Nowadays, ICOs (Initial Coin Offerings) are among the most contentious fundraising techniques. Though, based on market figures, it looks like there’s no halt in raising money with ICOs anytime soon.
ICO Market Analysis
The very first successful ICO event took place in 2014 by Ethereum. However, the year 2017 saw some of the biggest ICOs, such as Filecoin and Hdac, that raised more than $250 million only with their token sales. But the trend seemed to slow down by the end of the year, with a huge number of failed ICOs.
According to a report, out of 169 projects, only 69 managed to raise money through token sales, effectively. As the trend started to fade away, it grabbed the attention of protruding figures of the blockchain sector.
By the end of 2017, the failure of ICO trends rebounded with force and achieved a whole new level in the starting of 2018. More than $1 billion worth token sales were registered back in December. However, in a mere three months of 2018, the blockchain firms raised more than $5 billion by selling tokens.
The number of ICOs are skyrocketing. Plus, 50 ICOs are now being registered every month, whereas in 2017, not a single month saw ICOs more than 26, except the month of December.
People with dubious business models saw a huge opportunity in the unregulated ICOs market. Major projects such as Bitconnect, was shut down after it reached a $2.5 billion market cap. Furthermore, the intense funds on digital platforms turn out to be an easy target for hackers and according to a report, 450 ICO projects were attacked in 2017.
Problems Faced by Regulators
ICOs are gaining huge popularity and have become a huge concern for regulatory authorities around the world for two main reasons:
- The vulnerability of the investors.
- The cash-flow to an unregulated sector.
Though, the complex decentralized architecture of the blockchain has made it quite hard to execute any regulations on the wild-market, the largest ICO market, US, has recently become the centre of the regulatory discussion on cryptocurrencies and ICOs. Deprived of any real plan, numerous US agencies, like SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) are trying their best to explain the rules according to their own partial understanding.
Is there any solution?
Well, it’s quite clear that the ICO market is far-off from coming to a “full-stop.” Though, on the other hand, this also means that more projects are going to target investors. However, in an attempt to regulate the market, the SEC keeps on banning legit ICOs.