Are Tokens Securities? An Anatomy of Initial Coin Offerings
49 Pages Posted: 12 Dec 2018
Date Written: November 18, 2018
We construct one of the most comprehensive Initial Coin Offerings (ICOs) datasets to study the determinants of ICOs success, post-ICOs returns, and longer-term token returns, volatility and liquidity. To overcome the problem of the generally low quality of ICOs data, we develop ICO data quality measures that allow us to validate the robustness of our results using subsets of data with the highest quality. Most of our results for ICOs are consistent with empirical regularities known to characterize Initial Public Offerings (IPOs) of equities. We argue that some theories that were initially developed to explain empirical patterns in the IPO market may be even better suited to explain some of the empirical results that we obtain for ICOs. In addition, some of the discrepancies between our findings for ICOs and corresponding results for IPOs may be traced to differences in institutional settings. Overall, our results contribute to the debate about whether tokens issued in an ICO should be considered securities by showing that they tend to behave like equities.
Keywords: ICOs, IPOs, regulation
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