Initial Coin Offerings (ICOs) Provide SMEs Financing Benefits but Are Not Mainstream, OECD Affirms
This Tuesday, the Organization for Economic Cooperation and Development (OECD) has talked about the Initial Coin Offerings (ICOs) and their potential. According to the OECD, ICOs can be a really relevant and important financial tool for business from small to medium size. However, the space needs to evolve in order to achieve this goal.
The report has affirmed that ICOs are not mainstream yet because they are not mature, but that they hold great promise. By also looking at airdrops and other similar methods, the report examines how tokens that use the blockchain technology can be used as way to raise money. The main problem, however, is that ICOs were not regulated and considerably dangerous.
According to the information of the report, regulatory efforts are ongoing and there is a certain difference between the discourse of what ICOs are and what they actually are. Therefore, a theoretical discourse on what ICOs are not their practical state.
While they are good ways to raise funds, the market is too immature and there are too many scams, as well as price swings. This makes it harder to assess how much a token is really worth.
The report also affirms that ICOs are being hailed as miraculous solutions to financing projects, but they are all very different from each other and some are good while others are not. In fact, many ICOs were created for products that are not even built on top of the blockchain and basically use them as buzzwords.
On the report, the OECD affirms that regulatory uncertainties made companies not trust ICOs too much and that they may want to use other methods to raise money. This is partly because a lot of ICOs are scams or a bust and because they are not properly regulated in most of the world at the moment.
The fact that ICOs are generally made for early stage investments is also a point that adds to the risk as the companies are rarely well developed when they start offering ICOs. Because of this, the reports affirm that the potential of them to become mainstream is quite limited for all these issues.
In the end, the conclusion is that while ICOs can become an efficient method for small and medium-sized companies to get access to capital early in the creation of their products, ICOs are hardly very mainstream and there are some problems that might make them even harder to become mainstream.