How the Accounting works for fundraising through ICO?

[ajaychakravarthy1]

This question is from finance and accounting perspective.

Normally when a company raises funds from the market, in the cash flow statement it is accounted for under Financing activity.

My view is, in an ICO, the fundraising happens through the sale of a token that has utility described by the company hence it should be classified under Operating Activity and not financing activity in the cash flow statement

However, an auditor I spoke to said that any kind of inflow of cash that is outside of the core business of the company should be classified under Financing Activity in the cash flow statement and the Token cannot be considered as a product of the company raising an ICO.

Can someone help reconcile these different points of view?     

[LeGaulois]

An ICO is not considered as a product, at least it shouldn't be. The confusion can come from people thinking that they are buying a product: the tokens (with the hope to make a good ROI from it). But in fact, the token can be considered just as crowdlending participation. People invest some money in a project and they are supposed to get it back with or without profit(s).
Considering this, crowdlending belongs to financing activity (in my opinion)

[ajaychakravarthy1]

But your answer does not take in to account the utility of a token. You can purchase the product or use any of the service provided by the company by using the Token provided my the company. So in a way a Token sale can be counted as advance revenue for the company that it can recognize after the product is launched.

So money through a token sale can be classified as an operating activity and not a finance activity.

[LeGaulois]

But your answer does not take in to account the utility of a token. You can purchase the product or use any of the service provided by the company by using the Token provided my the company. So in a way a Token sale can be counted as advance revenue for the company that it can recognize after the product is launched.

So money through a token sale can be classified as an operating activity and not a finance activity.

Hmmm It's difficult.
once the project is launched and operating, the token is not a token anymore. Like you say you can purchase the product/service using the tokens (you purchase some coins). But it is because the tokens have been converted into the altcoin

You lent money to the project and the project promise you to send it back in the form of tokens (crowdlending). Then you are supposed to cash out your initial investment and you're done. The fact that you speculate with the tokens is something else.
If you notice their websites never promise, you will make 120%-150% ROI and so on. At least I have never seen it so far

if the tokens can be used to purchase a product the tokens shall have a fixed value.

[ajaychakravarthy1]

But your answer does not take in to account the utility of a token. You can purchase the product or use any of the service provided by the company by using the Token provided my the company. So in a way a Token sale can be counted as advance revenue for the company that it can recognize after the product is launched.

So money through a token sale can be classified as an operating activity and not a finance activity.

Hmmm It's difficult.
once the project is launched and operating, the token is not a token anymore. Like you say you can purchase the product/service using the tokens (you purchase some coins). But it is because the tokens have been converted into the altcoin

You lent money to the project and the project promise you to send it back in the form of tokens (crowdlending). Then you are supposed to cash out your initial investment and you're done. The fact that you speculate with the tokens is something else.
If you notice their websites never promise, you will make 120%-150% ROI and so on. At least I have never seen it so far

if the tokens can be used to purchase a product the tokens shall have a fixed value.

Thank you so much for your insights. It did bring a different point of view.