The difference is who runs the sale. In an ICO (Initial Coin Offering), the project sells its new tokens directly to buyers. In an IEO (Initial Exchange Offering), a centralised trading platform runs the sale for the project, usually for a fee, and lists the token afterwards. In an IFO (Initial Farm Offering), the sale runs on a decentralised exchange. Buyers originally had to commit liquidity-provider (LP) tokens to take part. The format matters less than one legal point: in the US, any of the three can be a securities offering, depending on the facts.
The newest development is American. On 18 August 2026 the US Securities and Exchange Commission (SEC) proposed "Regulation Crypto Assets" (Release No. 33-11434, File No. S7-2026-27). It would create two exemptions from Securities Act registration for crypto-related investment contracts. One covers offerings of up to $5 million over a four-year period. The other covers offerings of up to $75 million in each 12-month period. The comment period closed on 20 October 2026. The rule is a proposal and is not yet in force.
ICO: the project sells directly
How it works
The team publishes a white paper that describes the project and its token, then sells newly created tokens to the public in exchange for existing cryptocurrency. No intermediary runs the sale. The team handles the smart contract, marketing and distribution itself.
Ethereum is the best-known early example. According to ethereum.org, the Ether sale opened on 22 July 2014, ran for 42 days, and accepted bitcoin.
What went wrong in 2017
Regulators acted after a wave of token sales:
- 25 July 2017, United States. The SEC's report of investigation into "The DAO" concluded that its tokens were securities. The SEC added that "virtual coins or tokens may be securities" under federal law.
- 4 September 2017, China. The People's Bank of China and six other agencies declared ICO fundraising illegal, effective immediately. They ordered completed sales to arrange refunds.
- 29 September 2017, South Korea. The Financial Services Commission said it would ban fundraising through all forms of ICO. Contemporary reports noted some ambiguity over whether the ban covered foreign ICOs.
On quality, a March 2018 Satis Group study of ICOs with a market cap of at least $50 million classified 81% as scams and 8% as reaching trading on an exchange, as reported by BleepingComputer. That figure comes from one advisory firm's classification, not an official count.
Trade-offs
- Open access. Anyone with a compatible wallet can usually take part.
- No gatekeeper. Nobody checks the project before the sale, and a listing afterwards is not guaranteed.
- Legal exposure. Buyers and issuers may be dealing in unregistered securities, depending on the jurisdiction and the facts.
IEO: a centralised platform runs the sale
How it works
The project applies to a centralised platform's launch programme. The platform reviews the project and handles marketing and the sale. Its users buy through their existing accounts, so identity checks (KYC) are already done. The token is typically listed on that platform once the sale ends.
What regulators said
On 14 January 2020 the SEC's Office of Investor Education and Advocacy issued an investor alert on IEOs. It noted that IEOs are offered by trading platforms on behalf of issuers, while ICOs are sold directly by issuers. It also said IEOs "may, depending on the facts and circumstances, involve an offering and sale of securities." The alert warned that the platform itself may need to register as a national securities exchange or operate under an exemption such as Regulation ATS, and may be acting as a broker or dealer. In short, a platform's involvement does not make the sale legally compliant.
Trade-offs
- Some screening. The platform has a reputational stake. Review standards are not public or uniform.
- Fast liquidity. Tokens usually trade soon after the sale, which also exposes buyers to sharp moves at listing.
- Centralisation. One company controls the review, the allocation and the listing.
IFO: the sale runs on a decentralised exchange
How it works
The term came from a decentralised exchange that launched in September 2020. In the original model, participants supplied a token pair to a liquidity pool, received LP tokens, and committed those LP tokens during a sale window. Allocations depended on the share committed, and unused LP tokens were refunded after the sale. Part of the proceeds went towards burning the exchange's own token. These details come from secondary reporting, not the exchange's own documentation.
The model has already changed
In October 2025 the exchange that coined the term replaced IFOs with a successor product. Users now commit the exchange's own token during a sale window and claim the new token afterwards, with "no staking" and "no lock-ups." All participation fees are burned, and a tiered fee applies when a sale is oversubscribed, according to The Block's report of 6 October 2025. Much of the LP-based process that older guides describe no longer applies to that venue.
Trade-offs
- Non-custodial. Smart contracts handle the sale, not a company holding your funds.
- More steps. The LP version required DeFi knowledge and several on-chain transactions, each with its own fees.
