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Initial Coin Offerings as Securities Offerings: An Economic Analysis of the Existing Exemptions from Registration

Simona Mola, PhD, An Wang, PhD, and Michael Liftik
June 2018
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The number of initial coin offerings (ICOs) has exponentially increased since early 2017. In 2018, there were a total of 334 offerings, with cumulative proceeds of $13.9 billion as of the end of May. ICOs certainly have appeal as a new fund-raising vehicle for startups and projects. However, given the legal uncertainty and the increasing scrutiny by regulators, they may not necessarily be a simple one. The authors examine the currently available mechanisms to raise capital for an ICO that would comply with securities laws. Based on the economic characteristics of recent ICOs, they analyze whether such mechanisms are suitable to facilitate capital formation for ICO issuers.