According to a joint report from consulting firm PriceWaterCooperHouse and the Swiss Crypto Valley Association, Initial Coin Offerings (ICOs) volume reached new record highs in the first half of 2018 despite the price collapse of cryptocurrencies.
Between January and May 2018, ICO volume is already twice as much as it was during the entire year of 2017. Regulators and traditional financial institutions remain skeptical of ICOs, and have criticized their lack of oversight in certain jurisdictions but cannot deny their growth or effectiveness.
According to the report, the U.S., Singapore, and Switzerland are now the three most important ICO hubs worldwide, largely due to progress in regulation. Regarding regulation, the authors identified three different approaches that are currently being implemented worldwide:
“The US uses a centralized system in which all tokens offered by ICO are traded as securities. In Europe, on the other hand, a differentiated regulation prevails. FINMA, for example, classifies tokens into three sub-types: asset, payment and utility tokens, which do not constitute an actual investment but allow the buyer direct access to the product or service of the ICO. Finally, in Asia, regulation is very heterogeneous, ranging from strict prohibition to active promotion of ICO projects. “
The report also highlighted that ICOs continue to crowd out traditional VC funding, especially in technology and Blockchain-related startups. Hybrid models which combined classic VC/PE funding and ICO are increasingly establishing themselves as a valid funding alternative.
To date, around a third of all announced ICOs have successfully closed the funding round. Overall the report’s sentiment is such that after ICOs experienced a hype-cycle in 2017, 2018 is a year for maturity and integration as an emerging fundraising mechanism.
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