An ICO is an Initial Coin Offering. Many blockchain-based projects raise capital by way of ICO’s in an effort to raise money to build their platform or expand their project. There is usually a process where a project releases their first tokens to buyers through private sales, presales, and public sales. They will offer bonuses or discounts to early buyers to attract early adopters often in tiers.

The term ICO comes from the securities industry. Companies raise money in an IPO, Initial Public Offering, which became the model for the ICO. The ICO market exploded in 2017 which went from a few dozen millions of dollars raised through ICO’s in 2016 to over $4 Billion dollars by the end of 2017. Because there are no standard regulations of cryptocurrencies or ICO’s worldwide, the sudden increase of large amounts of money attracted a lot of scam projects and also the attention of regulators. We are anticipating increased regulation of ICO’s in particular and cryptocurrencies in general in the upcoming months and years.

ICO’s have been an attractive way for investors to get in early on highly speculative projects. But, with increased scrutiny from the US SEC and other regulators, participation has been getting more difficult. Many projects don’t want future trouble with the SEC, so they exclude citizens of countries like the US and China, to avoid future punitive actions. The hope is that when regulations finally get established, that clarity will allow issuers to work within local regulations, scams will be reduced, and investors will be able to participate more freely.