When the end of 2017 bitcoin took off, it gave the primary offerings of coins extra boost, which was enough for the beginning of 2018. As enthusiasts looking for the next “big cryptocurrency” that resembled the gold rush, the unbridled confidence of the market in ICO has created an environment in which traditional methods of investment analysis were discarded in favor of solid, akin to religious faith in the blockchain.
However, it now seems that the fervor has died down. ICO statistics Data shows that the volume of funds attracted in April, declined significantly compared with the January peaks. Perhaps this is due to the current uncertainty of regulation and the deadline for paying taxes at the end of April (in the USA). Anyway, it seems that investors ‘ interest to the ICO is lost.
Despite the fact that the number of ICO have increased the total amount of attracted funds decreased, which may indicate the awareness of investors regarding possible fraudulent offers.
Tokens without a team, a road map or a working product, but with a strong desire to hit the gold mine began to buy the best airtime for your clever promotion. Data show that at the initial stage of trading ICO without the work products actually exceeded their respectable competitors.
Of course, this “success” without a solid Foundation that ultimately leads to loss of profits, litigation, the panic in the market and the response of governments trying to protect investors.
What they proposed ICO has demonstrated that startups can raise funds based on promises, not production samples, instilling investors confidence on the empty space and not bringing in total revenues.
For example, consider a cryptocurrency Dentacoin, which is supposedly intended to pay for the services of dentists. These tokens were sold out in just five minutes and collected nearly $2 million, but then during the month fell seven times compared to the initial ICO price ($0,000748). Perhaps the project that best embodies the current state of things, is Useless Ethereum Token (“useless Ethereum-token”), who honestly offered “meaningless” ICO and still got 310,445 ETH ($200497)!
The fatigue of investors and growing pressure from regulators
It is not surprising that investors are tired of ads ICO, and numerous problems have drawn attention from regulators. And it probably contributed to the recent outflow of funds from the market.
Growing pressure regulators on ICO associated with the requirements of the securities and exchange Commission (SEC) and the KYC (“know your customer”) and professional standards, as well as reducing the number of ICO for us citizens is likely to squeeze out of this field of bad players and will blow a bubble that arose due to the fraudulent offers.
There is encouraging news. For example, South Korea announced that it will repeal the ban on ICO, and the SEC was cautiously optimistic that the balance in the regulation can be found.
In a recent interview with CNBC, the SEC Commissioner Robert Jackson said:
Investors is difficult to figure out where normal investments, where fraud… In the future we will think about ways to make these investments work in accordance with our securities laws.
He also compared the current state of the market the ICO and other markets:
How would it look on our markets without regulation of the securities and what would have happened if the SEC has not done its job? Take a look at the ICO market!
The authorities seem to recognize that in the whirlpool of experiments on financing really is a revolutionary financial system — the same one that opened the startups access to global investors, crowdfunding has changed and is fast spreading across the financial world.
According to the materials of Brave New Coin