In Partial Fulfillment of Requirements in Management Consultancy

Rogationist College, Silang, Cavite

INITIAL PUBLIC OFFERING (IPO) &

INITIAL COIN OFFERING (ICO)

Submitted by:

DELIGERO, Hydee R.
BSA 801

Submitted to:

Mr. Armando L. Bañares, CPA, PhD.

Professor

Date:

February 08, 2018

 I. INITIAL PUBLIC OFFERING (IPO)

An initial public offering (IPO) is the first time that the stock of a private
company is offered to the public. IPOs are often issued by smaller, younger companies
seeking capital to expand, but they can also be done by large privately
owned companies looking to become publicly traded. In an IPO, the issuer obtains the
assistance of an underwriting firm, which helps determine what type of security to issue,
the best offering price, the amount of shares to be issued and the time to bring it to
market.

An initial public offering (IPO) is the process through which a privately held
company issues shares of stock to the public for the first time. Also known as "going
public," an IPO transforms a business from a privately owned and operated entity into
one that is owned by public stockholders. An IPO is a significant stage in the growth of
many businesses, as it provides them with access to the public capital market and also
increases their credibility and exposure. Becoming a public entity, however, also
involves significant changes for a business including a loss of flexibility and control for
management. In some cases an IPO may be the only means left of financing rapid
growth and expansion. The decision to go public is sometimes influenced by venture
capitalists or founders who wish to cash in on their early investment.

IPO or Initial Public Offering is the first time a company’s stocks is offered to the
public for purchase, the issuing company being the only seller and with a set IPO price.
This price is announced before the offer period, wherein excitement in the market is
generated prior the grand listing date. After this process, the company becomes
‘publicly-listed’ or ‘publicly-traded’. Once the IPO period is over, the sold shares are
then traded just like other stocks with both the buyers and sellers coming from the
investing public, or retail investors.

Small companies looking to expand often use an IPO as a way to generate

capital. Capital can be used to fund research and development, fund capital
expenditure, or even used to pay off an existing debt. Another advantage is an
increased public awareness of the company because IPOs often generate publicity by
making their products known to a new group of potential customers. Subsequently this
may lead to an increase in market share for the company. At the same time, an IPO
may also be used by founding individuals as an exit strategy. Many venture capitalists
have used IPOs to cash in on successful companies that they helped start-up.

An IPO is also referred to as a public offering. When a company initiates the IPO
process, a very specific set of events occurs. The chosen underwriters facilitate all of
these steps.

• An external IPO team is formed, consisting of an underwriter, lawyers, certified public

accountants (CPAs) and Securities and Exchange Commission (SEC) experts.

• Information regarding the company is compiled, including financial performance and

expected future operations. This becomes part of the company prospectus, which is
circulated for review.

• The financial statements are submitted for official audit.

• The company files its prospectus with the SEC and sets a date for the offering.

II. ROLE OF IPO IN PSE

The number of IPOs being issued is usually a sign of the stock market’s and
economy’s health. During an economic downturn, the number of IPOs drop because it’s
not worth the hassle to list a company when share prices are depressed. When IPOs
increase, it usually means the economy is getting back on its feet again.

The PSE index has recently breached the 8,300 mark on the back of improving
corporate earnings and the country’s economic fundamentals.
 However, while continuing to attract companies, the stock market has yet to see
the return of the IPO heyday of the 1990s or even prior to the 2008 global financial crisis
when there were double-digit listings, peaking at 21 companies in 1994.

III. ADVANTAGES OF GOING PUBLIC

The primary advantage a business stands to gain through an initial public stock
offering is access to capital. In addition, the capital does not have to be repaid and does
not involve an interest charge. The only reward that IPO investors seek is an
appreciation of their investment and possibly dividends. Besides the immediate infusion
of capital provided by an IPO, a business that goes public may also find it easier to
obtain capital for future needs through new stock offerings or public debt offerings. A
related advantage of an IPO is that it provides the business's founders and venture
capitalists with an opportunity to cash out on their early investment. Those shares of
equity can be sold as part of the IPO, in a special offering, or on the open market some
time after the IPO. However, it is important to avoid the perception that the owners are
seeking to bail out of a sinking ship, or the IPO is unlikely to be a success.

