The Initial Coin Offering (ICO), Initial Exchange Offering (IEO), and Security Token Offering (STO) industries raised a total of $3.39 billion across 583 token sales in the first half of 2019. Although considerably down since 2018’s figures, ICOs continue to dominate over the newer forms of distributed crowdfunding.
Reports by Inwara and the Crypto Valley Association state that 69 percent of the $3.39 billion total raised by distributed crowdfunding efforts was contributed to ICO projects, 21 percent to IEOs, and 10 percent to more regulated STOs. Almost a third was raised by projects based in China -— Bitfinex’s $1 billion IEO accounting for all but $180 million of the invested total in the nation.
Projects from the USA raised 7.6 percent of the total, or $255 million. That being said, the United States market did account for the largest number of token offerings at 66. Closely following in terms of the number of projects were Singapore, the United Kingdom, China, and Estonia.
ICOs Hanging In
The reports also states that the amount of traditional venture funding in companies exploring blockchain technology is also declining. So far in 2019, $2.26 billion has been raised. This is only a fraction compared to the $4.19 billion and $3.25 billion in the first and second halves of 2018 respectively.
Inwara speculates as to why this might be the case:
“A plausible reason could be the current technological limitations of existing Blockchain technology which has still yet to provide scalable enterprise solutions.”
The figures certainly paint a picture of a picture of an industry in decline after the late-December 2017 ‘all-things-blockchain’ mania that briefly engulfed the planet. What’s more, a third digital token market analysis firm, Next Autonomous, warned followers to take the findings of the two reports with a proverbial pinch of salt.
Arguing that the figure is somewhat inflated based on the declining quality of data and issues with projects self-reporting figures, the firm states that the numbers are “suspicious.” It goes on to claim that a true figure would likely see the funds raised by tokenized crowdfunding efforts fall below those contributed by venture investors to blockchain-first companies.
Investors Want Regulation
Although the cryptocurrency market appears to be in the process of a revival since the pits of 2018, the same enthusiasm has evidently not returned to the various tokenized crowdfunding industries. The Crypto Valley reports speculate that the end of the so-called “crypto winter” has been brought about by increased interest in institutional investors in the space, as well as greater regulatory clarity.
It seems likely that this also explains the declining interest in unregulated ICOs, as well as the modest growth of STOs. Investments in the more regulatorily-compliant versions of the original distributed crowdfunding model have increased by 12 percent, with a total of $419 million contributed to projects.
Why do you think the number of ICOs has fallen so heavily in the last twelve months? Let’s hear your thoughts in the comments below.