Crypto ICOs showing a comeback, after major drop off in 2018


Crypto ICOs showing a comeback, after major drop off in 2018

Initial Coin Offerings… remember them? Investor interest seemed to wane as Crypto Winter took hold of the industry, and regulators across the globe began to clamp down on what they perceived to be fraudulent activities. Fraud losses have been excessive, and the need for valid investor protections has pushed many fund raises down a track of increased disclosures, mirroring the traditional practices with equity securities. The latest news is that ICOs are slowly making a comeback, perhaps, spurred on by the recent meteoric rise of Bitcoin valuations, along with many of its altcoin brethren.

Finding reliable statistics in this business sector, if ICOs are worthy of that classification, is a difficult task. Data for total funds raised for 2018 from three separate sources ranged anywhere from $7.5 billion to $21 billion, with one data point in the middle at $11.4 billion. The amount may vary, but the trend lines were similar. The first half of the year was stellar, but then the SEC and others came down hard on a few operations, while losses in crypto valuations were deteriorating at a rapid pace. The result, as expected, sent the ICO trade into hibernation by the time the year ended.

Cointelegraph was able to obtain current data for May, and the results look promising. Per its reporting:

The initial coin offerings (ICO) sector is showing signs of an uptick due to positive investor sentiment, apparently spurred by the recent crypto market rally. The data was revealed in a new report from token rating platform ICObench… Providing data as of May 21, the report notes that the success rate of ICOs has increased, ostensibly reflecting a rise in projects’ quality. 85% of total funds raised so far in May reportedly belong to projects with a high (3-3.5) rating — as compared with 68% in April.

ICObench also reported that there were “287 ongoing ICOs and 140 upcoming token sales expected.” When it came to fundraising totals, the news was a bit distorted, due to the recent Bitfinex private fundraising of $1 billion, a new type of offering, now referred to as an Initial Exchange Offering, or “IEO”. Outside of Bifinex, the total funds raised were a mere $75 million in the first three weeks of May. These funds were primarily raised in the British Virgin Islands and the Cayman Islands, obviously more accommodating from a regulatory perspective. The UAE and UK were also high on the list.

Since the latter part of 2018, investors have become more discerning, avoiding several of the “traps” that were prevalent before in a totally unregulated arena. InWara, an ICO database with 3,000+ ICOs, reported that the number of ICOs in the first quarter of 2019 declined 61% from the fourth quarter of 2018, but it also noted that total funds raised were $790 million, adding that the current year shows promise.

We also reported last February that: “The preferable path out of this mess appears to be what is called an STO (“Security Token Offering”). ICOs rarely give investors a share of its profits or a stake in the capital raised. Their token provides access to the service being development, and if all goes well, then the “utility” token, as it is called, will appreciate in the market, as the service goes viral.” The UAE has emerged the winner in this space with $67 million raised in the first quarter, roughly 56% of the total.

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Crypto ICOs showing a comeback, after major drop off in 2018

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