NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales

Sabrina T. Howell, Marina Niessner, David Yermack

NBER Working Paper No. 24774
Issued in June 2018, Revised in September 2019
NBER Program(s):The Corporate Finance Program, The Law and Economics Program, The Productivity, Innovation, and Entrepreneurship Program

Initial coin offerings (ICOs) have emerged as a new mechanism for entrepreneurial finance, with parallels to initial public offerings, venture capital, and pre-sale crowdfunding. In a sample of more than 1,500 ICOs that collectively raise $12.9 billion, we examine which issuer and ICO characteristics predict successful real outcomes (increasing issuer employment and avoiding enterprise failure). Success is associated with disclosure, credible commitment to the project, and quality signals. An instrumental variables analysis finds that ICO token exchange listing causes higher future employment, indicating that access to token liquidity has important real consequences for the enterprise.

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Document Object Identifier (DOI): 10.3386/w24774

 
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