Even amid concerns about the need to streamline the activities of companies involved in ICOs, the total funds raised through the crowdsale effort has hit $4 billion. This was according to records released by Autonomous Next, a fintech company specializing in providing analytics on ICO. This is despite the repeated warnings by regulatory agencies especially SECб whose Chairman Mr. Clayton said that companies involved in ICOs may be breaking federal laws.
Despite having just come on mainstream, 2017 witnessed what could be described as the proliferation of ICOs literally eclipsing $265 million raised between 2014 and 2016. September 2017 was the peak as, ICOs raised $800 million in crowdsales that spread through a variety of projects, unlike earlier funding that targeted financial and technological projects.
There have been concerns that the ICO ecosystem has slowed down and that it is getting more difficult for startups to get funding. Though some industry watchers say that it was as a result of the Bitcoin rally in the weeks prior to September which made investors hesitant to let go of their bitcoins for investments they were not certain would appreciate in value. Another reason for the slowdown may be that it is a maturing market in which investors have realized that ICO tokens are not tickets to wealth. It is still possible that the investors had become inured to the ICO hype.
Whatever the reason, it is obvious that a number of factors have contributed to the meteoric rise of ICO just as issues such as its unregulated nature contributing to the loss of confidence by many investors. Initial coin offering is a fertile ground for scams and the fact that many ICOs had fraudulent teams behind them contributed in no small way to the slowdown. Compounding issues are that successful companies such as Bancor and Tezos couldn’t follow through with their whitepaper as promptly as they should and may have contributed to the loss of interest by borderline investors.
The SEC warnings and intervention in which they stopped some ICOs such as Munchee was a negative publicity that must have contributed to dampening investor confidence in ICOs as well. SEC action will no doubt contribute to stability in this novel crowdfunding that we are certain has come to stay albeit under stricter guidelines. Whatever the reason for the slowdown, another certainty is that ICO has already changed the landscape of startup funding.