The number of ICOs launched in the second quarter of the year grew by 49 percent, a new report states. The amount of money raised, however, indicated that investors were less excited at the prospect of investing in ICOs, as it fell by 12 percent. Finance and commerce ICO projects took the lion’s share of the money, with entertainment coming in third. The number of projects that hit their hard cap also fell, with investors remaining cautious in the wake of huge market volatility.
The Philippine SEC (Security and Exchange Commission) approved draft rules for initial coin offerings (ICOs), ABS CBN News reported. This official approval will pave the way for the legal sale of cryptocurrencies in the Philippines. The Securities and Exchange Commission has released, for public comment, the proposed rules to govern the registration of initial coin offerings, which will be considered when the actual rules will be implemented, SEC Chairman Emilio Aquino said.
Researchers from the University of Pennsylvania have found that a significant number of ICOs retained centralized control through undisclosed code.
The full paper, titled Coin-Operated Capitalism and published on July 18, is an “interdisciplinary effort spanning law, economics, and computer science,” according to University of Pennsylvania Law Professor David Hoffman.
The researchers looked at the top fifty ICOs which raised a total of $ 2.6 billion USD in revenue with the notional initial market cap of $ 3.8 billion. “We looked at the top fifty ICOs from 2017 taking into account every white paper, T&C and prospectus, every available piece of code, and every social media post we could get our hands on,” says Hoffman.
The US remains a leading destination for ICO projects according to a new study that also ranks Switzerland and Singapore in the top three. The report notes that authorities in other jurisdictions, like Russia and Estonia, are working to adopt favorable regulations in order to attract more crypto startups. The findings coincide with another study identifying 78% of all ICOs as scams.
For investors who were successful during the 2017 ICO craze, the wild west nature of the crowdsale model already appears to be a thing of the past. As the US SEC has begun to take an increasingly active stance throughout 2018 on the disruptive ICO approach, more and more startups are electing to limit the scope of their sales or forego ICOs altogether. However, there are exceptions to this trend, and several projects have gone ahead and fully embraced the regulations imposed by the SEC. Here are three of the most promising examples.
It appears the days of John McAfee promoting initial coin offerings (ICOs) are over. In a tweet on June 18, 2018, McAfee announced his decision to no longer work with ICOs.
McAfee Backs Out of ICO Promotions ‘Due to SEC Threats’
McAfee’s tweet was a response to a question posed by one of his followers, asking him to recommend a viable ICO investment. McAfee responded by stating he would no longer promote any ICO “due to SEC threats.” He warned others still promoting and endorsing ICOs that they were risking arrest in doing so.
Watchdog ICOs exit scamming; ERC20 token wallets getting emptied via smart contract bugs; people dying in token sale publicity stunts: the world of ICOs has become so bizarre it’s impossible to tell what’s real and what’s satire. As a glimpse into the events of the past week shows, there’s never a dull day in ICO land. Nor is there a sane one.
U.S. Securities and Exchange Commission (SEC) chairman Jay Clayton states that the SEC will not be bending the rules anytime soon when it comes to cryptocurrencies and that while bitcoin remains a commodity, all initial coin offering (ICO) tokens — or coins offered through a fundraising process — classify as securities.
“We are not going to do any violence to the traditional definition of a security that has worked for a long time,” he explained to CNBC. “There’s no need to change the definition. A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’[;] that is a security and we can regulate that. We regulate the offering of that security and regulate the trading of that security.”
BitTorrent creator Bram Cohen has become the latest high-profile cryptocurrency industry figure to urge explicit caution over all ICOs.
Cohen: No Need For ‘Benefit Of The Doubt’
In comments on social media, Cohen, who stopped short of criticizing the ICO crowdfunding model itself, implied industry journalists in particular should not involve trust when rating an investment opportunity.
“As a journalist you shouldn’t give any ICO the benefit of the doubt that they’re a ‘good project,’” he wrote on Twitter. “Appropriate bayesian priors are that they’re all scams until proven otherwise.”
China-based cryptocurrency exchange BTCC co-founder Bobby Lee continued the persisting narrative on centralized blockchains May 30, likening them to “databases.”
‘Complete Intellectual Dishonesty’
In a series of tweets, Lee echoed recent comments by cryptocurrency speaker and educator Andreas Antonopoulos on the lack of appeal of blockchains which are not decentralized.
“People don’t realize that Blockchain should be distinct & different from Databases, invented decades ago!” he wrote.
Bitcoin’s real Blockchain was only invented in 2009. Everyone using a digital ledger is calling it Blockchain, (without) regards to functionality. Complete intellectual dishonesty!
South Korea’s National Assembly has put forth an official proposal to permit domestic initial coin offerings (ICOs), signaling a possible reversal of the outright ban on the lucrative crowdfunding method issued in September of last year.
