ICO – Initial Coin Offerings

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Contents

Initial Coin Offering (ICO)

What Is an Initial Coin Offering (ICO)?

An Initial Coin Offering (ICO) is the cryptocurrency industry’s equivalent to an Initial Public Offering (IPO). ICOs act as a way to raise funds, where a company looking to raise money to create a new coin, app, or service launches an ICO. Interested investors can buy into the offering and receive a new cryptocurrency token issued by the company. This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project.

Key Takeaways

  • Initial Coin Offerings (ICOs) are a popular fundraising method used primarily by startups wishing to offer products and services, usually related to the cryptocurrency and blockchain space.
  • ICOs are similar to stocks, but they sometimes have utility for a software service or product offered.
  • Some ICOs have yielded massive returns for investors. Numerous others have turned out to be fraud or have failed or performed poorly.
  • To participate in an ICO, you will usually need to purchase a digital currency first and have a basic understanding of how to use cryptocurrency wallets and exchanges.
  • ICOs are, for the most part, completely unregulated, so investors must exercise a high degree of caution and diligence when researching and investing in ICOs.

How an Initial Coin Offering (ICO) Works

When a cryptocurrency startup wants to raise money through ICO, it usually creates a whitepaper which outlines what the project is about, the need the project will fulfill upon completion, how much money is needed, how many of the virtual tokens the founders will keep, what type of money will be accepted, and how long the ICO campaign will run for.

During the ICO campaign, enthusiasts and supporters of the project buy some of the project’s tokens with fiat or digital currency. These coins are referred to as tokens and are similar to shares of a company sold to investors in an IPO. If the money raised does not meet the minimum funds required by the firm, the money may be returned to the backers and the ICO is deemed unsuccessful. If the funding requirements are met within the specified timeframe, the money raised is used to pursue the goals of the project.

Although ICOs aren’t regulated, the Securities and Exchange Commission (SEC) can intervene. For example, the maker of Telegram raised $1.7 billion in an ICO last year, but the SEC is now attempting to halt the project due to alleged illegal activity on the part of the development team.

Special Considerations

Investors looking to buy into ICOs should first familiarize themselves with the cryptocurrency space more broadly. In the case of most ICOs, investors must purchase tokens with pre-existing cryptocurrencies. This means that an ICO investor will need to already have a cryptocurrency wallet set up for a currency like Bitcoin or Ethereum, as well as having a wallet capable of holding whichever token or currency they want to purchase.

How does one go about finding ICOs in which to participate? There is no recipe for staying abreast of the latest ICOs. The best thing that an interested investor can do is read up about new projects online. ICOs generate a substantial amount of hype, and there are numerous places online in which investors gather to discuss new opportunities. There are dedicated sites that aggregate ICOs, allowing investors to discover new ICOs and compare different offerings against one another.

Initial Coin Offering (ICO) vs. Initial Public Offering (IPO)

For traditional companies, there are a few ways of going about raising the funds necessary for development and expansion. A company can start small and grow as its profits allow, remaining beholden only to company owners but having to wait for funds to build up. Alternately, companies can look to outside investors for early support, providing them a quick influx of cash but typically coming with the trade-off of giving away a portion of ownership stake. Another method is to go public, earning funds from individual investors by selling shares through an IPO.

While IPOs deal purely with investors, ICOs may deal with supporters that are keen to invest in a new project much like a crowdfunding event. But ICOs differ from crowdfunding in that the backers of ICOs are motivated by a prospective return on their investments, while the funds raised in crowdfunding campaigns are basically donations. For these reasons, ICOs are referred to as “crowdsales.”

ICOs also retain at least two important structural differences from IPOs. First, ICOs are largely unregulated, meaning that government organizations like the Securities and Exchange Commission (SEC) do not oversee them. Secondly, due to their decentralization and lack of regulation, ICOs are much freer in terms of structure than IPOs.

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ICOs can be structured in a variety of ways. In some cases, a company sets a specific goal or limit for its funding, which means that each token sold in the ICO has a pre-set price and that the total token supply is static. In other cases, there is a static supply of ICO tokens but a dynamic funding goal, which means that the distribution of tokens to investors will be dependent upon the funds received (i.e. the more total funds received in the ICO, the higher the overall token price).

