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What is an ICO?
An ICO, or initial coin offering, is a way of raising money by selling a new coin or token to the public, usually for dollars or other cryptocurrencies, before or as the project launches. It is also called a token sale or presale.
What it means for you
An ICO can be an unregistered securities offering, and the SEC warns that ICOs carry less investor protection than traditional markets and more room for fraud. Ask whether the token is a security and whether the sale was registered before buying in.
How it works
The SEC's investor bulletin describes ICOs, also called token sales, as offerings in which individual investors exchange currency such as US dollars or cryptocurrencies for a digital asset labelled a coin or token. Depending on the facts, the tokens may be securities, and if so their offer and sale are subject to federal securities laws. The SEC says the market has substantially less investor protection than traditional securities markets, with greater opportunities for fraud and manipulation.
Source: SEC Investor Bulletin: Initial Coin Offerings · checked 5 October 2026
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