Cryptocurrency vs. Initial Coin Offerings (ICO): Different Animals, Different Regulatory…

The recent flurry of activity and press coverage, over the past 18 months in particular, concerning “initial coin offerings” (also referred to as a “digital token sale”) has created confusion regarding their relationship to cryptocurrencies. While certainly connected in both concept and actuation, those with an interest in this burgeoning marketplace will be wise to note that both the risk and the regulatory landscape for existing cryptocurrencies (also referred to as “virtual currencies”) differ from ICOs/tokens. Those who forge ahead, uninformed, stand to learn an expensive lesson. We hope to illuminate certain fundamental concepts here.

Cryptocurrencies

Cryptocurrencies are digital or virtual currencies, intended to be used as a form of payment similar to government-issued currency, that are encrypted (secured) using cryptography. Cryptography refers to the use of encryption techniques to secure and verify the cryptocurrency transactions. Bitcoin represents the…