Crypto Digest: A Primer And The Top ICO Prospects

Crudely, these are the steps one follows in an ICO:

• Once someone opts for an ICO, preparatory work is undertaken. Technical milestone for the project for which the ICO is undertaken is set. The plan to do a token sale is unveiled, also giving details of the terms, the project per se and its goals.
• A white paper is published along with the disclosure, selling the merits of the project to potential investors.
• Discussion threads are developed on various social media platforms, expanding upon and debating the merits of the product.
• On the date earmarked for the offering, a tool is available on the ICO landing page, which facilitates interested people to purchase tokens in exchange for a cryptocurrency.
• The tokens are received in the investors' wallets. After receiving the money, the sale is said to be concluded.
• Pricing is set tentatively by an issuer to start with. Once the sale progressive, the pricing may vary depending on what the market is willing to pay or can be set through a Dutch auction.

Companies offering the ICO come from different countries.

Once an investor invests in an ICO and is in possession of tokens, how can he/she liquidate it? An investor who has accumulated tokens over time can sell it when he deems it fit and profitable to someone who needs a product/service associated with cryptocurrencies.

Just like stocks, these tokens are also traded on cryptocurrency exchanges, where tokens can be bought and sold.

Though there is no formal lock-up period for tokens received through an ICO, recently some companies are enforcing a lock-up period, which suggests that the ICO market is slowly and steadily moving toward maturation.

ICO Vs. IPO: Differences And Similarities

While an IPO requires a comprehensive prospectus and needs to be registered with the SEC, FINRA as well the states in which the offering of securities is done, an ICO needs only a technical white paper.

With the cumbersome process involved, the IPO process takes up to six months, when the company's activities are restricted and it has to work with the SEC to ensure compliance in all respects.

However, ICOs, which now remain outside of the regulatory oversight, often provide very limited information concerning the legitimacy of the project. So, the onus of due diligence lies with the investors, impacting their ability to make informed decisions.

SEC Seeks To Regulate ICOs The Same Way As IPOs

Regulators across the globe are contemplating bringing cryptocurrencies and ICOs under regulatory purview. Legal experts are mulling over whether tokens would qualify as a security, drawing points from the Howey Test created by the Supreme Court for determining whether a transaction qualifies as an investment contract.

If this is established, then tokens would be considered as securities and would have to comply with disclosure and regulatory requirements.

Recently the SEC ruled that the ICOs should meet the same regulatory safeguards as traditional securities.

Pointing to DAO's ICO, the SEC said investors purchased tokens and in the process invested in a company, expecting a reasonable return. However, while offering securities to the public, the company violated several securities laws. What prompted the SEC to jump into the fray was that hackers stole tokens offered through the ICO, resulting in a legal fallout.

These Firms Look The ICO Way

Here's the list of some currently active ICOs:

• Obsidian: The Obsidian Platform coalesces blockchain and private anonymous messaging and consists of the Obsidian Coin and the Obsidian Secure Messenger.
• Dimcoin: P2P cryptoexchange built on NEM.
• Latoken: Tokenizing fractions of assets such as real estate and art.
• GX Coin: Wealth management solutions.
• Fluence: It allows to store, query, manage and monetize encrypted structured data, securing it with the power of blockchain technologies.
• Betking: Platform for fair casino game.

Some Upcoming ICOs

• Snapup (Monday): A platform for shop for premium products.
• Chronologic (Monday): A crypto pegged to time on the Ethereum blockchain.
• Ahoolee (Monday): Search engine for products.
• Airtoken (Tuesday): Unlocking mobile accessibility for the underserved.
• Real (Thursday): Offering Real tokens to invest in real estate.