Still, others have a dynamic token supply which is determined according to the amount of funding received. In these cases, the price of a token is static, but there is no limit to the number of total tokens, save for parameters like ICO length. These different types of ICOs are illustrated below.

Advantages and Disadvantages of Initial Coin Offerings (ICO)

Advantages

In an IPO, an investor receives shares of stock in a company in exchange for her investment. In the case of an ICO, there are no shares per se. Instead, companies raising funds via ICO provide a blockchain equivalent to a share—a cryptocurrency token. In most cases, investors pay in a popular existing token like bitcoin or ether and receive a commensurate number of new tokens in exchange.

It’s worth noting just how easy it is for a company launching an ICO to create these tokens. There are online services that allow for the generation of cryptocurrency tokens in a matter of seconds. Investors should keep this in mind when considering the differences between shares and tokens—a token does not have any intrinsic value or legal guarantees. ICO managers generate tokens according to the terms of the ICO, receive them, and then distribute them according to their plan by transferring them to individual investors.

Early investors in an ICO operation are usually motivated to buy tokens in the hope that the plan will succeed after it launches. If this actually happens, the value of the tokens they purchased during the ICO will climb above the price set during the ICO itself, and they will achieve overall gains. This is the primary benefit of an ICO: the potential for very high returns.

ICOs have indeed made many investors into millionaires. Take a look at the figures for 2020: That year, there were 435 successful ICOs, each raising an average of $12.7 million. the total amount raised for 2020 was $5.6 billion, with the 10 largest projects raising 25% of this total. Furthermore, tokens purchased in ICOs returned an average of 12.8x on the initial investment in dollar terms.

Disadvantages

As ICOs have come to the forefront in the cryptocurrency and blockchain industries, they’ve also brought along challenges, risks, and unforeseen opportunities. Many investors buy into ICOs in the hopes of quick and powerful returns on their investments. The most successful ICOs over the past several years is the source of this hope, as they have indeed produced tremendous returns. This investor enthusiasm can also lead people astray, however.

Because they are largely unregulated, ICOs are rife with fraud and scam artists looking to prey on overzealous and poorly informed investors. And since they are not regulated by financial authorities like the SEC, funds that are lost due to fraud or incompetence may never be recovered.

The meteoric rise of ICOs during 2020 drew backlashes from a series of governmental and non-governmental entities in early Sept. 2020. The People’s Bank of China officially banned ICOs, slamming them as counterproductive to economic and financial stability.

The Chinese central bank prohibited using tokens as currency and banned banks from offering services related to ICOs. As a result, both Bitcoin and Ethereum prices tumbled, in what many regarded as a sign of more cryptocurrency regulation to come. The ban also penalized already completed offerings. In early 2020, Facebook, Twitter, and Google all banned ICO advertisements.

There is no guarantee that an investor won’t be on the losing end of a scam when investing in ICOs. To help avoid ICO scams, investors should:

  1. Make sure that project developers can clearly define what their goals are. Successful ICOs typically have straightforward, understandable whitepapers with clear, concise goals.
  2. Know the developers. Investors should strive for 100% transparency from a company launching an ICO.
  3. Look for legal terms and conditions set for the ICO. Because outside regulators generally do not oversee this space, it is up to an investor to ensure any ICO is legitimate.
  4. Make sure that ICO funds are being stored in an escrow wallet. This is a wallet that requires multiple keys in order to be accessed. This is useful protection against scams, particularly when a neutral third party is a holder of one of the keys.

Example of an Initial Coin Offering (ICO)

As the ICO space gets bigger and bigger, so too do the sums raised by the largest projects. When evaluating ICOs, one can consider both the amount of money raised in the ICO as well as the return on investment. Sometimes ICOs with a remarkable return on investment are not the projects that raise the most money and vice versa. Ethereum’s ICO in 2020 was an early pioneer, raising $18 million over a period of 42 days. Ethereum has proven to be crucial for the ICO space in general, thanks to its innovations with regard to decentralized apps (dApps). When it debuted, ether was priced at around $0.30, and as of Nov. 4, 2020, it trades at $185.

In 2020, a two-phase ICO began for a company calledAntshares, which later rebranded as NEO. The first phase of the ICO ended in Oct. 2020, and the second continued until Sept. 2020. During this time, NEO earned about $4.5 million. While it is not one of the largest ICOs in terms of money raised, it has provided exceptional ROI for many early investors. The price of NEO at the time of the ICO was about $0.03, and at its peak, it traded at roughly $10.74.

