The latest stats related to ICO funding in recent months indicate lack of investments in ICO projects amidst the crumbling crypto bear market. According to the statistics reported in the new issue of the Diar digital asset newsletter, ICO fundraising in November dropped to the lowest level of 2018.
It is believed that the drop is most likely linked to the cryptocurrency markets. Crypto market set fresh 2018 lows into the end of November, the time when Bitcoin plummeted to as low as $3,600. Since then, there have not been positive changes in the market. In the past week, Bitcoin touched yet another fresh 2018 low at $3,300.
As per the report, ICOs have raised to a gross of over $12.2 billion, in 2018 alone. Majority of the amount came within the first half of this year. In the month of February over $2.6 billion was raised followed by January, during which an amount of $2.4 billion was successfully raised.
However, the fundraising dropped precipitously in March and April, but recovered in May. Since then, ICO fundraising has been on a steady decline, and now it has almost disappeared in November. ICO projects have raised only $65 million, in the last month, notes Diar.
“Initial Coin Offerings (ICO) are all but over with November seeing total raised funds at $65Mn. ICOs in 2018 have raised over $12.2Bn but have now petered out from regulatory backlash fears, as well as a slow-down in cryptocurrency markets with token prices plummeting leaving retail investors with a bitter taste.”
In the United States, ICOs are deemed to be securities products. The country is yet to institute a type of legal framework for ICOs. In a recent speech, the chairman of Securities and Exchange Commission, Jay Clayton noted that although ICOs can be an effective way to raise capital, they still must comply with traditional securities law.
“ICOs can be effective ways for entrepreneurs and others to raise capital. However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
Clayton also mentioned ICOs potential risks, including a lack of protection, fraud and manipulation. Lastly, Diar’s report ended on a pessimistic note, stating that proper regulatory framework from global regulators is required to prevent the damage.
“It’s unlikely the contentious fundraising mechanism, at least in its current unregulated format, to garner much interest moving forward with regulated tokenized securities platforms paving the way for a new realm of finding investor capital.”