Another advantage of an IPO is increased public awareness of the company.

This sort of attention and publicity may lead to new opportunities and new customers.
As part of the IPO process, information about the company is printed in newspapers
across the country. The excitement surrounding an IPO may also generate increased
attention in the business press. There are a number of laws covering the disclosure of
information during the IPO process, however, so business owners must be careful not
to get carried away with the publicity. A related advantage is that the public company
may have enhanced credibility with its suppliers, customers, and lenders, which may
lead to improved credit terms.

Yet another advantage of going public involves the ability to use stock in creative
incentive packages for management and employees. Offering shares of stock and stock
options as part of compensation may enable a business to attract better management
talent, and to provide them with an incentive to perform well. Employees who become
part-owners through a stock plan may be motivated by sharing in the company's
success. Finally, an initial public offering provides a public valuation of a business. This
means that it will be easier for the company to enter into mergers and acquisitions,
because it can offer stock rather than cash.

IV. DISADVANTAGES OF GOING PUBLIC

The biggest disadvantages involved in going public are the costs and time
involved. Experts note that a company's management is likely to be occupied with little
else during the entire IPO process, which may last as long as two years. The business
owner and other top managers must prepare registration statements for the SEC,
consult with investment bankers, attorneys, and accountants, and take part in the
personal marketing of the stock. Many people find this to be an exhaustive process and
would prefer to simply run their company.

An IPO is extremely expensive. In fact, it is not unusual for a business to pay

between $50,000 and $250,000 to prepare and publicize an offering. In his article
for The Portable MBA in Finance and Accounting, Paul G. Joubert noted that a business
owner should not be surprised if the cost of an IPO claims between 15 and 20 percent
of the proceeds of the sale of stock. Some of the major costs include the lead
underwriter's commission; out-of-pocket expenses for legal services, accounting
services, printing costs, and the personal marketing "road show" by managers; .02
percent filing costs with the SEC; fees for public relations to bolster the company's
image; plus ongoing legal, accounting, filing, and mailing expenses. Despite such
expense, it is always possible that an unforeseen problem will derail the IPO before the
sale of stock takes place. Even when the sale does take place, most underwriters offer
IPO shares at a discounted price in order to ensure an upward movement in the stock
during the period immediately following the offering. The effect of this discount is to
transfer wealth from the initial investors to new shareholders.
Other disadvantages involve the public company's loss of confidentiality,
flexibility, and control. SEC regulations require public companies to release all operating
details to the public, including sensitive information about their markets, profit margins,
and future plans. An untold number of problems and conflicts may arise when everyone
from competitors to employees know all about the inner workings of the company. By
 diluting the holdings of the company's original owners, going public also gives
management less control over day-to-day operations. Large shareholders may seek
representation on the board and a say in how the company is run. If enough
shareholders become disgruntled with the company's stock value or future plans, they
can stage a takeover and oust management. The dilution of ownership also reduces
management's flexibility. It is not possible to make decisions as quickly and efficiently
when the board must approve all decisions. In addition, SEC regulations restrict the
ability of a public company's management to trade their stock and to discuss company
business with outsiders.
Public entities also face added pressure to show strong short-term performance.
Earnings are reported quarterly, and shareholders and financial markets always want to
see good results. Unfortunately, long-term strategic investment decisions may tend to
have a lower priority than making current numbers look good. The additional reporting
requirements for public companies also add expense, as the business will likely need to
improve accounting systems and add staff. Public entities also encounter added costs
associated with handling shareholder relations.

V. COMPANIES THAT HAS GONE PUBLIC

Last year, there were four IPO listings, comprising of the Villar family’s Golden
Haven which raised ₱778 million; Cemex Holdings Philippines (₱25 billion), Pilipinas
Shell Petroleum Corp. (₱18.4 billion) and Shakey’s (₱4 billion). This year, the PSE
hopes to see anywhere between six and eight.

