What is an ICO?

An ICO, short for initial coin offering, is a way for a crypto project to raise money by selling newly created tokens to the public. The name echoes an IPO, the initial public offering of a company's shares. ICO buyers usually receive no ownership stake, and most early sales came with none of the disclosures a share offering requires.

How does an ICO work?

A team publishes a document called a white paper describing what it plans to build. It creates a supply of tokens, most often on Ethereum, and sets terms: a price, a sale period and how the tokens will be divided.

Buyers send cryptocurrency to the project's address and receive tokens in return. They generally hope the tokens will be useful on the finished platform or will rise in price once listed on an exchange. Often no working product exists at the time of the sale.

What happened in the 2017 boom?

The first token sale is usually dated to 2013, and Ethereum itself was funded by one in 2014. In 2017 and the first half of 2018, well over a thousand projects raised billions of dollars between them.

The results were poor. Many projects never delivered a product. Some were outright scams in which organizers vanished with the money, a pattern now called a rug pull. A large number of ICO tokens lost nearly all their value in the downturn of 2018.

Why did regulators step in?

US securities law applies to an "investment contract", meaning money put into a common venture with profits expected from the efforts of others. That standard is the Howey test, explained in the guide on whether crypto is a security.

In July 2017, the SEC published a report concluding that tokens sold by a project called The DAO were securities. Enforcement cases against ICO issuers followed. In 2020, a court blocked the messaging company Telegram from distributing tokens it had sold for $1.7 billion, and Telegram agreed to return money to investors.

Do ICOs still happen?

The label faded, but public token sales did not. Later variants include:

• IEOs, or initial exchange offerings, where a crypto exchange runs the sale and lists the token.
• IDOs, where tokens are first sold through a decentralized exchange.
• Airdrops, where tokens are given away to early users.

In March 2026, the SEC and CFTC issued a joint interpretation setting out when a crypto asset sale is an investment contract and when that status ends. On August 18, 2026, the SEC proposed "Regulation Crypto Assets", which would create exemptions for token offerings up to set dollar limits, with disclosure requirements. As of October 2026 it was a proposal, not a final rule.

Securities rules differ by country and change often, so readers should check the official source or a qualified professional for their own situation.