What is an ICO?
Initial Coin Offering (ICO) – capital mobilization mechanism, in which the project owners will offer a secret cryptocurrency (Crytopcurrency) in the form of regular tokens in exchange for Bitcoins or Ethereum. It is similar to the IPO (shares first public offering). ICOs are a relatively new phenomenon, but have quickly become a hot topic in discussions of the blockchain community.
Many projects consider ICOs to be unregulated stocks allowing the project owner to raise an unreasonably large amount of capital, while others consider it an innovation in the model of joint venture funding system. The U.S. Securities and Exchange Commission (SEC) recently made a decision regarding the state of the issuance of money by notorious companies like DAO ICOs, forcing project owners and investors to reconsider. Sponsored models of ICOs. The most important criterion is passing the Howey Test. If passed, it must continue to be confidential and subject to some restrictions imposed by the SEC.
ICOs are easy to organize thanks to technologies like the ERC20 Standards that help summarize the many development processes needed to create new digital currencies. Most ICOs work by having investors deposit money (usually Bitcoin or ether) into a smart contract with the storage of funds and distribution of the equivalent of the following new token.
There are almost no obstacles to prevent you from participating in ICOs, because the digital currency is in fact not highly secure. Receiving money from an investment of investors, the funds invested in ICOs can be huge. A basic problem with ICOs is the fact that most of them invest pre-product (pre-product). This makes investing extremely risky, risking quite high. But there are also objections that ICOs are an especially useful (even necessary) way of investing in encouraging protocol development.
So is ICO legal?
The short answer is possible. Legally, ICOs do not work very well because they are a new form and are not strictly regulated. However, recent SEC decisions have clarified how the ICO works. A token is viewed as a currency that can give users access to a specific protocol or network – thus its financial security is quite low. On the other hand, if the token is considered to be a physical currency, it means that it is merely a valuable currency – its security will increase significantly.
While a lot of individuals trade tokens to gain access to the platform in the future, most transactions are to raise funds. Therefore, projects that have not yet launched products can still be priced.
The SEC decision clarifies the role and security of tokens. However, it is clear that there are still many challenges regarding the limits and legality of ICOs. However, since that has not happened yet, it is certain that businesses will continue to benefit from this new hard phenomenon.