So far, companies that has gone public are:

 Wilcon Depot (₱7 billion)

 Cement maker Eagle Cement (₱8.6 billion)
 Property developer Cebu Landmasters (₱3 billion)
 Dennis Uy’s Chelsea Logistics Corp. (₱8 billion)
 Financial service aggregator ExpressPay (₱528 million)
 Others in the pipeline include:

 Technology firm Audiowav (₱2.7 billion)

 Investment holding company Pure Energy Holdings (₱1.5 billion)
 Xeleb, a subsidiary of listed gaming technology company Xurpas Inc. (₱736 million)
 Fruit shake chain The Big Chill (₱500 million to ₱600 million)

VI. INVESTING IN IPO’S

There are two ways to participate in an IPO. The first way is through an online
broker subscription.

If you already have a trading account with an online broker, chances are they will
offer some number of shares to clients like you by announcing it on their website.
However, the challenge here is the limited number of shares that the broker can offer,
and so allocation of shares is not guaranteed.

If there are more buy requests than the number of available IPO shares allotted to your
broker, a raffle is usually conducted to distribute the same. If you do not get chosen,
then you will end up with no shares of the IPO. As such, you can try the second method,
which is the Local Small Investors Program (LSIP).

LSIP is PSE’s own initiative to encourage more small investors to participate in

IPO’s and a direct way to buy IPO shares from the underwriters or a bank or any other
financial institution that pledges to buy all the unsold shares in an issue of new shares.
A company going through an IPO must allocate shares for this program. The program is
also designed to reach out to as many small investors as possible with its ₱25,000
maximum investment limit and accepts minimum board lot. Most clients have a higher
chance of securing IPO shares with the LSIP.
 But you have to take into consideration that investing in an IPO is just like buying
regular stock and needs careful research. The key to profitable IPO investing is to know
the company behind the stock. Most of the information you will need can be found in the
IPO’s prospectus: the business model of the company, performance of the industry
where the company belongs, earning power reliability of the firm based on its financial
history, trustworthiness of the controlling shareholders, and the capability of the
members of the management team.

Once you become familiar with the company, then the next step is to evaluate
the IPO price to see if the offer is acceptable. You need to know how much you can
potentially profit from investing in the IPO. One way to check is by getting the P/E ratio
or price-earnings ratio, which is the ratio for valuing a company by measuring its current
share price relative to its per-share earnings.

Consider also the liquidity of the IPO. How much of the company’s outstanding
shares shall be available for the public to trade? If the free float or the proportion of
shares of a publicly traded company that is traded in the stock market is small, say at
minimum of 10%, then you can expect the stock to be more volatile because there are
only a limited number of shares available. Higher volatility means higher risk because
the share price can swing at a large percentage in a few days if it is actively traded.

If you are investing for the short term, this can be a good opportunity for you. But
if you are investing long-term, choose an IPO with bigger free float, say 25% or more so
that there is higher stability in the share price movement. Institutional investors, such as
foreign funds, prefer larger free floats so they can trade with significant number of
shares without necessarily affecting the share price.

Overall, it is good to buy an IPO if you know what you are buying. Don’t buy just
because everyone is going crazy about it but uy because it is a good investment.
 VII. INITIAL COIN OFFERING (ICO)

An initial coin offering (ICO) is a controversial means of crowdfunding centered

around cryptocurrency, which can be a source of capital for startup companies. In an
ICO, a quantity of the crowdfunded cryptocurrency is preallocated to investors in the
form of "tokens", in exchange for legal tender or other cryptocurrencies such
as bitcoin or ethereum. These tokens supposedly become functional units of currency if
or when the ICO's funding goal is met and the project launches.

ICOs provide a means by which startups avoid costs of regulatory compliance

and intermediaries, such as venture capitalists, bank and stock exchanges, while
increasing risk for investors. ICOs may fall outside existing regulations or may need to
be regulated depending on the nature of the project, or are banned altogether in some
jurisdictions, such as China and South Korea.

ICO (Initial Coin Offer) is a term that has lately gained popularity in the
cryptocurrency environment. This term is used to define a process of raising
investments for some particular project. Only instead of traditional shares, the
participants get coins for their investments — certain electronic tokens (blockchain
entries), confirming the investor’s stake in the project and consequently the investor’s
share in the profit from the project. In other words, A-coins are issued for Project A, B-
coins are issued for Project B, and so on. Coins, just like shares, have value only within
the scope of a certain project. So, coins for Project A do not affect coins for Project B.

