Financing Open Blockchain Ecosystems: Toward Compliance and Innovation in Initial Coin Offerings

Abstract

In the blockchain space, most Initial Coin Offerings (ICOs) will not be true ecosystem tokens and will therefore be well suited as securities token offerings, using registration exemptions and trading through decentralized alternative trading systems. Open-source blockchain-based ecosystems may choose to rely on fundraising practices typical of start-ups and private enterprises for the pre-production phase. Once they have established some profit centers, they may choose the use of coin offerings to fund post-production phases. Most importantly, token issuers might choose to devise creative corporate forms combining nonprofit structures, which would oversee access to shared open-source resources, with for-profit structures to develop specific business or decentralized applications.