Initial Exchange Offering (IEO)

In blockchain terms, an initial exchange offering (IEO) is an initial coin offering (ICO) which is undertaken by a cryptocurrency exchange rather than by the issuing company.

IEOs differ from ICOs in that issuing companies are screened by a third party (an exchange) and must meet certain criteria. Only companies who meet an exchange’s criteria for listing can list their tokens on the exchange. In this way, cryptocurrency exchanges play a similar role to that played by stock exchanges in the stock market.

A stock exchange screens companies and only companies which meet its criteria can hold an initial public offering (IPO) and subsequently list their stock on the exchange. A cryptocurrency exchange screens companies and only companies which meet its criteria can hold an IEO and list their tokens on the exchange.

This sets IEOs apart from ICOs, where companies sell their tokens directly to investors. ICO can be compared to over the counter (OTC) stock trading, where shares or participation certificates are sold directly by their issuing companies to investors without regulation by a third party.

IEOs differ from security token offerings (STOs) in that they are regulated by cryptocurrency exchanges whereas STOs are regulated by government authorities.

More on this topic:
Online stock broker comparison
Initial Coin Offerings – 12 Tips for Investors
STOs and ETOs: The Pros and Cons Explained
Swiss Participation Certificates – The Pros and Cons Explained

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Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.