French regulator approves value-less ICOs

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Another token offering has received the green light from the French financial market regulator, Autorité des marches financiers (AMF). On May 12, the AMF granted an ICO visa to WPO, an independent renewable energy provider with operations in France, the United Kingdom, Ireland, and Sweden. This is the second ICO visa that the AMF has ever granted.

The ICO visa was created by the AMF in 2019 to reduce the amount of risk investors take on when it comes to utility token investing. The AMF requires French companies interested in hosting a utility token offering to apply for the ICO visa, and only after it is approved are they allowed to publicly promote a digital asset offering that is not considered to be security.

Second visa granted

The AMF took a step in the right direction by requiring companies to apply for an ICO visa. Many investors across the globe were burned by the ICO craze in 2017 that led to the creation of thousands of value-less tokens. Many of the tokens that were launched in 2017 are worth less than 90% of their original value. Putting protections in place—or a hurdle to jump through—like the AMF has with the ICO visa makes it much harder for illegitimate companies to raise funds. 

The ICO visa granted to the WPO is the second ICO visa that the AMF has ever granted. The first ICO visa was granted to the French company ‘French-ICO’ a platform that allows other ICO issuers to raise capital online. However, the AMF’s move to allow ICO’s is precarious; what’s shocking about the AMF permitting ICO’s is that both institutional and retail investors have shown little to no interest in investing in ICO’s. 

ICOs are dead

Starting in Q4 2018, venture capital funding began to outweigh initial coin offering capital raised, by July 2019, VC funding outweighed ICO funding for four consecutive quarters. According to digital currency data provider LongHash, ICO funding in October 2019 was down by 95% compared to the previous year. The data showed that investors, both institutional and retail, were continually losing interest in ICOs. 

The AMF has done the right thing by putting a barrier between a token issuance and investors. But the fact that they are still allowing companies to offer tokens that they publicly state will be listed on cryptocurrency exchanges and subject to speculation does not move the industry forward in a positive way.