The Rising Popularity of Initial Coin Offerings: Global Snapshot of Regulators’ Perspectives


Initial coin offerings are currently all the rage. In this article Yap Lian Seng, Managing Partner of ZICO Insights Law LLC (a member of ZICO Law) together with Heng Jun Meng and Lee Chongshen share their insights on global regulatory stances towards initial coin offerings.

What are initial coin offerings?

An initial coin offering or ICO is a new method of capital raising used mainly by tech start-ups where new blockchain-enabled digital tokens are created and offered for public sale. Digital tokens under an ICO will typically entitle holders to a right derived from the business of the issuer, be it the right to a profit and/or a right of use and would often also be listed and tradeable on a cryptocurrency exchange for fiat currency. Cryptocurrency exchange refers to platforms facilitating trading in digital tokens. Fiat currency refers to currency established by a government to be legal tender– e.g. US Dollar, Singapore Dollar.

 Currently, as the majority of ICOs are carried out without being subject to the full rigour of securities laws applicable to initial public offerings, it is no surprise that globally, firms have raised more than USD1 billion via ICOs in the third quarter of 2017 alone[1].  

How are regulators reacting to the rise of initial coin offerings?

Of late, the proliferation of ICOs has attracted the attention of regulators globally due to, among other things, concerns relating to fraudulent offerings, money laundering and terrorist financing and a surge of speculative interests. The regulatory stance adopted by global financial hubs will play a major role in shaping the way ICOs are conducted as well as the features of digital tokens.

This is an interesting space to watch, as regulators globally take different regulatory stances towards ICOs. Whilst some have banned ICOs outright (such as China and South Korea), others (such as US, UK, Japan, Australia and Singapore) seem to be studying the development and implications of ICOs globally to find middle ground between embracing fintech innovation and maintaining a healthy financial ecosystem.

ZICO Insights Law LLC recently advised Singapore-incorporated HelloGold Foundation Limited in its USD8 million ICO – see for further information.

[1] McSpadden, Kevin. “ICOs have raised a billion dollars since mid-August” e27 17 October 2017. Web. 26 October 2017.

[2] U.S. Securities and Exchange Commission “SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities”. 25 July 2017. Web. 26 October 2017.

[3] The People’s Bank of China “Public Notice of the PBC, CAC, MIIT, SAIC, CBRC, CSRC and CIRC on Preventing Risks of Fundraising through Coin Offering” 8 September 2017. Web. 26 October 2017

[4] Financial Conduct Authority. “Discussion Paper on distributed ledger technology” Discussion Paper DP17/3 April 2017. Web. 26 October 2017.

[5] Securities and Futures Commission “Statement on initial coin offerings” 5 September 2017. Web. 26 October 2017.

[6]Australian Securities and Investment Commission “Information sheet on initial coin offerings” Info Sheet 225 September 2017. Web. 26 October 2017.

[7] Reuters “Japan FSA gives official endorsement to 11 cryptocurrency exchanges” 29 September 2017. Web. 26 October 2017.

[8] Monetary Authority of Singapore “MAS clarifies regulatory position on the offer of digital tokens in Singapore” 1 August 2017. Web. 26 October 2017.

If you have any questions or require any additional information, please contact Yap Lian Seng, Heng Jun Meng or Lee Chongshen of ZICO Insights Law LLC.

This alert is for general information only and is not a substitute for legal advice.