One of the things that the crypto market saw in 2017 is the proliferation of ICOs. Along with the popularity of Bitcoin and other cryptocurrencies, ICOs have grown in popularity because of the willingness of investors to throw their money on things that involved cryptocurrencies. In fact, it was a strategy used by many companies in order to come up with funds especially those that are struggling.
However, there were issues along the way. According to a study, 1 out of 5 ICOs is considered a scam. And this isn’t helping the case of the industry. Regulators are now paying close attention not only on cryptos but also on ICOs. Even the SEC considered ICOs as a security.
Brian Kelly mentioned in that crypto investors are taking a wait-and-see approach when it comes to their crypto investment. He said that “People are starting to say, ‘I’m going to put the brakes on the ICOs right now. I’ve got my portfolio. I don’t need a seventh or eight ICO”. He added that “To me, ICOs are not as hot as they used to be”. He even said that ICOs as a means to raise funds can be “very frothy”.
In the first six months of 2018 alone, there are around 300 ICOs that were launched already. This is already the same number of ICOs launched last year. And also, more money has already been raised this year on ICOs.
US as a Main Player
US is considered as a main player in ICOs. US dollars are mostly used in order to fund into these ICOs. And many of these investors according to Kelly “are actually looking to buy ether, to buy bitcoin, to buy some of these big protocols, these platforms that everything is being built on”.
US Representative Warren Davidson mentioned that the ICO market needs a “light touch” of regulation. He was asked regarding cryptocurrency regulation and he mentioned that the “big thing” that the market needs right now is a “light touch regulatory framework”. According to the congressman, this could potentially provide more certainty.
Davidson mentioned that having a regulatory framework is a necessity today especially when the US Securities and Exchange Commission considered Ethereum as a commodity and not as a security. He even mentioned that the government still “has not put together” a framework that works in the industry. He claims that there is still “arbitrage going on”.
And this could exactly be the thing that many investors are looking forward to. Tom Lee mentioned that institutional investors are still waiting for regulatory clarity before they join the crypto industry. It is true that there are accusations that the price of Bitcoin was manipulated in 2017. And even for this reason alone, there is a need to take things seriously.
Also, a clear regulatory framework can advance companies doing business in the industry and could even get rid of bureaucratic difficulties. There are countries today such as Japan and Israel that are already working for improved regulations that tackle issues in the crypto market.