ico

An initial coin offering (ICO) is a fundraising mechanism used by blockchain and cryptocurrency projects. In an ICO, a company issues new tokens to investors in exchange for established cryptocurrencies such as Bitcoin or Ethereum, or for fiat money. The issued tokens may grant access to a product or service, confer a stake in the project, or serve as utility within a planned ecosystem. The mechanism aims to provide early finance for development without traditional equity markets.

Typical ICOs begin with a white paper outlining the project's technical concept, a roadmap, and token economics, including total supply, distribution, vesting, and use of proceeds. A crowdsale or sale period then takes place, with investors purchasing tokens at a set or variable price. After the sale, tokens may be listed on cryptocurrency exchanges, enabling secondary trading and liquidity.

Regulation and oversight vary by jurisdiction. Some tokens are treated as securities, subject to securities laws, while others are considered commodities or not classified as financial instruments. Regulatory focus includes investor protection, disclosure requirements, and anti-fraud and anti-money-laundering measures. In many countries, unregistered ICOs have faced enforcement actions, bans, or other restrictions, and some projects have been penalized for misrepresentation.

The ICO market surged in 2017 and 2018, but a substantial portion of projects failed or proved fraudulent. Notable examples include the Ethereum crowd sale of 2014, which raised about $18 million, and later large fundraises such as EOS and Filecoin. In response to regulation and quality concerns, some markets have shifted toward more regulated models such as security token offerings (STOs).