I've done a bit of research on ICOs, but it seems the most important information is always missing: what do ICO token holders get for their tokens? How can those tokens be used to derive value from investing in them?

I understand every ICO is different, and I'm not looking for any kind of exhaustive list. But a few examples would be nice.

If holding an ICO token only gives you the right to sell it later to a willing buyer, then the fundamentals of the token are all that matters - not the health of the company doing the ICO. In this case, I would hardly even call it an ICO. It would just be another alt coin.

If holding an ICO token is to have any value related to the issuing company, it needs to have some kind of value that grows if the health of the company improves. An obvious example would be if an ICO token were equal to X% of the company's equity, or if it were equal to X shares in a situation with VERY well defined share inflation parameters (ie policy around issuing new equity). But my understanding is that tying an ICO token to a company's equity isn't legal in most cases (unless you're doing a plain old IPO).

So do ICO tokens usually give the holder a right to demand something of value (and importantly, something who's value grows as the issuing company grows in value or some related success metric)?

  • ICOs are not legally protected and you have no rights. The company issued the token will do what they want to.
    – Nulik
    Commented Oct 16, 2017 at 23:11
  • @Nulik If you have a contract, you are legally protected, ICO or not. If your token gives you no contractual rights, then its unconditionally worthless.
    – B T
    Commented Oct 16, 2017 at 23:13
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    "smart contract" is just a fancy name for a program to execute in Ethereum virtual machine. there is no way to put legal contract in Ethereum. In fact all ICOs are legally illegal. Check out this: bytemaster.github.io/article/2016/03/27/…
    – Nulik
    Commented Oct 16, 2017 at 23:49
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    just google "icos illegal" and you will get a bunch of documents like this one: steemit.com/steem-project/@picokernel/…
    – Nulik
    Commented Oct 16, 2017 at 23:51
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    The token distributed in an ICO is typically something that will have value and can be exchanged for some service in the application that the company is (again) typically planning to develop. If the company's business model is sound and the application gains usage, the token should increase in value. That is the way a token would be tied to the company's performance. [Standard disclaimer applies for typically, should etc] Commented Oct 17, 2017 at 19:25

3 Answers 3


In British law a contract can become established automatically in the absence of a written contract, a simple offer/acceptance/exchange process can establish a contract. My guess is that many other nation states have similar fundamental concepts baked into their legal systems.

Another element of the discussion is in which national jurisdiction would a legal dispute over an ICO purchase be settled. If a British company sold a utility token to a UK resident that could be subject to domestic consumer law.


Unless stated by the company issuing the tokens, you have no rights whatsoever to anything. Even if they say that the token holders can vote on some decisions, unless those decisions are actually enforced on-chain by a smart contract, there is no way for the company to be obliged to do something. They are not even legally obliged to do whatever a voting decided given that those people do not have a direct relationship with the company.

ICOs -better named Token Sales- should be treated as a purchase of a product. In this case the product being sold are tokens. As you don't own a piece of The Coca-Cola Company when you buy a Coke, you don't own a piece of the company when you buy a token.


well, I remember that we had some "fever" in the the Swiss Market in the 80's with the "bon de participation" which were share with no voting right.

At the end..... their popularity died down.

  • This is not relevant information and does not answer the asked question Commented Mar 22, 2018 at 11:53

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