Rishabh Periwal, National Law University, Jodhpur & Yajur Lath. National Law University, Jodhpur
INTRODUCTION
An initial coin offering (“ICO”) is the cryptocurrency industry’s equivalent to an initial public offering (“IPO”). A company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds. 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.
Generally, ICOs use Distributed Ledger Technology (“DLT”) to offer ‘coins’ or ‘digital tokens’ that confer various rights on the holder/investor.1 Earlier, ICOs dealt with small amounts of money and were limited to a few investors; however, mainstream businesses have also begun opting for ICOs to raise funds. The ICO market exploded in 2017 and is said to be in a financial bubble as of now. In 2017 alone, a total of 3.5 billion USD was raised via ICOs, crossing the total amount of early stage funding done via Venture Capital.
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