cryptocoins or currencies. Take storj.io as an example. It's a start-up working on a decentralized cloud-based storage platform. To raise funds for product development storj created its own digital token called Storjcoin. Storj held an ICO, and investors bought 30 million dollars' worth of Storjcoins. Investors then had two options for how to spend that coin. First, they can trade them for more popular digital tokens like Bitcoin or Ethereum. And secondly, they can use them on storj's platform once it's up and running. This is a perfect example of how ICO works, and most ICO has a similar concept. However, due to lack of proper regulation and involvement of government and other regulatory authorities, ICO is a controversial subject. Here in this article, we will discuss the upcoming rules and regulations and expert's thoughts about ICO projects.
And while ICOs are similar to IPOs, there are some fundamental differences between the two. ICO investors don't typically hold a stake in the company raising funds, and unlike IPOs, ICOs are fairly unregulated by the government. But that's starting to change; some national regulators are cracking down on cryptocurrency markets in their countries. On September 4th in 2017, China's central bank made all fundraising through ICOs illegal and on September 29th in the same year, South Korea enacted a similar ban on all new cryptocurrency sales. While regulations in the U.S. haven't been as clear cut, the SEC weighed in on the subject back in July of 2017. They said the capital raising through blockchain requires compliance with federal securities laws. And there's been some crypto skeptics in the U.S. doubting more than just digital fundraising. Well-known investors like Warren Buffett and Howard Marks have expressed their skepticism about the future of cryptocurrencies calling it a mirage and a fad. In September, JP Morgan Chase CEO Jamie Dimon called Bitcoin a "fraud." In his words exactly – "okay you can't have a business where people could invent a currency out of thin air and think that people who are buying it are really smart. It's worse than tulip bulbs… okay, it won't end well… it will eventually blow up; it's a fraud." But some would argue that crypto skeptics like Dimon stand to lose from the rise of bitcoin. The CEO of digital currency exchange shapeshift says that "Jamie Dimon has every interest in the world in disparaging Bitcoin and working with his friends in government to regulate and suffocate it." But comments from industry leaders aren't the only ones the crypto community is concerned about. Celebrities have increasingly been promoting ICOs, which is drawing a lot of unwanted attention. Actor Jamie Foxx recently tweeted about an ICO he was participating in. He said "looking forward to participating in the new cobinhood token! zero fee trading!" And as one early Bitcoin investor puts it, Foxx's tweet is a good indication of "peak ICO." The more attention that gets drawn to be an ICO, the more likely regulatory crackdown may be ahead. While it remains to be seen how regulators will tackle the crypto market going forward, one thing is for sure this billion-dollar market isn't going away anytime soon.
