Cryptocurrency and Initial Coin Offerings—The Wave of the Future or Death by Regulation?

First came Bitcoin as the original cryptocurrency, followed by many others now in use, including Ethereum. Extremely large amounts of capital are being invested in a new capital raising mechanism – initial coin offerings. Essentially, companies are creating and selling their own cryptocurrency (in the form of virtual coins or tokens) that may be used by holders of the created currency in the future to purchase the issuing company’s products or services. The cryptocurrency, sold to investors or holders, for fiat currency, such as US dollars, or other virtual forms of currency (unregulated and without legal tender status in any jurisdiction) may trade and increase or decrease in value. Many believe that cryptocurrencies are the inevitable result of technological innovation and increased reliance on a digital economy freed from hard currency and related monetary instruments, while others, concerned about nations’ abilities to control and regulate their money supply, and the concomitant impact on the viability of monetary policy, seek to closely regulate cryptocurrencies. Davis Sorin’s talk focused on the emerging regulatory concerns and challenges.