An ICO (or an initial coin offering) is a special tool by which newly created and rapidly developing companies can sell digital tokens. This is necessary to finance their business processes. In order to set up an ICO, a document called “white paper” has to be prepared.
It specifies the main details of the project and outlines its goals. In addition, this document includes information about the number of tokens to be issued for fundraising. It also indicates the percentage of assets that the founders plan to keep.
In turn, an IPO is a tool that allows established companies to sell their securities to the public for the first time. Mostly, this tool is used to sell stocks, but businesses may also offer other securities such as futures, bonds, warrants, and others to end customers. For creating an IPO, an established company usually attracts a certain number of underwriters, which are investment banks. They work with the firm that hired them for a while to figure out which type of securities would be more profitable to sell and how much investment it could bring in theory.
The main purpose of the underwriters is to prepare a preliminary project prospectus. This paper contains information that investors should know about the company. It may include a description of the business plan, strategic initiatives for the future, important financial documents, management and ownership structures, etc. Once the prospectus has been drafted, it is checked, and possible deficiencies are identified and corrected. Then the prospectus can be recognized as final. Once it is approved, the paper is submitted to the Securities and Exchange Commission where the IPO application will be filed. Each instrument requires careful consideration and scrutiny before it can be applied.
For more details about these instruments, please, check here: https://brokers-news.com/education/ico-ipo-some-notes-for-investors/.
Methods of ICO & IPO Regulation
One of the main differences between these concepts is the extent to which they are regulated by the existing legislation. Established companies with different fields of activity, which conduct ICOs today, are not restricted by the laws and regulations. And those who have chosen the IPO must necessarily adhere to the rules of law.
Many analysts argue that if a company conducts an ICO and its actions are not regulated by law, it carries great risks for investors who decide to invest their finances in business development. When some tokens can bring big profits, others literally burn up the invested money. If finances have been lost, there is no legal way for investors to recoup their investment.If you want to keep up with the latest news, just visit https://brokers-news.com/education/ and choose the most interesting article for you.