The ICO mechanism has a number of useful features, such as:

 ICO coins may be subdivided or consolidated. Just like ordinary cryptocurrency
coins
 ICO coins have the same anonymity as ordinary cryptocurrency
 Coins can be sold or bought at cryptocurrency exchanges that will naturally trade
in them
However, despite all the attractiveness of ICO, it has one considerable drawback.
ICO is good for raising funds and for launching a project, but it has no mechanism for
distributing the profits from the project’s business operations among the shareholders,
or in other words, no dividend distribution. At least this was not found either in the
corresponding documents or in the speakers’ reports.
It looks as if ICO proponents plan only up to the stage of making money. “You
have bought tokens — good of you! Your part is finished, congratulations! Now you are
investors! And we have raised money, much more than has been invested in
advertising, and now we can realx on a beach in Hawaii.”
Of course, we are far from claiming that all ICO participants are fraudsters. No at
all! Most ICO organizers are quite honest people. Yet they do not think about the future
either, and do not look as far ahead as the stage of “what if my business is successful
and I have to distribute profits among the shareholders?” And even if they think about
this, they console themselves with the idea: “we will buy back the ICO coins at the
exchange, and thus raise the value of the shareholders’ assets”. However, such
consolation is just self-deception.
This strategy of cost compensation to shareholders has two serious drawbacks:
1. When coins are bought back, the ownership stakes change, which is not the
case in a classic system where shares are separated from dividends.
2. The liquidity of any ICO coins is by definition lower than the liquidity of money,
as ICO coins derive from a specific project (company), while money derives
from economy, that is, from all companies taken together.

In the latter case, a company has to “cross the spread” to perform a buy-back,
that is, to pay the margin between the purchase and sale price of an ICO coin. And the
margin is rather high, due to the low liquidity of an ICO coin that is tied to a specific
project. The liquidity of an ICO coin is lower than the liquidity of a universal coin tied to
the economy in general.
For example, a company has N money to pay to its shareholders, but it physically
cannot perform buy-back, as there are not enough sale offers on the market. What the
markets generally offer is only a small percentage of the real volume of the shares or
coins issued. In practice, the low liquidity of ICO coins will lead to price peaks during
buy-backs, and excess profit to speculators, those who managed to sell at the right
time, but not to real investors who buy to hold for many years and want to have regular
returns on their investments.
So, as we can see, an ICO is good for starting a risky project that has no profit
and, respectively, no dividends. The game is played around a venture-type project —
 “let’s hope it takes off”. Although it is known that 80 % of startups go bankrupt within the
first three years, and any particular investment mechanism has no dramatic effect on
these statistics.
For a real project that carries out business operations, has sales turnover, brings
income and regularly distributes profits in the form of dividends, an IPO is preferable.
For these reasons, the Kolionovo farm managed by Mikhail Shlyapnikov chose the IPO
mechanism for attracting investments. At the time of issuing the shares on the Emercoin
blockchain, the farm already had a real and profitable business, and that is why an
effective dividend payment mechanism was the baseline requirement when it came to
choosing a platform.
The Emercoin blockchain has an option of “sending coins to the current
shareholder”. This option enables efficient and prompt delivery of dividends in the form
of universal coins to the holders of shares, and thus avoids crossing the spread and
“shaking the market”. Here, the Emercoin blockchain performs two functions:
as a distributed ledger of shareholders and; as a mechanism of dividend distribution to
current [Link] the moment, Kolionovo is issuing an ICO for one of its projects,
testing various investment mechanisms.
Moreover, it should be noted that in case of any legal disputes, IPO registered
entries can be turned into IOUs like bonds (as these certificates are in essence, IOUs,
only not on paper, but on the blockchain), and so, when necessary, property disputes
can be transferred to a traditional jurisdiction. As for ICO, it has no legal definition, and
ICO investors are not protected by law.
 VIII. HISTORY

The first token sale (also known as an ICO) was held by Mastercoin in July
2013. Ethereum raised money with a token sale in 2014, raising 3,700 BTC in its first 12
hours, equal to approximately $2.3 million dollars at the time. An ICO was held by
Karmacoin in April 2014 for its Karmashares project.

