Surely you do know what crowdfunding is, don’t you? Someone shares a project or personal circumstances on an online platform, and whoever wants to help them or invest in their initiative can donate some money. Well, crowdsales in crypto aren’t that different, except that it’s always about investing in a new idea, and it always involves the purchase of newly minted tokens. To be more specific, a crowdsale in the crypto space is a fundraising method in which a DLT-based project offers its native tokens (created by their team) to the public in exchange for established cryptocurrencies, such as Bitcoin or Ether, or fiat money, like USD or EUR. This process typically occurs before the project is fully launched and is often part of an Initial Coin Offering (ICO) or a similar token distribution event. Crowdsales allow early supporters to acquire tokens at a fixed or tiered price, and the funds raised are generally used to finance the development and deployment of the project’s ecosystem or platform. ICO, by the way, was the most popular type of crypto crowdsale some years ago. And, between 2017 and 2018, it was in charge of demonstrating everything that could go wrong with this new and unregulated model. A bad track record In layman’s terms, an ICO happens when someone (which could be, literally anyone with Internet and a minimum level of crypto literacy) decides to put together a website, some social channels, and, if we’re lucky, a whitepaper, to offer some kind of new crypto project to potential investors (anyone with Internet, too). These investors would be buying a batch of recently-minted tokens to fund that project and, if everything goes well, their tokens would acquire a lot of value in time. No laws, no limits, and no more requisites than a crypto wallet and a dream. Except. Yes, things often go wrong. In 2017 and 2018, ICOs exploded in popularity, quickly becoming the go-to way for crypto startups (and scammers) to raise money. What started quietly with projects like Mastercoin suddenly turned into a frenzy, with Ethereum’s early success showing the potential: early buyers paid just $0.31 per ETH —now worth around $1,600. Big names like Tezos, Filecoin, and EOS raised millions (even billions), and it seemed like anyone with a vague whitepaper and some marketing could secure funding in minutes. But behind the hype, problems grew. Many teams had no working product and still walked away with millions—some didn’t stick around at all. A 2018 report by Statis Group found that nearly 80% of ICOs from the previous year were outright scams. By the end of that year, prices crashed, trust evaporated, and funding dried up by 95% in 2019. Only about 1 in 10 projects actually survive, according to ICOBench. Eventually, governments stepped in with stricter rules, trying to protect investors and clean up the mess. Regulations for ICOs After 2017, regulatory agencies around the world began scrutinizing ICOs due to the increasing concerns. Governments responded in different ways. China and South Korea imposed full bans on ICOs, while others, like Australia, New Zealand, and France, released regulatory guidelines or introduced opt-in frameworks. The U.S. took a case-by-case approach, driven largely by the Securities and Exchange Commission (SEC), which began classifying some ICOs as unregistered securities offerings. A key tool in the SEC’s evaluation is the Howey Test, a legal standard used to determine whether a financial transaction qualifies as an investment contract—and therefore, a security. If a token sale involves an investment of value in a shared venture, with expectations of profit derived from someone else’s work, it likely passes the test. Many ICOs, especially those promoting future profits or development promises, met these criteria. When they did, they triggered strict securities laws and regulatory requirements. This scrutiny led to several high-profile crackdowns. One example is the case of Block.one, the company behind EOS, which raised over $4 billion through an ICO and later settled with the SEC for $24 million. Other projects, like Centra Tech and Munchee, faced fraud charges or were shut down entirely. The SEC also clarified that promotional endorsements, like those by celebrities, must disclose payments to avoid misleading investors. As regulatory pressure mounted and the investor trust in the old model evaporated, the crypto space adapted. New models like Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs) emerged, focusing on compliance and investor protection. These alternatives signaled a shift toward more structured, legally sound fundraising strategies. New Crowdsale Models People still launch and participate in ICOs, but crypto projects today also use other types of crowdsales to raise funds, each with distinct methods and levels of oversight. Security Token Offerings (STOs) rely on tokens backed by tangible or financial assets, such as real estate or company shares, and are subject to securities laws. These tokens represent ownership rights or financial benefits and must follow strict regulatory frameworks, especially in jurisdictions like the U.S. STOs often require investors to be accredited, ensuring they meet specific income or asset thresholds. This approach offers legal protections and aligns closely with traditional investment models but in a tokenized form. On the other hand, Initial Exchange Offerings (IEOs) and Initial DEX Offerings (IDOs) serve as alternatives that bypass some regulatory hurdles. The latter type, especially, is largely immune to most regulations because funds are handled in a decentralized way, and users have to check for red flags by themselves (liquidity pools, smart contracts, etc.) IEOs are organized by centralized exchanges, which manage the token distribution and require projects to meet certain listing standards, such as a clear whitepaper and technical setup. IDOs, by contrast, take place on decentralized exchanges (DEXs), providing instant liquidity and broader access but often with less oversight. Both options allow non-accredited investors to participate, though IEOs may be more selective due to the involvement of centralized platforms acting as gatekeepers. Other forms like Initial Farm Offerings (IFOs), Initial NFT Offerings (INOs), and Initial Game Offerings (IGOs) expand crowdfunding into DeFi, digital collectibles, and gaming. IFOs typically require users to contribute to a liquidity pool using the DEX's native tokens in exchange for early access to new project tokens. INOs involve the sale of NFTs that may carry ownership or access perks, while IGOs focus on gaming-related assets or tokens. Most of these models avoid the need for accredited investor status but still carry risks due to market volatility and limited regulation, similar to the original ICOs. Accredited Investors As mentioned above, some new, regulated crypto crowdsale models require investors to be accredited. An accredited or verified investor is someone who meets specific financial or professional criteria that allow them to invest in opportunities not open to the general public. Depending on where you live, the requirements may vary. In the U.S., for instance, you typically need a net worth above $1 million (excluding your home) or an annual income of at least $200,000 for the last two years. In the crypto world, accredited investors gained importance after the ICO boom and mess of 2017. To reduce risks and comply with evolving regulations, many crypto projects started limiting their fundraising to verified investors only. Crowdsales such as STOs and some IEOs now often require participants to be accredited. This is especially true when tokens represent ownership of real-world assets or follow securities laws. While this narrows access, it also helps build a more trustworthy environment for both investors and creators. If you want to participate in all available types of crypto fundraising, verifying your accredited investor status (if you are one) is key. In the Obyte ecosystem, this process is simple and secure. Within the Obyte wallet, you can find the “Accredited Investor Attestation” chatbot in the Chat menu – Bot Store. If you meet the US requirements to be accredited, the chatbot helps you verify your status using documents like financial statements or letters from a licensed professional. The attestation is published on the Obyte DAG, so if the crowdsale is conducted on the Obyte platform, you won’t need to share your documents again—just the proof of verification. This unlocks access to a broader range of investment opportunities while keeping things decentralized and transparent. Featured Vector Image by macrovector / Freepik Surely you do know what crowdfunding is, don’t you? Someone shares a project or personal circumstances on an online platform, and whoever wants to help them or invest in their initiative can donate some money. Well, crowdsales in crypto aren’t that different, except that it’s always about investing in a new idea, and it always involves the purchase of newly minted tokens. To be more specific, a crowdsale in the crypto space is a fundraising method in which a DLT-based project offers its native tokens (created by their team) to the public in exchange for established cryptocurrencies , such as Bitcoin or Ether, or fiat money, like USD or EUR. This process typically occurs before the project is fully launched and is often part of an Initial Coin Offering (ICO) or a similar token distribution event. Crowdsales allow early supporters to acquire tokens at a fixed or tiered price, and the funds raised are generally used to finance the development and deployment of the project’s ecosystem or platform. To be more specific, a crowdsale in the crypto space is a fundraising method in which a DLT-based project offers its native tokens (created by their team) to the public in exchange for established cryptocurrencies ICO, by the way, was the most popular type of crypto crowdsale some years ago. And, between 2017 and 2018, it was in charge of demonstrating everything that could go wrong with this new and unregulated model. A bad track record In layman’s terms, an ICO happens when someone (which could be, literally anyone with Internet and a minimum level of crypto literacy) decides to put together a website, some social channels, and, if we’re lucky, a whitepaper, to offer some kind of new crypto project to potential investors (anyone with Internet, too). These investors would be buying a batch of recently-minted tokens to fund that project and, if everything goes well, their tokens would acquire a lot of value in time. No laws, no limits, and no more requisites than a crypto wallet and a dream. No laws, no limits, and no more requisites than a crypto wallet and a dream. Except. Yes, things often go wrong. In 2017 and 2018, ICOs exploded in popularity, quickly becoming the go-to way for crypto startups (and scammers) to raise money. What started quietly with projects like Mastercoin suddenly turned into a frenzy, with Ethereum’s early success showing the potential: early buyers paid just $0.31 per ETH —now worth around $1,600. Big names like Tezos, Filecoin, and EOS raised millions (even billions), and it seemed like anyone with a vague whitepaper and some marketing could secure funding in minutes. But behind the hype, problems grew. Many teams had no working product and still walked away with millions—some didn’t stick around at all. A 2018 report by Statis Group found that nearly 80% of ICOs from the previous year were outright scams. By the end of that year, prices crashed, trust evaporated, and funding dried up by 95% in 2019. Only about 1 in 10 projects actually survive, according to ICOBench . Eventually, governments stepped in with stricter rules, trying to protect investors and clean up the mess. A 2018 report by Statis Group found that nearly 80% of ICOs from the previous year were outright scams. Statis Group Statis Group dried up dried up ICOBench ICOBench Regulations for ICOs After 2017, regulatory agencies around the world began scrutinizing ICOs due to the increasing concerns. Governments responded in different ways. China and South Korea imposed full bans on ICOs, while others, like Australia, New Zealand, and France, released regulatory guidelines or introduced opt-in frameworks. The U.S. took a case-by-case approach, driven largely by the Securities and Exchange Commission (SEC), which began classifying some ICOs as unregistered securities offerings. A key tool in the SEC’s evaluation is the Howey Test , a