- Impermanent loss. In the LP version, supplying liquidity exposed participants to impermanent loss when the pair's prices moved apart.
- Contract risk. No central party reviews the smart contract on your behalf.
Which kind of token sale is this?
Answer who runs the sale and what it asks you to commit to see which format it is and what the article says to check.
Who runs the token sale you are looking at?
- The project team sells its tokens directly, with no intermediary → ICO: the project sells directly
- A centralised trading platform runs it, and you buy through your account there → IEO: a centralised platform runs the sale
- Smart contracts on a decentralised exchange run it → next question
What does the sale ask you to commit during the sale window?
- LP tokens, received after supplying a token pair to a liquidity pool → IFO: the original LP-token model
- The exchange's own token, with no staking and no lock-ups → The successor model on the decentralised exchange
Nobody checks the project before the sale, and a listing afterwards is not guaranteed. In 2017 the SEC said virtual coins or tokens may be securities, and China declared ICO fundraising illegal. Check who controls the sale contract and the raised funds, whether the contract has been independently audited, and take addresses only from the project's own documentation.
Identity checks run through your platform account, and the token is usually listed on that platform once the sale ends, which exposes buyers to sharp moves at listing. The SEC's 14 January 2020 investor alert said IEOs may, depending on the facts and circumstances, involve an offering and sale of securities: a platform's involvement does not make the sale legally compliant.
Allocations depend on the share of LP tokens committed, and unused LP tokens were refunded after the sale. This version needs DeFi knowledge and several on-chain transactions, each with its own fees, and supplying liquidity exposes you to impermanent loss when the pair's prices move apart. No central party reviews the smart contract on your behalf.
In October 2025 the exchange that coined the term replaced IFOs: users commit its own token during a sale window and claim the new token afterwards. All participation fees are burned, and a tiered fee applies when a sale is oversubscribed. Much of the LP-based process in older guides no longer applies to that venue, and no central party reviews the contract for you.
This sorts a sale by format only: it cannot tell you whether a particular sale is a securities offering where you live, whether its contract is safe, or whether the project is genuine, and the IFO details rest on secondary reporting.
Side-by-side
| ICO | IEO | IFO | |
|---|---|---|---|
| Who runs the sale | Project team | Centralised platform | Decentralised exchange (smart contracts) |
| Identity checks | Often none | Yes, through the platform account | Usually none |
| Pre-sale review | None | Platform's own review | Depends on the venue |
| Listing after sale | Not guaranteed | Usually on the hosting platform | Liquidity on the hosting DEX |
| What you need | A wallet | A platform account | A DeFi wallet (plus LP tokens in the original model) |
| US securities status | Depends on facts (SEC, 2017) | Depends on facts (SEC, 2020) | Not addressed by name; the same facts-and-circumstances test applies |
What changes under the rules
United States. If adopted, Regulation Crypto Assets would give issuers a defined route for crypto-related investment contracts: the $5 million and $75 million exemptions, principles-based disclosure tailored to crypto assets, and audited financial statements above certain thresholds in the larger exemption. It would also add a conditional safe harbor. An issuer that certifies it has "ceased or terminated all essential managerial efforts" it promised, and meets other conditions, would no longer have the crypto asset treated as subject to an investment contract. The antifraud and antimanipulation provisions would still apply.
European Union. Under the Markets in Crypto-Assets Regulation (MiCA), which entered into force in June 2023 and has applied in full since December 2024, offers of crypto-assets to the public come with a white paper. ESMA states that white papers in its interim register have not been checked or approved by any EU national authority, and that the offeror or issuer "is solely responsible for the content." Since 23 December 2025, white papers must use the machine-readable iXBRL format.
How to check any token sale
- Read the white paper. Under MiCA, see whether one exists in ESMA's register. Remember that being listed there does not mean a regulator approved it.
- Check who controls the sale contract and the raised funds, and whether the contract has been independently audited.
- Check your jurisdiction. In the US, the question is whether the sale is a securities offering. China declared ICO fundraising illegal in 2017.
- Use official addresses only. Take contract and deposit addresses from the project's own documentation, never from chat messages.
- Budget for fees. On-chain formats can involve several transactions, and the fees add up on small amounts.
Limitations: the details of the original IFO model and its 2025 replacement rest on news and secondary reporting, not the exchange's own documentation. The Satis Group figure is a single firm's classification.
