ICOs in Q1 2019 Raised 50 Times Less Than in 2018
According to a report published on March 31 by the Wall Street Journal (WSJ), ICOs (Initial Coin Offerings) raised $118 million in the first quarter of 2019. This is about 58 times less than what the projects had raised in the same time period last year, when ICOs had raised about $6.9 billion.
Investors Scared Off by Regulators
WSJ cited data extracted from the ICO data analytics website TokenData, and stated that investors had been scared off by steps regulators had taken against non-regulated ICOs.
The media giant cited the latest case of action being taken against an ICO, which took place as recently as February this year. The US SEC (Securities and Exchange Commission) had charged Gladius, the cryptocurrency-based startup, with the sale of unregistered securities, despite the fact that the company had reported itself to the regulator.
This week alone, it was reported how one owner of a crypto startup called Sponsy had to cancel the company’s ICO, and now was attempting to sell his company on eBay for a mere $60,000.
Another reason why investors were now wary of ICOs was the unrelieved bearish sentiment in the cryptocurrency market. In fact, just last month, Jalak Jobanputra, the founding partner of the venture capital firm Future Perfect Ventures, stated that valuations for venture capitals had also been badly impacted by the ongoing bear sentiment in the cryptocurrency market.
Another piece of information that the WSJ report revealed was that of the 2,500 projects that had been tracked by TokenData since 2017, only 45% had managed to successfully raise funds for their projects.
According to WSJ, consultant and attorney Joshua Ashley Klayman reportedly stated that ICOs would possibly eventually disappear, however, the digital securities market would not.
An indication of this seems to be the new STOs (Security Token Offerings) that are now receiving increased attention from both investors as well as government regulators across the globe.
Patchwork Regulatory Landscape in the US
In the United States, the cryptocurrency market continues to struggle with a difficult landscape of patchwork regulations for the industry, especially when it comes to the sale of tokens.
Individual states in the country are creating regulations on the go. For example, in February this year, the state of Wyoming legislated a Blockchain-based tokenized bill into law. However, the state of Delaware had already passed a similar bill into law back in September of 2017.