legal standard used to determine whether a financial transaction qualifies as an investment contract—and therefore, a security. If a token sale involves an investment of value in a shared venture, with expectations of profit derived from someone else’s work, it likely passes the test. Many ICOs, especially those promoting future profits or development promises, met these criteria. When they did, they triggered strict securities laws and regulatory requirements. Howey Test Howey Test Many ICOs, especially those promoting future profits or development promises, met these criteria. When they did, they triggered strict securities laws and regulatory requirements. This scrutiny led to several high-profile crackdowns. One example is the case of Block.one, the company behind EOS, which raised over $4 billion through an ICO and later settled with the SEC for $24 million. Other projects, like Centra Tech and Munchee, faced fraud charges or were shut down entirely. The SEC also clarified that promotional endorsements, like those by celebrities, must disclose payments to avoid misleading investors. settled settled clarified clarified As regulatory pressure mounted and the investor trust in the old model evaporated, the crypto space adapted. New models like Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs) emerged, focusing on compliance and investor protection. These alternatives signaled a shift toward more structured, legally sound fundraising strategies. New Crowdsale Models People still launch and participate in ICOs, but crypto projects today also use other types of crowdsales to raise funds, each with distinct methods and levels of oversight. Security Token Offerings (STOs) rely on tokens backed by tangible or financial assets, such as real estate or company shares, and are subject to securities laws. These tokens represent ownership rights or financial benefits and must follow strict regulatory frameworks, especially in jurisdictions like the U.S. types of crowdsales types of crowdsales Security Token Offerings (STOs) rely on tokens backed by tangible or financial assets, such as real estate or company shares, and are subject to securities laws. STOs often require investors to be accredited, ensuring they meet specific income or asset thresholds. This approach offers legal protections and aligns closely with traditional investment models but in a tokenized form. On the other hand, Initial Exchange Offerings (IEOs) and Initial DEX Offerings (IDOs) serve as alternatives that bypass some regulatory hurdles. The latter type, especially, is largely immune to most regulations because funds are handled in a decentralized way, and users have to check for red flags by themselves (liquidity pools, smart contracts, etc.) IEOs are organized by centralized exchanges, which manage the token distribution and require projects to meet certain listing standards, such as a clear whitepaper and technical setup. IDOs, by contrast, take place on decentralized exchanges (DEXs), providing instant liquidity and broader access but often with less oversight. Both options allow non-accredited investors to participate, though IEOs may be more selective due to the involvement of centralized platforms acting as gatekeepers. IEOs are organized by centralized exchanges, which manage the token distribution and require projects to meet certain listing standards, such as a clear whitepaper and technical setup. Other forms like Initial Farm Offerings (IFOs), Initial NFT Offerings (INOs), and Initial Game Offerings (IGOs) expand crowdfunding into DeFi, digital collectibles, and gaming. IFOs typically require users to contribute to a liquidity pool using the DEX's native tokens in exchange for early access to new project tokens. INOs involve the sale of NFTs that may carry ownership or access perks, while IGOs focus on gaming-related assets or tokens. Most of these models avoid the need for accredited investor status but still carry risks due to market volatility and limited regulation, similar to the original ICOs. Accredited Investors As mentioned above, some new, regulated crypto crowdsale models require investors to be accredited. An accredited or verified investor is someone who meets specific financial or professional criteria that allow them to invest in opportunities not open to the general public. Depending on where you live, the requirements may vary. In the U.S., for instance, you typically need a net worth above $1 million (excluding your home) or an annual income of at least $200,000 for the last two years. In the crypto world, accredited investors gained importance after the ICO boom and mess of 2017. To reduce risks and comply with evolving regulations, many crypto projects started limiting their fundraising to verified investors only . Crowdsales such as STOs and some IEOs now often require participants to be accredited. This is especially true when tokens represent ownership of real-world assets or follow securities laws. While this narrows access, it also helps build a more trustworthy environment for both investors and creators. In the crypto world, accredited investors gained importance after the ICO boom and mess of 2017. accredited investors accredited investors To reduce risks and comply with evolving regulations, many crypto projects started limiting their fundraising to verified investors only If you want to participate in all available types of crypto fundraising, verifying your accredited investor status (if you are one) is key. In the Obyte ecosystem , this process is simple and secure. Within the Obyte wallet, you can find the “Accredited Investor Attestation” chatbot in the Chat menu – Bot Store. If you meet the US requirements to be accredited, the chatbot helps you verify your status using documents like financial statements or letters from a licensed professional. The attestation is published on the Obyte DAG, so if the crowdsale is conducted on the Obyte platform, you won’t need to share your documents again—just the proof of verification. This unlocks access to a broader range of investment opportunities while keeping things decentralized and transparent. Obyte ecosystem Obyte ecosystem Featured Vector Image by macrovector / Freepik Featured Vector Image by macrovector / Freepik Freepik Freepik
