Autonomous Next Research Shows Sharp ICO Funding Drop Related to Security Tokens Rise
According to a research conducted by Autonomous Next, funds raised via Initial Coin Offerings across the globe dropped with a whopping 90% since January to September, and this could be due to the entrance of Social Token Offerings (STOs).
Funds raised through ICOs increased in January, hitting almost $3 billion, but later dropped with time to a low of $300 million in September.
Security Token Offering Could be the Major reason
One of the key reasons for the decline of ICO funds, according to the research is STOs, which are financial securities. Considering that they are backed by the US Securities and Exchange Commission (SEC), many investors have opted to go for them as opposed to ICOs.
However, with this change of events, Autonomous Next research have termed it as ‘unlikely’ that STOs will find a strong ground soon because of the regulations enforced on it.
Other Contributing Factors
The research also pointed out other factors that could have led to the sharp decline of ICO funds, stating that the ‘possibly’ ongoing crisis in Chinese peer-to-peer lending that began in 2015 as well as the devaluing idea of investing in a utility token have also played a major role.
Explaining this further, Autonomous Next stated that:
“If we include EOS and other chunky private token raises, the highs (of funds raised through ICOs) go to over $3 billion, suggesting that monthly ICO activity is down 90%, which of course looks a lot like Ether’s price performance, but with a three-month lag.”
Cryptocurrency price ‘crash’ slowed down the ICO trend
Autonomous Next was also quick to state that the slowing trend of ICO funding could have been further attributed by the dipping prices of digital currencies. It cited that the ‘crash’ which came after an apparent ‘crypto boom’ late last year might have scared investors away from responding to various ICOs.
Apart from the price ‘crash’ the research also justified the slow trend with two factors: Bitmain capturing capital before ICO, and fintech companies’ interest in digital currencies. The research claimed:
“Anecdotally, projects are selling equity and giving matching tokens for ‘free’ to investors in the capital structure.”