The Regulation Paradox of Initial Coin Offerings: A Case Study Approach

Zhang, Alfred; Raveenthiran, Anujan; Mukai, Justin; Naeem, Ramisha; Dhuna, Arvin; Parveen, Zoha; Kim, Henry M.

doi:10.2139/ssrn.3284337

Cited by 6 publications

(15 citation statements)

References 1 publication

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, with the introduction of new financing tools and its associated promises, also challenges in terms of regulatory uncertainty, cost level and large risk of scams emerge (Wi sniewska, 2018). Against this backdrop, some research (Rohr and Wright, 2017;Zhang et al, 2018;Dobrauz-Saldapenna and Klebeck, 2019) particularly devoted to the legal and regulatory challenges that token sales entail and provide potential guidelines and insights on how to tackle these problems to improve investor protection.…”

Section: Optimizationmentioning

confidence: 99%

Optimization of special cryptocurrency portfolios

Schellinger

2020

JRF

View full text Add to dashboard Cite

Purpose This paper aims to elaborate on the optimization of two particular cryptocurrency portfolios in a mean-variance framework. In general, cryptocurrencies can be classified to as coins and tokens where the first can be thought of as a medium of exchange and the latter accounts for security or utility tokens depending upon its design. Design/methodology/approach Against this backdrop, this empirical study distinguishes, in particular, between pure coin and token portfolios. Both portfolios are optimized by maximizing the Sharpe ratio and, subsequently, compared with alternative portfolio strategies. Findings The empirical findings demonstrate that the maximum utility portfolio of coins, with a risk aversion of λ = 10, outweighs alternative frameworks. The portfolios optimized by maximizing the Sharpe ratio for both coins and tokens indicate a rather poor performance. Testing the maximized utility for different levels of risk aversion confirms the findings of this empirical study and confers them more robustness. Research limitations/implications Further investigation is strongly recommended as tokens represent a new phenomenon in the cryptocurrency universe, for which only a limited amount of data are available, which restricts the sampling. Furthermore, future study is to include more sophisticated optimization models using different constraints in portfolio creation. Practical implications In light of the persistently substantial volatility in cryptocurrency markets, the empirical findings assert that portfolio managers are advised to construct a global minimum variance portfolio. In the absence of sophisticated optimization models, private investors can invest according to the market values of cryptocurrencies. Despite minor differences in the risk and reward ratios of the portfolios tested, tokens tend to be more speculative, especially, if the Tether token is excluded, which may require enhanced supervision and investor protection by regulating authorities. Originality/value As the current literature investigates on diversification effects of blended cryptocurrency portfolios rather than making an explicit distinction, this paper reflects one of the first to explore the investability and role of diversifying coins and tokens using a classic Markowitz approach.

show abstract

Section: Optimizationmentioning

confidence: 99%

Optimization of special cryptocurrency portfolios

Schellinger

2020

JRF

View full text Add to dashboard Cite

show abstract

“…128 tion has also prevented compliant ICO projects from working. 136 Japan has recognised Bitcoin as a legal tender, enabling Bitcoin to be used as an official form of payment to pay a public or private debt or meet a financial obligation. 137 Such legal recognition pushed Bitcoin prices up by 2% in 24 hours and increased the price globally by 160% for the next two months.…”

Section: Lack Of Regulation a Cause Of Uncertainty And Untrustworthinessmentioning

confidence: 99%

A Regulatory Framework for Cryptocurrency

Lee

L'heureux

2020

SSRN Journal

View full text Add to dashboard Cite

“…According to the Security Token Network 15 , in Q1 of 2019, the USA had 40.7% 16 of the market share with 61 STOs, the UK has 8% (12 projects), the European Union (without the UK) had a total of 27 offerings (the details about top 7 STO is shown in Table 7). The share of the Asian region is 5.3%, which is very small, given the fact that the leading crypto exchanges (Binance, Huobi and OKEx) are registered and work from Asian countries ( Table 8).…”

Section: Conceptmentioning

confidence: 99%

“…com/blog/ico-market-review-and-trend-analysis (accessed on 17.08.2019). 15 Security Token Network (2019). URL: https://token.security/stn/article/analysis/state-of-the-security-token-ecosystem-part-1-security-token-offerings-q1-2019/ (accessed on 18.08.2019).…”

Section: Conceptmentioning

confidence: 99%

“…Regulation is impossible without centralization of information, categorizing, creating limits, whereas decentralization means substituting controlled systems with algorithms. This creates a fundamental conflict as regulation minimizes risks at the expense of loss of individuality, while cryptography, on the opposite, is unable to decrease risks, but enhances individual power of users [15]. One of the most famous scam ICOs is the OneCoin case.…”

Section: Eos Ico and Filecoin Scam Projectmentioning

confidence: 99%

See 1 more Smart Citation

Comparative Analysis of ICO, DAOICO, IEO and STO. Case Study

Alina

2019

jour

View full text Add to dashboard Cite

The article examines the problem of the ICO (Initial Coin Offering, from English — “initial offer of coins, initial placement of coins”). The information source is the ICO rating data of the return on investment in blockchain startups. The methodological base of the research is a situational comparative analysis of the ICO, DAOICO, IEO and STO and systematization of information. The author analyzes three new ICO models. The first one includes elements of Decentralized Autonomous Organizations (DAO). Its aim is to minimize the difficulties and risks associated with the ICO. The second model (Initial Exchange Offering (IEO), from English — “primary exchange offer”) is designed to minimize risks, liquidity problems and a delay in listing tokens at the end of the token sale. The third model — the Security Token Offering (STO, from English — “offer of security token”) — was designed to support real assets and comply with the SEC requirements. These models are a new direction for small and medium enterprises and investors. The absence of any scientific work emphasizes the relevance and scientific novelty of the study. The article is a follow-up of the empirical work related to the success of the ICO, as well as the basis for its revision using the case study results.

show abstract

The Regulation Paradox of Initial Coin Offerings: A Case Study Approach

Cited by 6 publications

References 1 publication

Optimization of special cryptocurrency portfolios

Optimization of special cryptocurrency portfolios

A Regulatory Framework for Cryptocurrency

Comparative Analysis of ICO, DAOICO, IEO and STO. Case Study

Contact Info

Product

Resources

About