More recently, ICOs have generated significantly larger amounts in terms of total funds raised. The largest ICO by this metric is Filecoin, a decentralized cloud storage project. During a one-month ICO ending in Sept. 2020, Filecoin managed to raise about $257 million. More recently, the company behind the EOS platform shattered Filecoin’s record by raising a whopping $4 billion.

ICO List of Best New Initial Coin Offerings

Top ICO List shows best new ICO coins that are active, upcoming or in discounted pre ICO. Best choice for quality ICOs. Browse the ICO listings to discover new initial coin offerings.
Top ICO List

Encores Token

ICO Description Start End
The Encores Browser makes it possible for the first time in history to advertise on every single website in the world! You can receive En[. ] October 1, 2020 May 31, 2020

ELAD Network

ELAD Network is a Real-estate orientated Block-chain with a difference September 10, 2020 November 10, 2020

Robinhood Casino

Robinhood is a one of a kind casino service provider that eliminates the house, allowing players to play against each other. September 14, 2020 February 2, 2020

Vernon Token

We use token investments to develop real estate residential projects in mid Europe and invest into portfolio of biggest US companies from[. ] September 11, 2020 January 16, 2020

Flas Exchange

Flas Exchange is a comprehensive trading platform that offers various types of digital assets. As a secure, reliable and advanced digital[. ] November 8, 2020 February 9, 2020

ARC-IRIS

IT’S OUR MISSION TO PROTECT NATURE WITH NEW TECHNOLOGIES Using wind, solar and hydrogen technology to operate a crypto-mining farm eco-f[. ] December 1, 2020 April 30, 2020

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What is Top ICO List?

Since 2020 Top ICO List has offered cryptocurrency investors all the newest, hottest and best Initial Coin Offering (ICOs), also known as ICO Coin. There are lots ICO listing websites available in the internet but most of them are not regularly updated. Top ICO List collects all the quality Active, Pre & Upcoming ICO’s. Tokens that get listed pay a small listing fee to pay for servers and other costs. We are hiring remote workers via WorkFromHomeJobs for programming and social media marketing positions.

Our ICO listings calendar is informative.

Gold and silver ICO listings are sponsored placements offered to selected high quality ICOs, but just because an ICO has a Gold or a Silver status doesn’t mean it’s necessarily better than the other ICO coins in our ico listing.

Do you list STOs (security token offerings), TGEs (token generation events) etc?

Yes, we list STOs (security token offerings), TGEs (token generation events), ITOs (initial token offerings), DAICOs (decentralised autonomous initial coin offering) and everything else that’s essentially a token offering of any sort. From an investors perspective, we’re quite excited for the rise of STOs (security token offerings), keep a close eye on our list of security tokens.

How to find the best ICOs and blockchain projects?

Initial Coin Offerings can be very beneficial deals for the early contributors but they come with huge risks. Even if the best return of investments from certain ICO projects have been nearly a million percent, over 90% of the ICOs launched so far have not been able to keep up with their milestones or make profit for the early contributors. Since the organizations and the whole business logic around digital tokens are so new, it is sometimes difficult to identify the reliable and skilled early stage blockchain teams and projects.

We also provide you with a list of some of the most reliable blockchain partners. If the ICO you are looking to invest in is working with some of our partners it is definitely a sign of professional industry collaboration.

How to invest in ICOs?

Most of the ICOs are built on the Ethereum platform using the ERC20 protocol. There are also other platforms such as NEO, Qtum, Lisk, Komodo, Strat, ICX and many others that some ICOs use as their transaction network. ICO projects have their contribution dashboards that people looking to participate in the projects can utilize to submit and receive relevant information. Many times contributors need to sign up for the ICO whitelist to reserve their share of the generated token pool.

Know Your Customer (KYC) documentation is usually also required from the contributors. Each person submitting digital assets to the project need to confirm their identity to the project by sending over scans or photos of official Identification Documentation (ID). Whitelisted and KYC document submitted participants need to have a suitable transaction network wallet and tokens that the ICO accepts as contributions against the token generation. The contributor submits the compatible wallet address information to the ICO and sends a desired amount of accepted tokens into a designated wallet address provided by the official communication channel of the ICO.

