ICOs are still alive, despite the bad reports and crackdown

14 Feb, 2019 | Updated: 14 Feb, 2019
by Fifi Arisandi
ICOs
ICOs are still alive, despite the bad reports and crackdown

ICOs are still alive, despite the shocking reports, crackdown and the declining numbers.

With the regulators are taking a stricter stance towards Initial Coin Offerings (ICOs), do they still exist? Do new startups still use the used-to-be popular method to raise funds for their businesses?

According to the data from CoinSchedule, there are still quite many new companies that take this path to raise money from investors.

In fact, the year of 2019 has seen 87 companies conducting token sales, 17 of which happened just last week.

Compared to last year, the number is just a fraction, however, it’s still bigger than what early 2017 had, when it first started.

Amount-wise, as much as $292 million was raised in January this year, which is only around 10% of the previous year’s $2 billion.

Considering the shocking facts revealed by various researches on ICOs, along with the crackdown by the SEC, it is pretty surprising that there are still companies that choose this method to raise funds.

Read more: ICO returns down over 1300% in 2018, according to Coingecko report

Lex Sokolin from Autonomous Research expressed his surprise by saying, “What boggles my mind is that token holder pressure hasn’t prevented entrepreneurs from wanting to avoid this sector. Imagine having thousands of upset traders yell at you on social media all day long.”

That said, it appears that the choice to conduct ICOs in such unconducive condition is compensated with changes in the target and location.

According to the report by Bloomberg, most ICOs now take place in locations outside the US, such as Switzerland, whose financial regulator has a friendlier stance towards ICO, Asia and Eastern Europe.

The data reveals a declining trend, where there were 22 token sales in the US out of 113 globally in Q1 2018 and only 12 closed sales in the US out of 111 globally in Q4 2018.

Sokolin thinks that several reasons that may cause the increase of ICOs investors in the aforementioned regions are the reality faced by startups where they have fewer access to capital and investors as well as a lax regulation from the authorities.

Moreover, most ICOs these days are said to have more mature projects with actual product and even millions of existing users, something that’s completely different with last year, when companies that conducted ICOs only had ideas and vision to start with.

Justin Sun from TRON, who just successfully conducted the BitTorrent tokens crowdsales, another term for ICOs, said, “These days, people are looking for both vision and signs of good execution.”

Read more: BTT - What is BitTorrent's new cryptocurrency token actually for?

Jack Platts from Web3 Foundation believes that the ICO model is not going anywhere. “The ability to raise money from anyone globally in a pseudo-anonymous way is still compelling to a lot of projects, and some version of it will be used long into the future,” he added.

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