Initial coin offerings have been a hot topic this year. One of the foremost methods for companies to raise capital, ICO’s have both sparked intrigue and infamy. This month, ICO reached a key milestone and surpassed the $4 billion mark. This comes within days of the SEC (Securities and Exchange Commission) Chairman Jay Clayton issuing a statement that discussed the risks involved with ICOs. In particular, Clayton highlights that many of the ICO organizers could actually be in volation of federal regulations that govern securities laws.
Don’t Forget to Join our FREE Text list! From Your Cell Phone Text the Phrase CRYPTO to 474747
Autonomous NEXT, a fintech research firm, found that ICOs have increased the number of dollars raised to $4.2 billion during 2017. This has dwarfed the $265 million that was raised from 2014 to 2016 and, yes that’s a combined number from those years.
But compared to previous years, funds have been given out to an array of project types and the most funded industries are core technology and finance. Even though ICO’s are setting records, the information shows that regular fund raising models may be getting into the late stages of the “hype cycle”.
CoinSchedule has come out to say that the excitement may have reached a peak in September, which was ignited by Filecoin’s $257 million crowdsale. Roughly $600 million was raised within 3 separate months (June, July, October) however this method of fundraising saw a drastic decline in November.
There are multiple reasons that could contribute to this. Initially, given the rise of bitcoin during the last quarter of the year, investors are less likely to sacrifice their potential gains that they could make by holding onto their bitcoin. This is, of course, in light of “placing bets” on certain assets that may not make them similar returns for months, possibly years.
Additionally, investors are starting to become more skeptical of ICOs. This is especially because of several ICO scams that have been brought to light in recent months. The SEC has also begun to crack down on token sales that simply do not comply with normal law. Organizers now need to take a much more detailed approach when launching an ICO.
“It is harder than before to get funded, so on average the market is cooler towards any particular project. But overall, ICOs are becoming more mature, both in operating models, code and regulatory approach,” said Autonomous Next’s Lex Sokolin.
This having been said, the climate for ICO’s may pick up in the future but the next wave may not be started quite yet.