After the ICO technical team has confirmed that the incoming contribution matches a verified KYC document related wallet address, the contributor wallet gets rewarded with the promised amount of the project tokens. Sometimes the process from the end of the ICO to the date when the tokens are transferred to the contributors might take several weeks due to the programming work required in between.

How to review and analyse an ICO?

Evaluating the viability of the ICOs is in many ways very similar to traditional venture capital investing. The project contributor needs to evaluate many traditional aspects of the project and it’s team. On top of that a risk aware investor studies in great depth the token economics model viability of the project. Since the price of the tokens are usually defined by the supply and demand on the token markets, the team’s marketing skills and efforts may play a big role in the project rating as well.

One of the most important things in any development project is the expertise and commitment level of the team. We recommend only investing in ICOs that work transparently by introducing their team and their skills. Even though many great projects such as Bitcoin have emerged from anonymous teams, the risk of an exit scam in an ICO with an anonymous team has actualized so many times during the recent year that for example us will not be listing any projects that are not revealing at least their project management team. The presented team should have relevant study or work experience, good networks, colleague or client endorsements and they should indicate clear commitment to the presented ICO project. The whole team should have diverse skills represented, and a decent size for project implementation.

The presented solution to be funded should clearly solve at least one customer segment’s everyday problem. The solution should preferably be related to a growing business sector and be very scalable in design. The sector development should also indicate that the demand for the presented solution is growing. If the project does not face much competition or has clear competitive advantages that can be seen as a good indicator of the project potential. The token model needs to fit in well for the service provision or otherwise the ICO should be looking for traditional types of investments instead.

If the ICO has passed these stages of the review the most complex evaluation stage begins. The token economics of the proposal need to make sense just as any traditional investment project. The contributor needs to dig out the information about the total amount of tokens to be generated, the mechanism of how new tokens are created, what is the end of ICO price of the tokens, how big share of the tokens are sold on the markets and what is the total initial project valuation. These figures need to be reflected to the turnover potential of the service – if the potential turnover is clearly higher than the initial project valuation, the tokens might have good value increase potential. This section is many times the weakest performing attribute of the ICOs, since the initial token supply valuation usually exceeds the potential turnover of the service in the first couple of years. It is usually a good sign, if the team will release their own tokens gradually over a couple of years – this is an incentive mechanism for the team to stay committed to the project and develop token value over a longer period of time.

Overall the token model must bring some concrete benefits for the end users and early contributors to make it a justifiable funding model. The team needs to have the required design, implementation and marketing skills to produce the described service. The project roadmap has to be fast to bring quick returns for the early contributors and the plan also has to be realistic so that delays will not cause losing of community confidence.

The last thing to evaluate is the current visibility of the project. Is the team putting in professional effort to engage with its community and to promote the service on the relevant industry sites, blogs and forums? This can be validated by visiting the project’s social media groups, looking at the sizes of the communities, how often the team is updating the channels and how much community engagement do the updates receive. It is good to check through the articles and reviews of the project to see if it has some expert endorsements.

All these bits of information create confidence or suspicions towards the ICO Coin project. It is good to know as much as possible before contributing valuable assets into any project.

The different ICO stages

1. Seed funding round

In this stage the project is usually in its very early steps refining the idea, gathering the team and preparing the white paper, website and strategic approaches. The seed phase is usually not very public and the team aims to raise the initial funding from their own networks. This is a good opportunity to get the maximum bonuses from very early stage projects that have a lot of potential. The risk is that many of the seed round companies never make it all the way to ICO stage.

2. Private Sales

In the private sales stage the project usually has its basic materials such as the white paper, landing page and social communities established but there is yet very little visibility for the project. People participating in the private sale have to get tipped about the project from their networks since otherwise it is unlikely to find so early stage projects. Private sale can still provide good bonuses for early contributors but this stage still carries the big risk of the ICO marketing campaign not succeeding.

3. Pre ICOs or pre sales

In pre-ICO and pre sales stage the project usually has secured sufficient funding for a full size ICO marketing campaign rollout. The pre-ICO gives still the last chance for active industry experts and well networked people to invest into the project with discounted token price. The most endorsed projects usually get sold out at this stage already.

