Understanding ICOs...

Initial Coin Offering (ICO) means that someone offers investors some units of a new cryptocurrency or crypto-token in exchange against cryptocurrencies like Bitcoin or Ethereum. Since 2013 ICOs are often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchanges if there is demand for them.

An ICO is largely similar to an IPO (initial public offering), but it differs to the extent that instead of offering shares in a company, cryptocurrencies or crypto-tokens are offered at a predetermined rate.
These crypto-tokens are basically digital assets. There are a method of payment for the service that the company proposes to offer. Examples of such services may include online music/movie- streaming services or cloud storage space. Reliance Jio announcing its own ICO called ‘Jio Coin’ created some buzz but that’s where it ends.

The US Securities and Exchange Commission and the Canadian Securities Administrators, on the other hand, have released investor bulletins highlighting that some ICOs may need to be categorized as securities in accordance with the nature of the crypto-token offered.
However, in order to streamline and regulate ICOs in India, there are legal and regulatory challenges that need to be addressed. First, based on their nature, crypto-tokens/cryptocurrencies could be classified as securities or currency or a payment system or intangible property. Additionally, the hybrid nature of crypto-tokens might require coordination among the Securities and Exchange Board of India (Sebi), the Reserve Bank of India (RBI) and other sectoral regulators for effective regulatory oversight.
There are 10 cryptocurrency exchanges with five million users and monthly volumes of $1.5 Bn (INR10,000)in India, according to industry estimates from early January. Read more 100,000 Indian cryptocurrency investors are now on the taxman’s radar

In India, there is regulatory opaqueness surrounding the regulation of ICOs (and other similarly placed emerging fintech products). One can see that the triad of these three jargons is nothing but a pyramid of niche technology that goes from macro application of blockchain to micro regulation of bitcoins and ICOs. How these technologies play out in India will depend on the feasibility of their regulation and the extent of their service to financial inclusion which is the bedrock of Indian economy today.
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