Digital coin offerings exceed 2017 with the total money raised in first quarter of 2018. According to Coindesk – January through March saw an amount of $6.3 billion raises from digital coin offerings. The amount is 118 percent more than that of 2017, which would imply ICO’s are here to stay despite the sceptics.
There has been much scrutiny surrounding the crypto market space as regulators battle to halt illegal businesses and protect investors from buying in without considering the risks. Anyone can create a digital asset and there are 15,000 that have been launched already. Start-ups raise funds by selling digital tokens instead of raising stock.
There are many fraudulent ICO’s that urge investors to buy through false advertising and misleading information. The mistake investors make is getting all FOMO (fear of missing out) about digital coin offerings as others are buying in. It is vital that investors get more detail about what it is they are actually funding. A legitimate ICO will have a structured white paper that explains in detail where the money will be used and a time frame in which it aims to do so.
The Legal ICO’s
The legal ICO’s such as Moonlite.io and Basis are two of a few that give detailed information on where funds will be used etc. Basis raised $133 million with assistance from whales such as Alphabet Inc.”s GV, Andreessen Horowitz, Kevin Warsh (former Federal Reserve Governor) and Stanley Druckermiller (billionaire hedge fund manager). This was the first time Bain Venture Capital firm and Lightspeed had even bought a digital asset.
Size and Speed
The size and speed of ICO funding in 2018 has gained momentum and saw the first quarter saw 59% more raised than the entire 2017. A Coindesk report showed that without Telegram’s record $1.7 billion digital coin offerings, the amount for ICO funds would be $4.6 billion (85% of total in 2017).
Coindesk notes that:
“A number of projects are still eager to sell tokens, despite the regulatory risk”
The Securities and Exchange Commission (SEC) acknowledged some ICO’s as securities offerings and required that they be registered with the agency.