An initial coin offering (ICO) or initial currency offering (derived form initial public offering) is a means of crowdfunding centered around cryptocurrency,[1][2] which can be a source of capital for startup companies.[3] In an ICO, a quantity of the crowdfunded cryptocurrency is sold to investors in the form of “tokens”, in exchange for legal tender or other cryptocurrencies such as bitcoin or ethereum. These tokens are promoted as future functional units of currency if or when the ICO’s funding goal is met and the project launches.

ICOs provide a means by which startups avoid costs of regulatory compliance and intermediaries, such as venture capitalists, bank and stock exchanges,[4] while increasing risk for investors. ICOs may fall outside existing regulations[5][6] depending on the nature of the project, or are banned altogether in some jurisdictions, such as China and South Korea.

Almost half of ICOs sold in 2017 failed by February 2018.[7]


The first token sale (also known as an ICO) was held by Mastercoin in July 2013. Ethereum raised money with a token sale in 2014, raising 3,700 BTC in its first 12 hours, equal to approximately $2.3 million at the time. An ICO was held by Karmacoin in April 2014 for its Karmashares project.

ICOs and token sales became popular in 2017. There were at least 18 websites tracking ICOs before mid-year.[8] In May, the ICO for a new web browser called Brave generated about $35 million in under 30 seconds.[9] Messaging app developer Kik‘s September 2017 ICO raised nearly $100 million. At the start of October 2017, ICO coin sales worth $2.3 billion had been conducted during the year, more than ten times as much as in all of 2016.[10][11][12][13] As of November 2017, there were around 50 offerings a month,[14] with the highest-grossing ICO as of January 2018, being Filecoin raising $257 million (and $200 million of that within the first hour of their token sale).[15]

Kik had previously issued $50 million in tokens called “Kin” to institutional investors, and sought to raise an additional $125 million from the public. In connection with this ICO, an unidentified third party executed a phishing scam by circulating a fake URL for the offering through social media.[16]

By the end of 2017, ICOs had raised almost 40 times as much capital as they had raised in 2016, although still amounting to less than two percent of the capital raised by IPOs. According to industry newsletter Cointelegraph, companies raised around $6 billion via ICOs in 2017; 37% of that amount was made by only 20 ICOs. Already by February, 2018, an estimated 46% of the 2017 ICOs had failed.[17]

ICOs are sometimes called “token sales“. Amy Wan, a crowdfunding and syndication lawyer, described the coin in an ICO as “a symbol of ownership interest in an enterprise—a digital stock certificate” stating that they are likely subject to regulation as securities in the U.S. under the Howey test.[18][19]

Ethereum is (as of February 2018) the leading blockchain platform for ICOs with more than 80% market share. Tokens are generally based on the Ethereum ERC20 standard. According to Cointelegraph the Ethereum network ICOs have resulted in considerable phishingPonzi schemes, and other scams, accounting for about 10% of ICOs.[20]

On January 30, 2018, Facebook banned advertisements for ICOs as well as for cryptocurrencies and binary options.[21][22] By April 9, 2018, ICO advertising has been banned not only by Facebook, but by TwitterGoogle, and MailChimp.[23]

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