SEC Initial Coin Offering Compliance Could Have Huge Implications For Crypto Investors
Initial Coin Offerings. If you have been reading about the crypto market for some time, you can certainly know all about them, as ICOs were, along with Bitcoin, the hottest thing in the crypto market last year. This year, though, their value has plummeted as the marketed was greeted by the bear.
While unregulated ICOs have been raising an incredulous amount of money, they were also very flawed and most of them turned out to be awful investments. This has led many people to state that ICOs were dead. A common mistake, surely. You can just check on Google how many times Bitcoin was declared dead already and it still already lives.
So what is the future? The future is compliant ICOs? Why? Because what the crypto market is lacking the most now that all the hype has died out is trust. People need to believe ICOs again in order to invest. After the first quarter of the year, the ICO market has plummeted.
You have to consider that, despite the bear market, ICOs have still raised over $18 billion USD so far in 2018. The sum is not insignificant and the newly regulated ICOs can be a way out for this market.
For instance, Gavin Wood, a co-founder of Ethereum, has recently told Bloomberg that this downturn is only temporary and that people will really come back for ETH and the ICOs in the future as soon as they evolve.
The Confusion Between Securities And Utilities
One can say that the main problem that the market had in 2018 was that ICOs sold mostly utility tokens but they were actually securities if you follow the U. S. Securities Law. This has led many institutional investors to be afraid, prohibitions to be in order and many other issues that plagued the market.
Now, if companies can finally get their shit together and stop marketing their securities as utility tokens like Bitcoin, there is hope for ICOs.
Granted, most of the confusion stems from the fact that Bitcoin is certainly a utility instead of a security and people still consider it to be an “investment”, which is the effect that Satoshi has caused with his affirmations that Bitcoin will be the digital gold.
In any case, despite all the problems created by a lot of misleading marketing and all the prophetic future of Bitcoin, it looks like more and more companies are starting to get closer to the U. S. Securities and Exchange Commission (SEC) in order to really mark a new era in which regulated tokens will be launched and they will be clearly securities.
This can change the landscape of the market and be able to create a space in which the investors will not be afraid to invest anymore, which will make ICOs raise like a phoenix again. It is also expected that ICOs will be less of crowd sales and more of private rounds of investment that resemble Initial Public Offerings (IPOs) a lot more.
Surely, by leaving crowd sales aside, the ICOs will lose most of its “charm” but people will also be safer from scams. Too much freedom led the market to be flooded with scams and problems, something that has to change in order to create a healthier market for the investors. A price has to be paid, though, that will be a shift in the direction of institutional investors.
However, this new mature version of the ICOs will probably be beneficial after all. It will create a market that will lead to innovation and to a better technology in the end. Some chances for retail investors to make a quick buck will be lost, surely, but we have to remember that most of these chances were misleading opportunities right from the start and that more people lost money than the ones who actually made some money.