Welcome to the European Parliamentary Research Service Podcasts.

Today we'll be talking about initial coin offerings, a new means of raising funds based on blockchain.

Interested? We'll explain how they work, look at potential benefits and challenges, and

analyze the regulatory responses they've been met with.

Initial coin offerings. This may be Greek to you, but hopefully by the end of this podcast,

it'll be a more familiar word. So, what are we talking about?

Well, initial coin offerings, ICOs from here on, are a relatively new method of raising capital

for early stage ventures.

They allow businesses, primarily startups, to raise capital for their projects by issuing

digital tokens to exchange for crypto assets or fiat currencies. This token may have some utility in using the product or service the company is offering,

or it may just represent a stake in the company or project.

So they are an alternative to more traditional sources of startup funding, such as business angels or venture capital.

That's right, and while they have some common elements with initial public offerings,

in the sense that they both allow a company to raise capital and develop,

ICOs are subject to less rules, less accountability, and red tape.

Angelo's Delivorias is a policy analyst within the European Parliamentary Research Service. The process for an IPO is lengthier and more complicated.

Therefore, it also involves the assistance of intermediaries,

such as investment banks or legal councils.

Also, the two types of funding target companies at different stages in their life cycle. For the moment, ICOs are

used mainly at an earlier stage in the funding escalator. So, to use a metaphor to illustrate,

the IPO is a mature kitchenware company owner and an ICO is a 19-year-old tech nerd developing

a new virtual reality app.

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