3. Promotion campaign

Publicity and public awareness regarding the ICO plays a very important part in its success. It attracts potential investors and allows accredited investors to gain interest in the project as well. Note that the campaigns are commonly executed online to achieve the widest investor reach. However, currently, several large online platforms such as Facebook and Google ban the advertising of ICOs.

Alongside structuring the ICO, the crypto project often also creates a white paper , which is made available to potential investors via a new website dedicated to the token. The promoters of the project use their white paper to explain important information related to the ICO:

• Aim of the project
• Applications of the project
• Projected costs
• How many of the virtual tokens the founders will keep
• What type of payment (which currencies) will be accepted
• How long the ICO campaign will run

The company releases the white paper as part of its ICO campaign, which it designs to encourage enthusiasts and supporters of the project to buy some of the project’s tokens. Investors can generally use normal or digital currency to buy the new tokens, and it’s increasingly common for investors to pay using other forms of crypto such as Bitcoin or Ethereum. These newly issued tokens are similar to shares of stock sold to investors during an IPO.

If the money raised in an ICO is less than the minimum amount required by the ICO’s criteria, then all of the money may be returned to the project’s investors. The ICO would then be deemed unsuccessful. If the funding requirements are met within the specified time period, then the money raised is spent in pursuit of the project’s goals.

4. Initial offering

After the creation of the tokens, they are offered to the investors. The offering may be structured in several rounds. The company can then use the proceeds from the ICO to launch a new product or service while the investors can expect to use the acquired tokens to benefit from this product/service or wait for the appreciation of the tokens’ value.

ICO Regulations

The initial coin offering is a radically new phenomenon in the world of finance and technology. The introduction of ICOs has made a significant impact on capital-raising processes in recent years. However, regulatory authorities around the world were not prepared for the introduction of the new fundraising model in finance.

Approaches to the regulation of initial coin offerings vary among different countries. For example, the governments of China and South Korea prohibit ICOs. Many European countries, as well as the United States and Canada, are working on the development of specific regulations to govern the conduct of ICOs.

At the same time, there are already published guidelines governing ICOs in a number of countries, including Australia, New Zealand, Hong Kong, and the United Arab Emirates (UAE).

Conclusion

In this tutorial, we learnt about ICOs, what they mean and even discussed key takeaways. We also discussed the different types of Initial coin offerings and how exactly it works, as in what steps a company has to follow. We then even discussed the ICO regulations that need to be followed.