ICOs and token sales became popular in 2017. There were at least 18 websites
tracking ICOs before mid-year. In May, the ICO for a new web browser
called Brave generated about $35 million in under 30 seconds. Messaging app
developer Kik's September 2017 ICO raised nearly $100 million. At the start of October
2017, ICO coin sales worth $2.3 billion had been conducted during the year, more than
ten times as much as in all of 2016. As of November 2017, there were around 50
offerings a month, with the highest-grossing ICO as of January 2018, being Filecoin
raising $257 million (and $200 million of that within the first hour of their token sale).

Kik had previously issued $50 million in tokens called "Kin" to institutional
investors, and sought to raise an additional $125 million from the public. In connection
with this ICO, an unidentified third party executed a phishing scam by circulating a fake
URL for the offering through social media.

By the end of 2017, ICOs had raised almost 40 times as much capital as they
had raised in 2016, although still amounting to less than two percent of the capital
raised by IPOs. According to Cointelegraph, companies raised around $6 billion via
ICOs in 2017; 37% of that amount was made by only 20 ICOs.

The term may be analogous with "token sale" or crowdsale, which refers to a
method of selling participation in an economy, giving investors access to the features of
a particular project starting at a later date. ICOs may sell a right
of ownership or royalties to a project, in contrast to an initial public offering which sells a
share in the ownership of the company itself. Amy Wan, a crowdfunding and syndication
lawyer, described the coin in an ICO as "a symbol of ownership interest in an
enterprise—a digital stock certificate". In contrast to initial public offerings (IPOs), where
investors gain shares in the ownership of the company, in ICOs, the investors buy coins
of the company, which can appreciate in value if the business is successful. These
coins are sometimes "pre-mined", eliminating the need for proof of work. Often
contributions are capped at a certain value and depending on how long the ICO lasts,
on a per-day basis. Conversely, those same coins can depreciate if the company does
not perform.

At least 400 ICOs have been conducted as of August 2017. Ethereum is (as of
August 2017) the leading blockchain platform for ICOs with more than 50% market
share. These tokens are called ERC20. According to Cointelegraph the Ethereum
network ICOs have resulted in considerable phishing, Ponzi schemes, and other scams,
accounting for about 10% of ICOs. Older coins focused on being a currency, while
newer coins based on the Ethereum blockchain have developed some controversy
through the selling of what is tantamount to "securities" in the form of ICO tokens.
These developments have created an evolution in the ICO release marketplace towards
the new "utility" token replacing the typical token. Some commentators believe that
"utility tokens", which can be exchanged for a unit of service such as storage, could
avoid such questions.

IX. CRITICISM

As A Mechanism For Scams

ICOs can be used for a wide range of activities, ranging from corporate finance,
to charitable fundraising, to outright fraud. The U.S. Securities and Exchange
Commission (SEC) has warned investors to beware of scammers using ICOs to
execute "pump and dump" schemes, in which the scammer talks up the value of an ICO
in order to generate interest and drive up the value of the coins, and then quickly
"dumps" the coins for a profit. The developers themselves can be guilty of such tactics.

However, the SEC has also acknowledged that ICOs "may provide fair and lawful
investment opportunities". The UK Financial Conduct Authority has also warned that
ICOs are very high risk and speculative investments, are scams in some cases, and
often offer no protections for investors. Even in cases of legitimate ICOs, funded
projects are typically in an early and therefore high-risk stage of
development. The European Securities and Markets Authority (ESMA) notes high risks
associated with ICOs and the risk that investors may lose all of their cash. Increased
regulation of ICOs will reportedly encourage institutional investors to invest in them.

X. REGULATION

The regulatory treatment of cryptocurrencies is evolving and is

[Link] are based on distributed ledger technologies which enable
anyone to purchase or transfer their cryptocurrency holdings to any other person
without the need for an intermediary (such as an exchange) or to update a central
record of ownership. Cryptocurrencies can be transferred easily across national and
jurisdictional boundaries. This makes it difficult for central authorities to control and
monitor the ownership and movement of holdings of cryptocurrencies. Countries have
different approaches to how they regulate cryptocurrencies. This can depend on the
nature of the cryptocurrency itself.

