WTF Is An ICO: Canada Loves It, China Hates It

Everyone wants to own some "coin", today it's bitcoin, tomorrow it's ethereum, but these are just two of the many cryptocurrencies available on the market today. How did they get there? Where did they come from?

Enter initial coin offering (ICO).

Cryptocurrency ventures are funded through an event referred to as an **initial coin offering **. Like a crowdfunding campaign, an ICO is a capital-raising process. The capital comes from interested supporters that want to be early backers. In exchange for getting in early, you get to be one of the first people to own the new "coin". Much like an initial public offering (IPO) of stock, the advantage of being an early supporter in an ICO is that you get to purchase the coins at a discount.

In 2014, the Ethereum project raised $18 million in bitcoins for $.40 per coin. When the project went live a year later the value had gone up to $14.

While cryptocurrencies can seem like a fun venture to get involved in, it's important to remember that they are not regulated. In other words, the government is still trying to figure out how to deal with them.

Outside of Russia, Canada has one of the most progressive policies regarding bitcoins and ICOs in the world. In August, Canada securities regulators signaled a change in policy with the release of CSA Staff Notice 46-307: Cryptocurrency Offerings. It details Canada's approach to dealing with ICOs and crowd-sales. The notice makes it clear that there is a strong willingness to consider ICOs as a legal distribution of securities in Canada. In addition to providing guidance for those businesses wishing to offer an ICO, Canada has also established a regulatory sandbox.

As China moves to ban ICOs, Canada's regulators view the technology as an innovation to help fund social enterprise. For example, Quebec's regulator has determined that an ICO by Impak Finance is indeed a securities offering. Impak is now one of the first to participate in Canada's regulatory sandbox.