Written by Olga Bogdanova, Head of PR at INCRYPTICO

The ICO hype that we’ve all been watching over the past year can be quite misleading because the whole history of the Initial Coin Offering already counts 5 years. We may say that the ICO industry is growing exponentially, just like the interest towards the blockchain technology. Thus, back in 2013, there were only 2 ICOs with $800,000 raised. In the first 5 months of 2018, a total of 537 ICOs with a volume of $13.7 bn have been closed successfully, which is more than all pre-2018 ICOs combined. And the year is not over yet…

Taken from the “Initial Coin Offerings: A strategic Perspective” report

Success or fail?

At the moment of writing, 1,158 out of 3,470 ICOs have successfully closed the funding round, which is around one-third of all announced campaigns.

Taken from the “Initial Coin Offerings: A strategic Perspective” report

Thereby, many projects are delayed and lose momentum during ICO preparation processes, and the reasons for that can be different: legal struggles, weak team, wrong marketing strategy, governance issues, etc. It’s interesting that ICO projects with smaller scale funding than the top 20 have a higher tendency to get off track or even dissolve.

Choose your ICO haven

In 2018, the US, Switzerland and Singapore remain key global ICO hubs. No wonder, as these countries express an overall positive attitude towards the crypto world.

Switzerland

Switzerland is a favoured choice for many ICOs, especially for EU and Asia-based projects. The local legislation treats tokens as assets, and Zug is well known as a “Crypto Valley” with an established ecosystem. The Swiss Financial Market Supervisory Authority (FINMA) reviews new ICOs on a case-by-case basis, and the regulations mainly depend on the function of tokens (payment, utility or asset/ security tokens).

Liechtenstein, Gibraltar and Malta seem now to follow in the footsteps of Switzerland to position themselves as ICO-friendly hubs.

Singapore

Singapore has an overall favourable regulatory treatment for cryptocurrencies and tokens. November 2017, the Monetary Authority of Singapore has issued guidelines, according to which it will not regulate virtual currencies, but rather the involved activities. Nowadays, MAS continues to monitor the ICO industry, and a more targeted legislation may be issued if necessary.

All in all, Singapore is becoming a jurisdiction of choice for ICOs with an established crypto/blockchain ecosystem.

USA

Although the US is still among the top-3 global ICO hubs, the situation there is a bit more complicated. According to the legislation, all tokens are treated as securities as per current communications. Thereby, the definition of security is very broad and the Howey Test is often applied to the tokens. Strict SEC rules have created a tendency that more and more ICOs block the US residents to become the investors.

However, ICOs are increasingly beginning to register with the SEC, and the market awaits further regulatory clarity and alignment of state/federal rules.

New Countries

Apart from the top-3 ICO countries, there are the ones that are gaining momentum in 2018. Thus, the UK and Hong Kong are raising their positions among countries with most ICO traction. The Cayman Islands and the British Virgin Islands rank among top ICO countries volume-wise, as they hosted the largest ICOs — EOS ($4.1 bn) and Telegram ($1.7 bn). Other countries not known for being large financial markets also appear among top ICO countries (e.g. Estonia, Lithuania, Israel).

Taken from the “Initial Coin Offerings: A strategic Perspective” report

It’s worth mentioning that the countries chosen for ICO registrations and those from which investors come from are mostly different. That’s why it is important to bear it in mind when planning a marketing strategy and traffic channels.

ICO vs. and feat. VC funding

One wouldn’t argue that ICOs have disrupted the traditional VS funding, as we know it. But, instead of seeing the traditional funding being pushed away, we see a trend of the hybrid funding that combines both VC funding and ICO funding. We are speaking about a scheme when there’s a Seed and Series A round as an initial funding after a business plan, prototype and team validation, which is thereafter followed by an ICO campaign that helps to grow business further & raise more funds.

Taken from the “Initial Coin Offerings: A strategic Perspective” report

Even though there can be potential conflicts between shareholders and token holders, there are several strong advantages of the hybrid funding that neutralize this drawback:

Founders get “smart money” as well as crowd support (first customers);

VCs validate the seriousness of business, the crowd validates idea & market potential;

Such scheme attracts business angels, VCs, tech-savvy users, and the crypto community;

It’s a great way to diversify the funding sources.

ICOs Become more Mature

ICOs are now generally avoiding an aggressive overpromotion as it dilutes credibility of the project. More focus is made on pre-sale phase with targeted investors, governance, and legal entity set-up. And, ICOs tend to move from the pure tech development towards supporting the idea by building engaged communities.

All in all, we may say that after a hype in 2017, ICOs have now become more well-established, transparent, and mature. This revolutionary way of crowdfunding is here to stay and develop.