Don't most ICOs explicitly state that the token does entitle the holder to...anything? With a stock or bond, there are legal structures that underlay the promised mechanism by which an investor might get a return on investment.

While it's all nice and fuzzy now, it seems to me that the recipients of the ICOs funds can do as they please with the money.

They are structured this way as an attempt to avoid the securities regulations.

It's an interesting solution to the problem. Securities regulations are setup so that investors have a chance at a return. They are intended to prevent the situation where companies raise funds, and don't return value to the investor.

So the sponsor of the ICO just says, no worries, we're not even promising an effort at returning value to investors!

It's unclear how this is going to play out from a regulatory point of view. It is clear, however, that the chance of these companies generating real value and returning it to the token holders is close to zero.

My guess is that most people putting their money down recognize, at least on some level, that they are joining a ponzi scheme. People love to gamble.

I think the biggest hurdle regulators will have to overcome if they want anything other than a blanket ban on ICOs will be verifying "good faith" execution of their business plans.

If you create a cryptotoken that has a real business purpose and sell it with the expectation that it will be redeemable for that purpose (basically selling gift cards for a service that doesn't exist yet), and a secondary market forms that appears to believe that the tokens are stock and trades them accordingly, are you guilty of securities fraud? What if you never actually develop that service, would that impact your case? If so, how do you distinguish between something that was a ponzi from the start and a mismanaged project that failed to deliver?

The innovation of blockchain, as applied to investments, is that your share can be immediately and easily traded.

The investment could still have the same terms and conditions as a regular security, though. There was a big one recently that even required you to be an accredited investor to buy on the blockchain.

Electronic trading of securities has been around for a while now. But it's only immediate and easy if someone wants to buy it at a value you're willing to sell for, and that's going to depend heavily on whether it does have terms and conditions attached which make holding it favourable.