What is an IPO, how does it work, and how is it different from an ICO?
In this article, we will examine how an IPO differs from an ICO, how both processes work, what assets investors receive, and why these differences are critical for assessing risks and returns. We will explain how a classic IPO works with the participation of banks, regulators, and exchanges, as well as how an ICO works with a white paper, smart contract, and instant liquidity. You will learn why in 2026 the boundaries between these formats will begin to blur, but the risks will remain different. At the end of the article, there will be practical advice: who is suited to an IPO, who is suited to an ICO, and what to look for in the new hybrid formats.
What are IPOs and ICOs in crypto?
An IPO (Initial Public Offering) is the initial placement of shares on a stock exchange. The company goes public, sells a stake in itself to investors, and raises capital. Examples: Google, Amazon, Coinbase.
An ICO (Initial Coin Offering) is the initial placement of tokens on a blockchain. A startup issues tokens that can be used in its ecosystem and receives cryptocurrency. Examples: Ethereum (2015), Filecoin, Solana.
Deep Dive: How an IPO Works (The "Suit & Tie" Route)
An IPO (Initial Public Offering) is the process by which a private company first lists its shares on a stock exchange and becomes public. It is not just a public debut, but a complex, strictly regulated procedure that can take anywhere from six months to a year. Below is a step-by-step outline.
An IPO begins with the filing of Form S-1 with the SEC. This is a legal document that discloses the company's finances, risks, structure, and audit. Without it, it is impossible to go public.
Next, the company hires underwriters, i.e., investment banks (Goldman Sachs, Morgan Stanley, etc.), which evaluate the business, buy part of the shares, and help with the placement.
After that, the roadshow begins: a series of meetings with institutional investors, where the company's management presents the business and collects preliminary applications.
On the day of listing, the shares begin trading on the stock exchange (NYSE, Nasdaq). This is accompanied by a symbolic "ringing of the bell," the moment when the company becomes public.
Source: foundersguide.com
What does the investor get?
- Shares: a legally registered stake in the company.
- Rights: voting at shareholder meetings, the right to dividends, access to financial statements.
- Liquidity: the ability to sell shares on the stock exchange at any time (after the lock-up period ends).
Source: solulab.com
IPOs and cryptocurrency companies
In recent years, more and more crypto players have been choosing IPOs as a way to legitimize and scale their businesses. Examples:
- Coinbase is the first major crypto exchange to go public on Nasdaq in 2021.
- Circle is the issuer of USDC and is preparing for an IPO in 2024.
- Bitdeer and Core Scientific are mining companies that are already trading on the stock exchange.
These cases show that the line between traditional IPOs and the crypto world is gradually blurring. But the essence remains the same: an IPO is a path for mature companies that are ready for full transparency and legal responsibility.
Deep Dive: How an ICO Works (The "Wild West" Route)
An ICO (Initial Coin Offering) is a way to raise capital by issuing tokens on the blockchain. Unlike an IPO, there are no shares, regulators, or banks involved. Everything is based on a smart contract, white paper, and marketing in the crypto community.
Source: blockchainsimplified.com
"ICO gave us the freedom to launch projects without banks and funds, but with it came risks," Vitalik Buterin
The process begins with the publication of a white paper, a document describing the project's goals, tokenomics, technical architecture, and development plan. Then, a smart contract is created that accepts cryptocurrency (usually ETH or SOL) and automatically issues tokens in exchange.
Next, marketing begins: Twitter, Discord, Telegram, influencers, memes, and sometimes aggressive "airdrop campaigns." On the day of the TGE (Token Generation Event), investors send crypto and instantly receive tokens.
Source: blockchainsimplified.com
Important: in most cases, you do not receive a share in the company. You receive a utility token, i.e., a digital asset that can give you access to a product, the right to vote or participate in the ecosystem, but does not give you legal rights to the business.
Source: solulab.com
In 2026, classic ICOs have almost disappeared. They have been replaced by:
- IDOs — placements on decentralized exchanges (DEX).
- IEO — through centralized exchanges (Binance, OKX, etc.).
- Launchpad formats with vesting, KYC, and code auditing.
Comparison: IPO vs ICO for Crypto
Source: solulab.com
Why IPO and ICO Difference Matters for Your Wallet
The difference between an IPO and an ICO is not just a matter of form. These are fundamentally different approaches to rights, risks, and returns.
In an IPO, you buy a stake in the company, receive legal protection, access to financial statements, and potential dividends. But entry is limited: most often, only funds and accredited investors participate, and the process itself takes months.
In an ICO, you buy a token that may give you access to a product or voting rights, but does not give you any rights to the business. On the other hand, anyone with a crypto wallet can participate, and tokens are delivered instantly. This makes ICOs attractive to those looking for high returns, but the risks are also much higher.
An IPO is difficult to fake: it requires auditing, registration, banks, and an exchange. A fake ICO, on the other hand, can be launched in 10 minutes. Therefore, it is important to understand what you are buying: a share in a business or a digital asset with limited functionality.
What does the future hold for IPOs and ICOs?
In the next two years, the boundaries between IPOs and ICOs will become blurred. Hybrid formats are emerging:
- Security Token Offerings (STO) are tokens that are legally registered as securities.
- RWA (Real World Assets) is the tokenization of real assets (bonds, real estate, funds).
- Blockchain IPOs, where companies list their shares but also issue tokens (examples: Circle, Kraken).
Regulatory pressure is also increasing: even IDO projects are increasingly undergoing audits, implementing KYC, and using vesting mechanisms to protect investors.
"In 2026, the line between tokens and securities will be defined not by technology, but by regulators" — The Block
Infrastructure is also changing: DeFi, DePIN, ETFs, PoS networks, and BTC halving are creating new scenarios for raising capital. In 2026, investors will need to be able to read not only SEC reports, but also smart contracts.
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FAQ
- Is ICO illegal? No, but it depends on the country. In the US, investors are often blocked from accessing it.
- Can you get rich from an IPO? Yes, but usually slowly; it's an investment, not a lottery.
- What has replaced ICOs? IDOs, IEOs, and Fair Launch formats with more transparent rules.
- Do I become a co-owner of the company when I buy a token at an ICO? No, this is the most common misconception.
- Why can ICOs give x100 returns, but IPOs cannot? ICOs start with micro-capitalization, while IPOs are already valued by the market.
- Which is safer: participating in an IPO or an ICO? IPOs are regulated and require auditing, while anyone can launch an ICO, so the risks are incomparable.
- Can you participate in an IPO with a crypto wallet? No, for an IPO you need a broker, a bank account, and often accredited investor status.
- Why do projects still conduct ICOs despite the risks? It is a quick way to raise capital without regulatory barriers.
- What is an IDO and how does it differ from an ICO? An IDO is the placement of tokens through a decentralized exchange with greater transparency and liquidity.
NFA, DYOR.
The cryptocurrency market operates 24/7/365 without interruptions. Before investing, always do your own research and evaluate risks. Nothing from the aforementioned in this article constitutes financial advice or investment recommendation. Content provided "as is", all claims are verified with third parties and relevant in-house and external experts. Use of this content for AI training purposes is strictly prohibited.
What are IPOs and ICOs, how do they work, how do they differ, and which format is right for you in 2026? A simple explanation, comparison of risks, investor rights, returns, and trends: from classic placements to tokens and RWAs.
January 24, 2026