Time for Some Action
South Korea, the third most prominent Bitcoin marketplace in the world, has long remained a source of uncertainty in the cryptocurrency space. The country’s government flat-out banned initial coin offerings (ICOs) in September 2017 and has since failed to deliver any sort of clarity in regards to the future of cryptocurrency within the East Asian nation. Meanwhile, domestic companies have flocked to Singapore and Switzerland to circumvent South Korean restrictions, while South Korean investors have been increasingly exposed to fraudulent imposters.
Initial Coin Offerings (ICOs) have become the hottest way of raising capital, but at least one in five has turned out to be a scam, according to a new study.
1 in 5 ICO Projects are Scams
The number of Initial Coin Offerings (ICOs) has gone through the roof throughout the last year as their underpinned technology, the blockchain, received mass media exposure and starts to see widespread adoption. Yet, being comparatively easy means of raising capital, at least one in five has turned out to be a fraud according to research.
KYC and AML procedures play an increasingly important role in the world of cryptocurrency. This is especially true when dealing with initial coin offerings. IdentityMind has already processed 150 client requests in the past few months. It’s a very positive trend that will bring more legitimacy to the ICO industry moving forward.
IdentityMind is on a Roll
While the number of initial coin offerings has not decreased by any means, the same old concerns remain in place. More specifically, a lot of projects can still be considered securities, and not all of these fundraising initiatives take the necessary KYC and AML procedures into account. This is quite worrisome, as such procedures are a mandatory requirement in most parts of the world.
Looking to put your money to work for you with some promising investments into Initial Coin Offerings? Here are three ICOs launching in 2018 that could help you do just that.
The first Initial Coin Offering you will want to pay close attention to is Origin.
Origin is a protocol which utilizes the Ethereum blockchain and IPFS for the creation of sharing-economy marketplaces. In essence, it affords both developers and businesses the ability to construct decentralized marketplaces on the blockchain, while making it simple to both create and manage listings for the fractional usage of services and assets.
Chinese state media outlet, Voice of China, has published reports criticizing the efforts of Chinese cryptocurrency exchanges and initial coin offerings (ICOs) to continue operations in spite of the central government’s 2017 crackdown.
State Media Criticizes Cryptocurrency Exchanges’ Defiance of Crackdown
Voice of China’s reports state that “On September 2017, seven ministries and commissions of the Central Bank issued the ‘Announcement on Preventing the Risk of Issuance of Coinage Offerings’, requiring that any institution not engage in the interaction between legal currency, tokens, and ‘virtual currency’.”
Bitcoinist spoke with co-founder of ICO Alert, Mike Finch, who shared his insight into the recent ban on Initial Coin Offering (ICO) advertising on Facebook, Twitter and Google social media platforms, how ICOs have been responding, and how it levels the playing field for quality ICOs to receive market attention.
Bitcoinist: How have ICOs been responding to the ban on popular social media platforms?
Mike Finch: There are two ways to look at this, for both ICOs and ICO marketing/consulting agencies. On one hand, it is bad because it decreases the sheer # of avenues for ICOs to advertise and you could argue it hurts the industry.
ICOs have gotten a bad name. And given the fact that we’re constantly hearing about scams and illicit dealings, it isn’t hard to see why. Then there are the well-intentioned ideas that don’t make it to the first line of code, and the omnipresent threat of the SEC hovering like a black cloud.
The ground is starting to shift, and many blockchain companies are moving away from ICOs and toward regulated security token offerings, otherwise known as STOs.
Thus far, 2018 has largely been a period of uncertainty regarding the state and future of Initial Coin Offerings. With the US SEC taking an increasingly active role in the regulation of ICOs, and an increasingly controversial perception of this funding method, it is unclear what sort of role ICOs will serve in both the short and long run.
Earlier this week, the Wall Street Journal reported that Telegram had decided to cancel its hotly anticipated ICO. The encrypted messaging application plans to create the Telegram Open Network (TON), a massively scalable blockchain ecosystem for micropayments and file storage, among other services, through DApps and smart contracts across multiple, connected blockchains.
The government of South Korean appears to be on the verge of legalizing ICOs after the 2017 ban. According to the Korea Times, a coalition of lawmakers are looking to obtain a consensus in the National Assembly to pass a bill making ICOs legal in the country.
Details of the Proposed ICO Bill
Rep. Hong Eui-rak is leading the move to legalize ICOs in the country. He is a member of the South Korean ruling party, the Democratic Party of Korea. According to Rep. Hong, the proposed bill the result of the collaboration between his office and the Korea International Trade Association (KITA).
Yet another global regulator is speaking out about its attempts to fight fraud in the ICO market. This time, it’s Australia taking the lead.