Two obscure companies with no sales raised nearly $400 million combined in recent days from outside investors. How did they do it? Via a new, unregulated fundraising method that has no connection to Wall Street and is based in the world of cryptocurrencies.

These fundraisings, called “Initial Coin Offerings,” are exploding in value. So far this year, companies have raised more than $1 billion this way. That is 10 times the amount raised in 2016, according to Smith & Crown, a digital-currency research firm.

...