4. Upcoming ICOs & whitelists

If the project has not sold out during the pre ICO phase, there might be a time window form a couple of days to a couple of weeks when the project is usually allocating a lot of resources to roll out marketing campaigns and to show that their actual ICO phase is starting soon. Whitelisting (pre-subscribing into the ICO) is usually done to collect a newsletter list about the interested contributors to provide the community with relevant updates about the progress of the crowdsale. The whitelists are usually limited in size to

5. Active (ongoing ICOs)

The actual ICO is the main crowd sale of the project tokens. Usually most of the tokens are left to be sold on this stage, since the marketing momentum has reached its climax and most of the potential investors have received information about the ongoing crowdsale. The investor confidence is at its highest level since the project has survived through the earlier stages and raised significant funding already, most of the time reaching over the soft cap at this stage already. The main sale of the ICO usually does not provide any discounts any more for the tokens, since the campaign is already in a more advanced stage and seems like a lower risk for the contributors.

6. After markets

After the ICO and the token generation event are finished each contributor should receive their share of the total token pool. The tokens are transferred or programmed by the project technical team to be allocated according to the contributions, KYC acceptance and wallet addresses collected during the previous stages. The ICO project management starts at latest at this stage to setup a favorable environment for the token after markets. This usually includes a lot of negotiations with different token exchanges that host platforms for the crypto currency and token peer-2-peer trading. Usually every finished ICO has to start from smaller exchanges to accumulate the required daily trading volume to be eligible to be listed in the more popular exchanges. Choosing the right exchange partners and having collaborative marketing efforts with them can gain a lot of traction to the trade of the tokens rising the demand, increasing the token market value and ultimately making the early contributors happy.

The markets do not end there; when an ICO project has matured into the stage of being listed in the exchanges, the project has to start focusing on delivering its development milestones promised in the roadmap. The project has to focus on improving its product, gaining more users and utilizing any token value increase mechanisms at use to keep the project attractive for new users and investors. A project surviving through all of these steps as a winner is a rare success story which makes identifying the right projects in the early stage challenging and rewarding for the early investors.

What is the Active ICO List?

In our ongoing ICO list you can find all the invest in today. These ICOs are offered for a limited time only, so you have to hurry before the ICO period ends. You can see the ending date for the ICO listed for each ICO.

What is the pre ICO list?

Pre ICO token sale is somewhat a newer phenomenon in the cryptocurrency world. From the word itself, pre-ICO gives investors the ability to buy tokens before the official crowdsale begins. Usually, the pre-ICOs raises a much lesser amount of fund and it also offer tokens at a lower price with an essential bonus. The fund-raising target of the pre-ICO sale is often lower than to the main ICO.

Basically, pre-ICOs make use of separate smart contracts from the main ICO event. This is to avoid the mixture of pre-ICO funds with the main ICO funds to enable proper and easy account reconciliation and audit. Several projects are running Pre-ICOs to collect funds to finance the expenses incurred on launching the main ICO. Paid promo ads, strategic recruitment, and meet-up costs to awaken the interest of investors.

In launching pre-ICO token sale, transparency about the money raised and the number of tokens issued is the most important. A pre-ICO is a great investment opportunity for a quick buck, but it can still affect the project’s appeal and credibility when large amounts of tokens are at dips.

Our pre ICO section is probably one of our most exciting sections! And that’s because the pre ICO allows investors to buy tokens before the official crowdsale begins. It’s not all that uncommon to find a new pre ICO with a bonus of 40% or more.

What is the Upcoming ICO list?

In the upcoming ICO listing you will find all the quality upcoming coins that will be launching soon. The “Upcoming ICO” status means you will not be able to invest on their token sale yet, but that they are creating hype and a community for their pre sale and official token sale.

If the one or more of the upcoming cryptocurrency ICOs looks interesting to you, join their telegram group and whitelist in order to ensure you place in their ICO. By joining the whitelist you will be notified of the token sales (usually even before the general public).

What is the Top Crytocurrency List?

In the Top Cryptocurrency List you will find all the quality cryptocurrencies that our ICO analysts keep an eye on.

It’s a short list of more established coins with links to data on the exchanges for them for you to do your own analysis. We’ll be writing more in depth reviews about why they are our top cryptocurrency picks, it’s currently in beta.

To view a full list of cryptocurrencies with prices & graphs visit: https://cryptocurrencylist.io/

How does Top ICO List measure up against the competition?

We might be biased – But we believe we have the best ICO list for crypto investors.