There are two main types of cryptocurrencies from a regulatory perspective:

utility tokens and asset-backed tokens. Utility tokens may have value because they
enable the holder to exchange the token for a good or service in the future, such
as Bitcoin. Asset-backed tokens may have value because there is an underlying asset
which the holder of the token can attribute value to. In many countries it is uncertain
whether utility tokens require regulation, but it is more likely that asset-backed tokens do
require regulation.

This makes it complex for the issuers of cryptocurrencies to analyse which

countries their tokens (or coins) can be sold into, and for the prospective purchasers of
cryptocurrencies to understand which regulations, if any, should apply.

XI. ADVANTAGES OF CRYPTOCURRENCY ICOS

The fact that ICOs are open to the general public means anyone in the
cryptocurrency industry can partake if they can get funds transferred on time. This
means the projects can raise funds in a completely decentralized manner, which is quite
important. More investors from all over the world means there is less centralization,
which is what cryptocurrency is all about.

Moreover, the concept of cryptocurrency ICO means people can help shape the
future of this entire ecosystem. There is a wide range of different projects raising funds
through an ICO, and every single project aims to bring something new to the table.
Moreover, virtually all of these projects raise a lot of money in the process of their ICO
taking place. Multi-million dollar projects are very common in the world of
cryptocurrency ICOs.
Perhaps the biggest advantage – to speculators, that is – is how the tokens can
be bought at a low price. Most exchanges will eventually enable trading of these tokens,
where they can be sold for a profit if the project is successful. Ethereum-based tokens
have a habit of appreciating in value by quite a magnitude. Value gains of over 1,000%
over the course of a year or less are quite common, regardless of the projects being
finished by that time. From a speculative point of view, cryptocurrency ICOs are more
than worth getting involved in. This could ultimately become the downfall of these
projects as well, though, but only time will tell if that is the case.

XII. CRYPTOCURRENCY ICO DISADVANTAGES

As the name somewhat suggests, an ICO is an initial coin offering. This means
investors are often buying coins or tokens for a project that does not even fully exist yet.
In most cases, the team will have some degree of code to show what the project will
look like. However, there is no guarantee of projects ever being completed or even
being embraced by mainstream users. This is a risk people need to be willing to take,
as it may take years until there is an actual market for the project in question.
Speaking of investors, the majority of ICO investors are enthusiasts, rather than
people with expertise. Backers have a financial stake in the process, but an ICO is not
regulated or registered. This means users will not be reimbursed if something were to
go wrong. This is something a lot of people tend to overlook these days, even though it
has become less of an issue ever since smart contracts were used to lock up ICO
funds.
 Additionally, not everyone will be able to partake in every ICO these days. This is
especially true on the Ethereum network, as a lot of ICOs sell out in less than 30
minutes. Partaking in such an event means users need to send a transaction at a much
higher fee to ensure their transfer is picked up in a network block. This higher cost just
to participate in an ICO is not a positive development by any means. Then again, it is
only a minor drawback to most people, albeit still important to keep in mind.

XIII. CRYPTO COMPANIES IN THE PHILIPPINES

The Philippines is notoriously known for its expensive and inefficient banking
systems and services. The financial services offered by the nation’s leading banks and
financial institutions are extremely difficult to obtain, especially for average employees
or workers with mediocre salaries.

Over time, Filipino workers migrated to local remittance networks, most notably
the Lhuiller remittance network, to transfer money around the country. The majority of
workers in the capital city Manila and other major cities including Cebu support their
families located in the provinces, that have limited access to banks and other financial
services. With hundreds remittance outlets and branches located in each city, Filipino
employees began to prefer local remittance outlets over banking systems.

This migration restructured the monetary system and the financial industry of the
Philippines completely. Billions of dollars are processed by these independent
remittance networks annually, and workers are using these non-bank alternatives as
their solution to transfer money.

