What Is The Difference Between an IPO and an ICO?

What Is The Difference Between an IPO and an ICO?

An initial public offering (IPO) is the process by which a privately held company becomes publicly traded by issuing shares of stock to the public. Meanwhile, an Initial Coin Offering (ICO) is a fundraising method used by companies and projects to raise capital by issuing and selling digital tokens, often called “coins” or “tokens” to investors. The tokens are typically based on blockchain technology, which is a decentralized and distributed digital ledger that records transactions on multiple computers.

What Is the Process of Launching an IPO?

In order to launch an IPO, you will normally go through the following process: (1) hiring an investment bank; (2) registering with the SEC; (3) undergoing due diligence; (4) undergoing roadshow; (5) undergoing pricing and allocation; and (6) undergoing the process of trading. 

At first, the company will typically hire one or more investment banks to act as underwriters for the IPO. The investment bank will help the company determine the appropriate price for the shares, and will handle the legal and regulatory aspects of the IPO. Then, the company will file a registration statement with the Securities and Exchange Commission (SEC), which includes detailed information about the company’s financial condition, management, and the terms of the offering.

Once an investment bank has been hired, they will conduct due diligence to verify the information in the registration statement and to assess the company’s financial condition. The company and the investment bank will conduct a roadshow to market the IPO to potential investors. The roadshow will typically involve presentations to institutional investors and analysts.

Afterwards, the company and the investment bank will determine the final price for the shares, and allocate shares to the investors; finally, the shares will begin trading on an exchange, such as the NYSE or NASDAQ, once the IPO is complete. 

What Are Some of the Risks of an IPO

The process of going public can be time-consuming and costly, and the success of an IPO depends on a number of factors, including the company’s financial performance, the overall market conditions, and investor sentiment; as a result, the process of launching an IPO can be very risky. 

What Is the Process of Launching an ICO?

An ICO is similar to an IPO in that it allows a company to raise capital by issuing and selling securities to the public. However, unlike an IPO, the securities being sold in an ICO are digital tokens that are created and maintained on a blockchain.

During an ICO, a company will typically (1) publish a whitepaper outlining the details of their project, including the problem they are trying to solve, the technology they are using, and the specific use-cases for the token. They will then (2) set a fundraising goal and a deadline by which they hope to raise the funds. This allows investors to purchase the tokens using digital currencies, such as Bitcoin or Ethereum, and the tokens can be used to access the company’s product or service, or to participate in the governance of the network.

What Are Some of the Risks of an ICO?

It’s worth noting that ICOs are highly speculative and there is a high risk of fraud, so it’s important to conduct thorough research and understand the risks involved before investing. Additionally, the lack of regulation and oversight in the ICO market can make it a prime target for fraud and scams. Also, the regulations for ICOs in some countries are not very clear and can be a grey area.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

Share this post

Silvino Diaz

Silvino E. Diaz’s practice ranges from Civil and Commercial Litigation to Entertainment and Intellectual Property Law. Silvino has earned a reputation as one of Puerto Rico’s foremost advocates for independent musicians and artists. As a result of his sustained commitment to creative industries, he was named Professor of Intellectual Property Law at Atlantic University College (Guaynabo, PR) – the Caribbean’s leading digital arts institution – where he spearheaded the “Introduction to IP” course for both the graduate and undergraduate programs, and was appointed by the Office of the President to develop an Intellectual Property graduate curriculum, where he served until moving to Miami in 2017. He is the founder of the service known as Starving Artists, where he offers innovative business and legal counsel for artists and creatives.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *



Contact Us

"*" indicates required fields