As indicated by AMIGASYSTEM there are special USB pendrive images that you can (raw) write to a USB-Pendrive.
For icaros desktop in particular that image can be found on the
download page of icaros desktop and is named Icaros Desktop Light Pendrive which links to
this file. Do read the instructions though because that particular image has an additional 512 byte header that is not recognized b y all USB raw image file writer utilities. If you can use the software that paolone recommends to use.
In case you wish to create your own 'image' in case a AROS distribution (such as for example a nightly) does not have a separate USB pendrive image, then i would recommend to use another machine that is capable of running virtualisation software such as vmware/virtual box, boot the AROS ISO file in a virtual machine, and raw mount a USB pendrive that you want to install AROS to. Detailed instructions on how to setup such a Virtual Machine can be read in the Icaros Desktop Manual and is only used to create an AROS USB pendrive (installation of AROS into the VM itself isn't necessary).
AROS requires that the USB pendrive is formatted using a Amiga (compatible) filesystem and the installation process takes care of that for you automatically. It is also the reason that many USB writing software is not capable of supporting AROS (so do not try to use utilities such as rufus etc to 'burn' the
ISO file to an USB pendrive as it simply will not work. Most of those tools
do handle special crafted USB pendrive/flashdrive images correctly.
In case you run into issues then please report back, because that is the only way we can try to help you out. The process is not a 100% guarantee to work for your particular used hardware but usually works on machines that supports legacy/BIOS USB boot.
edit: Some clarifications added.