However, the issue with these remittance outlets always has been its cost. To
send small amounts, workers pay nearly 7% of the payment as transaction fees. For
larger payments, the transaction fee is even higher. More importantly, the receiving
party, which most often is the family of the worker located in the province, had to spend
a substantial amount of money from the actual payment to travel to the remittance
outlets usually located in the hub of the city.
 With bank’s inefficient services and remittance outlet’s expensive fees, Filipino
workers began to search for other alternative payment networks to send money across
the country. As this interest widely spread throughout the country, Bitcoin became
extremely popular amongst workers, employees, and average users.

Major cryptocurrency companies in the Philippines target this remittance problem

by offering easy and simple methods of purchasing and selling bitcoin. For instance, if
an employee has to send money from Manila, through platforms and applications
offered by cryptocurrency companies in the Philippines, money can be deposited to
bank ATMs, bank outlets, and even convenience stores for families to claim.

[Link]
[Link] is the most popular crypto company and bitcoin platform in the
Philippines. With its close ties with the local payment network providers and banks, it
allows users to to purchase and sell bitcoin through traditional methods such as bank
deposits, bank wiring, and ATM deposits.
Over the past two years, [Link] has significant improved its platform, adding
new services and features which allow anyone to purchase or sell bitcoin through
convenience stores, remittance outlets, and even local brokers.
The most interesting part of the [Link] platform is its services that enable
users to settle utility bills. On the [Link] platform, users can settle credit card,
electricity, water, and rental fees using bitcoin. Normally, users would have to visit each
company to pay in cash.

[Link]
[Link], one of the main companies under Satoshi Citadel Industries, is a
unique remittance platform based on bitcoin that allows anyone in the Philippines and
around the world to send money from/to the Philippines through bitcoin.
With zero service fee policy, Rebit has quickly grown to become a major player in
the international remittance market, allowing users to initiate in transparent international
transactions without hidden fees and by offering real-time BTC-PHP exchange rates.
Rebitters, or users of [Link], can also cash out their bitcoin in major banks and local
pawnshop networks, which are located in any city in the country.

[Link]
[Link] is a merchant payment processing platform that allows both online
and offline merchants to accept bitcoin. The platform enables real time transactions with
no costs, accepting bitcoin and peso through a secure and reliable platform.
The [Link] team also operates under Satoshi Citadel Industries, which
houses some of the most popular and well known crypto companies in the Philippines.
[Link], [Link], and [Link] have led the financial revolution and restructuring
of the financial induistry in the Philippines over the past two years. With their services
and increasing interest from filipino workers, the bitcoin ecosystem will continue to
improve throughout the country.

XIV. IPO VS. ICO

Throughout the short history of cryptocurrency, we’ve been introduced to

numerous new processes and terms like decentralization, coins, tokens, altcoins, etc.
One such process brought to life by the cryptocurrency revolution is the Initial Coin
offering or the ICO.
An ICO is a crowdfunding strategy for startups dealing with decentralized
products and services and operating on an indelible distributed ledger. It involves
creation and sale of digital coins or tokens to fund the project development.
Even though the name and the objective of the ICO sound similar to one of the well-
known exit strategies, the Initial Public Offering or the IPO, there are many differences
between the two.
An initial public offering is a capital crowdsourcing strategy used by a privately
owned company to expand and become publicly traded. The process includes several
legalities and formalities to be fulfilled prior to and during the event.
The ICO as a concept is currently in its nascent stage. Nevertheless, its core
objective clearly distinguishes itself from the concept of the IPO.
 An ICO is an entry strategy while an IPO is an exit. That is, a startup tries to sell
the project/product idea or a prototype and enter the market with the help of an ICO,
while an IPO enables an established private company to expand by diluting its
ownership to the public.
The second principal difference lies within what is offered at the time of the sale.
An IPO involves selling of shares or equity to the public. That is, the IPO dilutes the
ownership of the founders and the people who buy the equity enjoys the ownership
rights in the proportion of the shares held by them.
Whereas, an ICO involves selling either of the three types of cryptoassets –
cryptocurrencies or coins, tokens, or tokenised securities. These cryptoassets are
digital coupons or tokens, issued on an indelible distributed ledger, which act as the
backbone of the whole project. By buying the cryptoassets, investors usually prepay for
the future product or service. For example, if the project is a video game, the tokens can
represent the in-game decentralized currency. The investors usually tend to invest in
these assets at the time of the ICO because their price is much less than it’ll be in
future. Besides the investment, these investors also may help the team in marketing
and promotion in hopes of more profits. However, these cryptoassets doesn’t dilute the
ownership of the founders. (Investments in ICOs which offer profit sharing or voting
agreements are classified as investment contracts)

