Informal Economy and ICO Issuance

Ceylan Onay, Michele Meoli, Emre Ozsoz

Research output: Other contribution


This paper evaluates the role of informal economy as a driver of Initial Coin Offerings (ICOs) globally. While advocates of ICOs value its role in entrepreneurial finance, others discuss its role in money-laundering. In fact, informal economy literature shows that money laundering is an integral part of informal economies and regulations and taxes are significant drivers for firms to stay informal. Accordingly, in this paper we investigate the impact of crypto regulations, bans and taxation on ICOs and find a positive impact of regulation and a negative impact of taxation. Next, we analyze the impact of Anti Money Laundering (AML) regulation enforcement. Contrary to the existing research that discusses how ICOs could be a means of money laundering, our research shows that better AML compliance attracts more ICOs. Most importantly we find that countries with larger informal economies also attract more ICOs and discuss that ICOs create an opportunity to access financing for informal entrepreneurs.
Original languageEnglish
Typeworking paper
Number of pages42
Publication statusPublished - 27 Oct 2022


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