Regulating Initial Coin Offerings? A Taxonomy of Crypto-Assets

Proceedings of the 27th European Conference on Information Systems (ECIS), Stockholm & Uppsala, Sweden, June 8-14, 2019

16 Pages Posted: 7 Jun 2019

See all articles by Jens Lausen

Jens Lausen

Goethe University Frankfurt - Faculty of Economics and Business Administration

Date Written: March 31, 2019

Abstract

In 2017, the price of bitcoin skyrocketed and many investors wanted to participate in the crypto-hype. Hence, a lot of companies took the new opportunity to obtain financing by issuing crypto-assets in initial coin offerings instead of going the heavily regulated way through venture capital or initial public offerings. Besides valuable projects, many projects fail or turn out to be a scam. Retail investors are not aware of the potentially high risks of ICO investments. Regulators of most jurisdictions have not yet proposed new rules, but monitor the new phenomenon to gain insights. Many regulators stick to regulation in place and pursue case-by-case assessments in order to apply existing rules. This paper develops a taxonomy of crypto-assets based on academic literature and empirical data. The taxonomy covers embodied investor rights, security-like characteristics, and crypto-specific features being able to support regulators with their case-by-case assessment. The taxonomy helps regulators to classify crypto-assets allowing them to decide which characteristics are subject to regulation and whether new rules are necessary to ensure market integrity and investor protection. Further, the taxonomy is also designed to support issuers with the design of new crypto-assets helping them to understand which characteristics might be subject to regulation.

Keywords: Initial Coin Offering, Blockchain, Cryptocurrency, Crypto-Assets, Token Sales, Regulation, Investor Protection, Taxonomy

Suggested Citation

Lausen, Jens, Regulating Initial Coin Offerings? A Taxonomy of Crypto-Assets (March 31, 2019). Proceedings of the 27th European Conference on Information Systems (ECIS), Stockholm & Uppsala, Sweden, June 8-14, 2019. Available at SSRN: https://ssrn.com/abstract=3391764

Jens Lausen (Contact Author)

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Theodor-W.-Adorno-Platz 4
Frankfurt am Main, D-60323
Germany

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