Strategy
An ICO is an entry strategy and is used by startups to raise funds for their project
and enter the market. Hence it is done during the introduction or the nascent stage of
the company and the capital raised is the working capital which is used for project
development.
However, an IPO is an exit strategy and is typically staged at a later stage when
the company is financially more stable but wants to expand and become publicly traded.
The capital raised is the long-term capital which is used to fund company’s expansion
projects.
Listing Requirements
In order to stage an IPO, a company should be listed on a stock exchange. This
requirement doesn’t apply to companies holding an ICO. They usually list their
cryptoassets on exchanges after successful ICOs.

Company Requirements
To list a company for an IPO, the applicants must fulfil numerous pre-requisites
related to aggregate pre-tax earning, aggregate cash flow, paid-up capital, underwriters,
prospectus, etc.
All that you need for an ICO is a minimum viable product, an audited public code,
and a whitepaper. An ICO can even be held without these as well.

Investor Requirements
In order to invest in an IPO, an investor has to fulfil his KYC requirements
whereas in most ICOs an investor only needs a cryptoasset wallet address and an
active internet connection to take part.

Currency Accepted
The securities in an IPO are traded in exchange for fiat currencies like Dollar,
Rupee, etc. ICOs, in contrast, involves the cryptoassets being traded in exchange for
other cryptocurrencies like Bitcoin, Ethereum, Neo, etc. However, some ICOs even
accept fiat currencies in addition to other cryptocurrencies.

Utility
Stocks represent proportionate ownership of the company, voting rights, and
eligibility to claim dividends. However, cryptoassets represent tokens which can be used
to avail a service or to store value

Regulation
IPOs are regulated by several national and international bodies like SEC in the
USA, SEBI in India, etc, but ICOs are self-regulated events.
Duration
Due to the heavy regulatory processes, IPOs can take up to 4-5 months to close.
ICOs, on the other hand, are dependent only on reaching the maximum hard cap or
fixed sale duration which usually lasts a month.
Parties Involved
An IPO witnesses many parties which benefit from it. These include the
company, stock exchange, brokers, underwriters, and the investor. There are usually
only two parties involved in an ICO.

Price Decision
The company spend a lot of time and involve few third parties to decide the price
of the shares at the time of an IPO. Book building is used to set the price.
 REFERENCES

 [Link]
Follow us: Investopedia on Facebook

 "2005 Annual IPO Review" IPOHome, Renaissance Capital. Available

from [Link] Retrieved on
15 March 2006.
 Draho, Jason. IPO Decision, Why and How Companies Go Public. Edward Elgar
Publishing, 2004.
 Evanson, David R. "Public School: Learning How to Prepare for an
IPO." Entrepreneur. October 1997.
 Joubert, Paul G. "Going Public." The Portable MBA in Finance and Accounting.
Wiley, 1992.
 Lardner, James, and Paul Sloan. "The Anatomy of Sickly IPOs." U.S. News &
World Report. 29 May 2000.
 Lindsey, Jennifer. The Entrepreneur's Guide to Capital: The Techniques for
Capitalizing and Refinancing New and Growing Businesses. Probus, 1986.
 MacAdam, Donald H. Startup to IPO. Xlibris Corporation, 2004. O'Brien, Sarah.
"Red Tape Said to Strangle Small-Business IPOs." Investment News. 9 July
2001.
 Tucker, Andy. "IPO Ahead? Try These Steps to Avoid Hitting
Roadblocks." Business First-Columbus. 17 March 2000.
 [Link]
Follow us: Investopedia on Facebook
 [Link]
 [Link]
should-know/
 [Link]
 [Link]
559ce40ced79