Regulatory Migration to Europe: ICO Reallocation Following U.S. Securities Enforcement

TL;DR

This study investigates how U.S. securities regulation in 2017 led to a significant shift of crypto-asset ICO activity from the U.S. to Europe, highlighting cross-border regulatory spillovers in digital markets.

Contribution

It provides empirical evidence of international ICO reallocation following U.S. securities law clarification, using a comprehensive global dataset and fixed effects panel regressions.

Findings

Europe saw a 14 ICO increase per region-month post-2017.

Significant reallocation of ICO activity toward Europe after U.S. regulatory clarification.

Evidence of cross-border spillovers in digital-asset markets.

Abstract

This paper examines whether a major U.S. regulatory clarification coincided with cross-border spillovers in crypto-asset entrepreneurial finance. We study the Securities and Exchange Commission's July 2017 DAO Report, which clarified the application of U.S. securities law to many initial coin offerings, and analyze how global issuance activity adjusted across regions. Using a comprehensive global dataset of ICOs from 2014 to 2021, we construct a region-month panel and evaluate issuance dynamics around the announcement. We document a substantial and persistent reallocation of ICO activity toward Europe following the DAO Report. In panel regressions with region and month fixed effects, Europe experiences an average post-2017 increase of approximately 14 additional ICOs per region-month relative to other regions, net of global market cycles. The results are consistent with cross-border regulatory spillovers in highly mobile digital-asset markets.