Many have been quick to assert the demise of the ICO market has occurred. Galaxy Digital CEO and chairman Michael Novogratz told Bloomberg in December how the “ICO Market is pretty much dead right now.”
Novogratz noted how some ICOs were actually just scam projects or committing other fraudulent activities, which attracted the attention of regulators who decided to crack down.
Authorities in South Korea have totally banned ICOs, while Chinese officials decided to clamp down on both ICOs and cryptocurrencies. In August, Monkey Capital LLC found itself in court in the Southern District of Florida after facing allegations it could not bring a working product out for investors after the token sale.
The company was asked to return the token sale money to plaintiffs before the case was even filed, but the founder and other staffers refused to comply with the request.
The judge presiding over the case said some team members used the token sale money to pay themselves and other business-related expenses. News stories about ICO-related scams and the shuttering of projects who have run out of steam (and money), has led to larger scepticism about the ICO world as a whole.
Digital Currency Group CEO and founder Barry Silbery took a critical view of the ICO world, commenting to CNBC in an interview how the ICO is “dead” and “over.”
However, others take a more optimistic viewpoint. Some, like Bitcoin Market Journal publisher John Hargrave suggest the market for ICOs is changing. He told Forbes how search interest for security token offerings (STOs) remains at a near all-time high despite tepid interest in ICOs. Eric Ervin of Blockforce Capital asserted these trends show how “investors are just doing more diligence and looking for more credible and vetted projects.”
He predicted STOs would become more popular as people get more comfortable with blockchain. Back in December, Novogratz also mused on what he saw as “a market for security tokens” that will be sold to qualified buyers. He said this sounds “a heck of a lot less sexy” but would result in business growth.
One of the reasons the ICO market has slowed down is due to the lack of investors and changing attitudes for those who wish to put money into an ICO.
A lot of Ether owners have a lot less money to spend than what has been seen in other periods. Speculation is those who held cryptocurrency with the markets were high felt more secure about their investments, and in turn were more apt to actually go out and participate in ICOs.
Now with the market downswings, people are generally less interested in participating. However, Hargrave expressed some optimism about the situation. He remarked how bad cycles usually change since the larger cryptocurrency market moves in tandem.
To him, this means the ‘crypto winter’ will “surely be followed by crypto spring.”