Initial Coin Offerings: Early Evidence on the Role of Disclosure in the Unregulated Crypto Market
73 Pages Posted: 9 Jun 2018
Date Written: May 2018
We provide initial descriptive evidence on the emerging crypto capital market, and use this unique unregulated setting to examine the role of disclosure for capital market outcomes. We analyze a comprehensive global sample of more than 750 Initial Coin Offerings (ICOs) with data from April 2014 to May 2018, and find that the ICO market has emerged as a significant financing channel with over $13 billion raised by a diverse set of virtual organizations from more than 50 countries. We also find that the likelihood of successfully raising funds is positively associated with our measures of disclosure and the information environment. Further, weaker information environments are associated with higher illiquidity, volatility, and crash risk. Finally, we present evidence on the capital market benefits of new information intermediaries that have naturally evolved in this unregulated market to provide monitoring and assessment of the quality of ICOs. Overall, our study is among the first to provide novel and timely evidence on the role of disclosure in this completely unregulated capital market.
Keywords: initial coin offering, crypto-currency, crypto-token, crowdfunding, disclosure, unregulated markets
JEL Classification: G1, G2, G3, M4
Suggested Citation: Suggested Citation