The initial coin offering (ICO) market is having a very bad year, a new report has revealed. The report indicated that the money raised by ICOs this year is more than 58 times lower than over the same period last year. Compiled by the Wall Street Journal (WSJ), it further indicates that the year might get worse for the industry.
In Q1 last year, crypto and blockchain startups raised over $6.9 billion. The market was flying high at the time, despite many cryptos losing up to 50 percent of their value over the three months. It looked like the ICO market had finally taken root after shooting to prominence in 2017. The rest of the year was just as stellar, setting the record as the best year ever for ICOs.
It has been anything but rosy since the year turned. Regulators have cracked down on ICOs, with some such as Gladius Network and Paragon Coin being forced to offer refunds to their investors. The crackdown has had a ripple effect on the investors. They have withheld their investments, denying crypto and blockchain startups the much-needed capital.
The report by the WSJ cites data provided by TokenData, a research and analytics platform. Out of the over 2,500 projects that TokenData tracked since 2017 from their earliest stages, only 45 percent were able to raise money. To show further just how hard crypto startups were having it, TokenData revealed that only 15 percent of tokens issued in ICOs were trading at, or above the original price.
The report quoted Joshua Klayman, an attorney and consultant who stated that he believes ICOs may not make a comeback. They could end up being slowly pushed out as investors become more cautious. However, the market for digital securities will only get bigger. It’s up to crypto startups to learn how to position themselves to make the best out of the new market.
Securities Token Offerings (STOs) have been one of the most aggressively expanding market, Klayman added. Since STOs fall under the current regulatory scope, the regulators are likely to be on board, as opposed to ICOs which challenge the status quo.
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