Now just a year ago, the voices that preached the huge profits obtained with the multiple ICOs that were on the market were at their peak. The ICO’s (Initial Coin Offering) were the definitive financing instrument for startups, even some venture capital funds expressed difficulties in finding new startups where to place the money of their investors. A year later the panorama changed radically.
In recent years, the initial offers of currencies have become a very efficient way for many projects related to Blockchain to obtain the necessary capital. In fact, in 2017 the ICOs contributed approximately six times more capital than the traditional rounds of venture capital financing. Although the general drop in the price and market volume of cryptocurrencies may have decreased interest in these financing instruments linked to blockchain projects, the truth is that this has remained.
The urgent need for effective regulation
But the success of ICO’s has also attracted the attention of various regulators worldwide, demanding greater regulation in this type of financing instruments. This was because of the multiple frauds, delays and breaches that some of the ICOs have incurred.
“First of all, let me start by pointing out that the initial offers of currencies are an interesting and extremely effective way for new companies to raise funds.” There is no doubt about that fact, however, that success does not compensate for the most obvious problem of the ICO’s. , which is that the government regulators are already aware and suggest that all the OICs are, by definition, securities. SEC Chairman Jay Clayton emphasized that point when he said that the sales of tokens that promise a returns are values and must be regulated to ensure that they comply with existing laws “
Only in the first half of 2017, according to a report by Cambers & Partners, there was 228 ICO and risk capital financing was exceeded in June 2017, which together with July were record months, in which the ICO’s raised in just two months 1,500 million Dollars. The average size was only 12 million, but the most successful ICO’s were extraordinary; Filecoin raised 257 million, Tezos 232 million EOS, in its first phase, raised 185 million, while Bancor raised 153 million.
This success in 2017 contrasts with a report by Satis Group that states that 80% of the ICOS was a fraud, failed projects, projects that stop working after receiving funding or that changed their objectives downwards and only 20% they have succeeded or continue functioning as planned and have reached the exchanges.
Are the ICO’s a blur in the general image of the cryptocurrency?
Certainly these figures do not help in establishing the general perception of the investor of the cryptocurrencies as a good investment in the medium or long term, which scares the traditional investor, the retailer and the venture capital funds.
What were the problems with the ICO’s market? First, there was a lack of full disclosure by the companies. Promises were being made, but there was little interest in demanding from those who make the promises to be transparent. There was also very little responsibility, and many investors basically played with their money in the hope of an immediate and high rate of return. And it was true there was a lot of money flowing into the market and there was no one who cared about the projects themselves. Without proper supervision, the whole market dynamic was a giant house of cards that collapsed at the first sign of strong winds.
What is the future of ICO’s?
In an interview with DCEBrief, the CEO of DNotes Global, Inc. Alan Yong emphasized the importance of ensuring that the cryptocurrency industry functions in compliance with existing government regulations. He specifically referred to the controversy surrounding the initial offers of currencies and suggested that the industry should change the way it uses that fundraising tool if it wants to avoid additional regulations to control the excesses of ICO.
Yong added about the urgent need for intervention by the SEC in the ICO’s
“The only question is whether the intervention of the regulators will be a benign form of monitoring and orientation, with mandatory sanctions for the bad actors”
The CEO of DNotes Global is optimistic about the future of the ICO’s, in his opinion, could be part of that road to success, but only if they adapt to SEC regulations and regulators around the world. “ICOs are too effective to simply abandon them altogether,” he said. “But they must be properly registered and motorized to avoid problems with regulators and investors.”
Economy fan, hangued, hooked on crytocurrencies and junkie of audiovisual stuff…on rehab