Although the cryptocurrency industry continues to make technological progress following its massive pullback in 2018, investors have grown much more weary. During the first quarter of 2018, Initial coin offerings or ICO managed to raise about 6.9 billion US dollars. In 2019 of the same quarter, the figure dropped significantly to 118 million, about 58 times less than the previous year according to ICO analytics TokenData.
SEC ICO Regulations
Wall Street Journal reveals that the actions against ICOs who don’t obey the regulations are responsible for the significant drop. For example, on February 2019, crypto company Gladius Network received a charge for violating the United States Securities and Exchange Commission’s rules regarding the selling of unregistered securities.
Bearish Market Sentiment
Moreover, the Journal also believes that the bear market is also a factor. Future Perfect Ventures founding partner Jalak Jobanputra states that the cryptocurrency bear market hurts venture capital valuations. According to TokenData’s report, only 15 percent of digital assets from successful ICOs are gaining profit via trading higher than the original price.
Atty. Joshua Ashley Klayman claims that ICOs are on the verge of disappearing altogether, but feels confident that digital securities will stay on the market. STOs, or security token offerings, are already receiving attention from government regulators and private sectors.
The US is already experiencing changes to accept token sales. In the states of Wyoming and Delaware, the law is already allowing blockchain tokenization. Despite this, people who are taking the risks of starting their ICOs find themselves struggling to maintain their business. A business owner who founded the company called “Sponsy” is currently trying to sell his company on an e-commerce website after canceling his failed ICO.