Other popular ICO listing sites include Top ICO List, Coin Schedule, ICO Alert, ICO Hot List, ICO Drops, ICO Bench and ICO Watch List. Test them out to see how we compare.

What is cryptocurrency and why is it important?

Cryptocurrencies are a new thing and are looking for their etymological position still. The term might mean different things for developers, investors, economists, legislators, journalists and for the common public. What seems to be common for the digital assets considered as cryptocurrencies is that they all are built on distributed ledgers and traded openly in various platforms and exchanges. Some parts of the community need to value the traded digital asset and accept it as a payment for service or as a good to be exchanged to another usually digital asset.

The classification of cryptocurrencies, various types of virtual tokens, digital coins, securities and digital assets is not very clear, since the legislation and the definitions for various terms are not yet solidified in the international markets and courts. We can expect more clarity on the definitions in the near future when the developer communities and regulators start publishing official guidelines for the asset classification. Before that the field of cryptocurrencies is an ongoing nearly philosophical debate with plenty of misunderstandings and potentially malicious misinformation.

What is Blockchain?

Blockchain is a protocol for managing a distributed ledger, meaning usually a cryptographically secured decentralized accounting system which operates through a network of computers in various locations. The network of computer confirm transactions in the system and cross refer the information to each other to keep a reliable, unforgeable and transparent records updated. The effort of providing calculation power to the maintenance of the network calculations is generally called “mining”. The blockchain systems usually reward the mining by generating or providing transaction tokens to the network supporting operators.

The blockchain protocols with cryptographic hash blocks, which contain relevant information about the previous transactions in the system.

Spotlight on Initial Coin Offerings (ICOs)

Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.

[+] ICOs can be securities offerings.

ICOs, based on specific facts, may be securities offerings, and fall under the SEC’s jurisdiction of enforcing federal securities laws.

[+] They may need to be registered.

ICOs that are securities most likely need to be registered with the SEC or fall under an exemption to registration.

[+] Tokens sold in ICOs can be called many things.

ICOs, or more specifically tokens, can be called a variety of names, but merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security.

[+] ICOs may pose substantial risks.

While some ICOs may be attempts at honest investment opportunities, many may be frauds, separating you from your hard-earned money with promises of guaranteed returns and future fortunes. They may also present substantial risks for loss or manipulation, including through hacking, with little recourse for victims after-the-fact.

[+] Ask questions before investing.

If you choose to invest in these products, please ask questions and demand clear answers.

What investors need to know

So, what do you need to know about ICOs before investing? Start with some basic research on Investor.gov and take note of the following:

[+] Products can be sold and traded internationally.

Recognize that these products are often sold on markets that span national borders and that significant trading may occur on systems and platforms outside the United States. Your invested funds may quickly travel overseas without your knowledge. Although the SEC actively enforces securities laws, risks can be amplified, including the risk that market regulators may not be able to effectively pursue bad actors or recover funds.

[+] Research your financial professional.

Understand the opportunity that is being presented, and do your homework on the individual who is doing the presenting. Is the offering legal and is the person offering this product licensed to do so? Make sure you visit investor.gov for more resources before you invest. Arm yourself with knowledge from this Investor Bulletin.

[+] If an investment sounds too good to be true, be cautious.

As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.

[+] Understand how the product is traded.

Many platforms for trading digital assets refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.

What market professionals need to know

As SEC Chairman Jay Clayton has stated, tokens and offerings that feature and market the potential for profits based on the entrepreneurial or managerial efforts of others contain the hallmarks of a security under U.S. law.

[+] Use caution before promoting offers and selling coins.

Market participants should use caution when promoting or touting the offer and sale of coins without first determining whether the securities laws apply to those actions. Similarly, those who operate systems and platforms that effect or facilitate transactions in these products should be aware that they may be operating unregistered exchanges or broker-dealers that are in violation of the Securities Exchange Act of 1934.

[+] The SEC protects Investors, and expects you to.

Gatekeepers and others, including securities lawyers, accountants and consultants, should be guided by the principal motivation for the SEC’s registration, offering process and disclosure requirements: Investor protection and, in particular, the protection of Main Street investors.

[+] SEC Report of Investigation on Coin or Token Offerings.

Market professionals, including securities lawyers, accountants and consultants, are encouraged to read closely the 21(a) investigative report the SEC released in 2020, concluding that a particular token was a security.

[+] Know when an exchange needs to be registered.

If a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.

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