Initial Coin Offering

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Initial Coin Offering  ( ICO ) or Initial Public Coin Offering (IPCO) (or Token Sale or Token Generating Event (TGE)) is an unregulated method of crowd investing used by companies whose business model is based on cryptocurrencies . With this method of initial capital raising, cryptocurrency firms avoid the strictly regulated process of raising capital prescribed by venture capitalists , banks or stock exchanges . In an initial coin offering, a portion of a newly issued cryptocurrency is given to investorssells in exchange for government-issued currencies or other cryptocurrencies, but mostly Ethereum .

General

It is a very similar concept to an IPO ( Initial Public Offering ). The term is often used in connection with " token sale" and represents a form of crowdfunding . Both terms refer to a financing option where investors get access to a future feature of the financed project; but the project will only start in the future. The investor, on the other hand, acquires a share of ownership or revenue in the financed project via ICOs. According to Amy Wan, partner at Trowbridge Sidoti LLP in the areas of crowdfunding and consortium law, "the 'coin' in an ICO is the symbol of interest in acquiring ownership of an organization - a digital share, so to speak". However, more than a monetary advantage can be acquired via ICO, as the example of Storjcoin shows: Via Storjcoins, the buyer acquires the right to use storage space offered by storj.io.

The first sale of so-called tokens (comparable to tokens are coupons , the function of which can vary depending on the ICO) took place by Mastercoin in July 2013. Ethereum raised money through the sale of tokens in 2014. The first ICO was that of Karmacoin in April 2014 for its Karmashares project. In 2017, NEOs were issued via ICO. The issue price was 3 cents, in the meantime NEO was traded for $ 180, which makes it the most successful ICO of all time. ICOs and token sales are common in the US . As of the end of July 2017, over 60 ICO offers were listed. An ICO of the new Brave web browser raised around $ 35 million in less than 30 seconds. There are currently more than 30 websites that document ICOs.

In July 2017, the US Securities and Exchange Commission (SEC) indicated that it could apply US securities legislation to ICOs. The BaFin published guidelines on ICOs. The SEC did not elaborate on whether all to block chains based tokens and crypto currencies Securities are to be regulated in the sense that the decision would be taken case by case. The SEC statement could, however, create more trust in ICOs among the general public and thus a greater willingness to invest in these financial instruments. In November 2017, BaFin published a consumer warning on the ICOs. In it, the financial supervisory authority draws attention to significant risks for consumers, up to and including a total loss of the investment.

The regulatory classification of the issue of tokens in Germany is still subject to legal uncertainty. BaFin points out that the regulatory categorization cannot simply be based on the common token classes (equity, currency and utility tokens). A case-by-case check must be carried out to identify the specific legal character of the tokens issued. The background is probably also the knowledge that in ICO practice the tokens issued are often of a hybrid nature.

The first known ICO in Germany is the sale of Wys tokens by the Berlin Wysker UG (limited liability).

In the Principality of Liechtenstein, the first blockchain law on the regulation of ICOs and the token economy was presented on June 21, 2019.

literature

  • Christopher Hahn / Adrian Wons: Initial Coin Offering (ICO) - corporate financing based on blockchain technology , Springer Gabler: Wiesbaden 2018, ISBN 978-3-658-21787-7 .
  • Peter Zickgraf: Initial Coin Offerings - A case for capital market law? In: The corporation . 2018, p. 293 ff .

Individual evidence

  1. ↑ Marco Liesenjohann: Token Generating Events as a new pillar of growth financing . In: Bitkom. December 18, 2017, accessed on February 20, 2020 (statement).
  2. ↑ Initial Coin Offerings (ICOs): Risks, Regulation, and Accountability. Regulation of Financial Institutions Journal : Social Science Research Network (SSRN). accessed on December 6, 2017.
  3. ↑ Osi Momoh: Initial Coin Offering (ICO) . In: Investopedia . December 20, 2016 ( investopedia.com [accessed July 27, 2017]).
  4. ↑ a b Patrick Schueffel: The Concise Fintech Compendium . Ed .: Institute for Finance. Friborg University of Economics, Friborg, Switzerland September 2017 ( schueffel.biz ).
  5. ↑ a b Why Your Initial Coin Offering Is Probably Regulated By Securities Law. March 6, 2017. Retrieved July 27, 2017 .
  6. ↑ a b ICO explains: This is behind the financing model of the blockchain scene . In: t3n News . ( t3n.de [accessed on July 28, 2017]).
  7. ↑ Storj - Decentralized Cloud Storage. Retrieved July 28, 2017 (American English).
  8. ↑ Christoph Bergmann: ICO: The egg-laying woolly milk pig of project financing - or is it just hype and rip-offs? In: BitcoinBlog.de - the blog for Bitcoin and other virtual currencies. September 28, 2016. Retrieved July 27, 2017 .
  9. ^ ICO, Explained . In: CoinTelegraph . ( cointelegraph.com [accessed July 27, 2017]).
  10. ↑ Karmacoin Becomes First Cryptocurrency to Issue Shares . In: Cointelegraph . ( cointelegraph.com [accessed July 27, 2017]).
  11. ↑ https://www.investopedia.com/tech/most-successful-icos-all-time/
  12. ↑ a b ICO Alert - The trusted ICO Discovery Platform of active and upcoming Initial Coin Offerings. Retrieved July 28, 2017 .
  13. ↑ $ 35 Million in 30 Seconds: Token Sale for Internet Browser Brave Sells Out - CoinDesk . In: CoinDesk . May 31, 2017 ( coindesk.com [accessed July 27, 2017]).
  14. ↑ SEC: US ​​Securities Laws 'May Apply' to Token Sales - CoinDesk . In: CoinDesk . July 25, 2017 ( coindesk.com [accessed July 27, 2017]).
  15. ↑ Regulatory classification of so-called Initial Coin Offerings (ICOs) underlying tokens or cryptocurrencies as financial instruments in the field of securities supervision. (PDF) Retrieved February 22, 2018 .
  16. ↑ 'Not a Surprise': Blockchain Industry Saw SEC ICO Action Coming - CoinDesk . In: CoinDesk . July 26, 2017 ( coindesk.com [accessed July 27, 2017]).
  17. ↑ Token Summit Creator: SEC ICO Guidance a 'Breath of Fresh Air' - CoinDesk . In: CoinDesk . July 26, 2017 ( coindesk.com [accessed July 27, 2017]).
  18. ↑ Federal Financial Supervisory Authority: Consumer Warning: Risks of Initial Coin Offerings (ICOs). November 9, 2017. Retrieved November 28, 2017 .
  19. ↑ BaFin: Initial Coin Offerings, notice on classification as a financial instrument. Retrieved August 9, 2018 .
  20. ↑ Kim Rixecker: First German ICO: Wysker brings shopping to the blockchain. In: t3n. Retrieved October 5, 2017 .
  21. ^ Blockchain law in the Principality of Liechtenstein. Retrieved July 3, 2019 .