ICO Funding has seen its greatest drop in 16 months, according to Autonomous Research—an independent financial research company. Their analysis revealed that in August, startups raised $326 million, the smallest since May 2017.

The new analysis was born out of the global concerns of legislators and regulators regarding ICOs. Members of the European Parliament as well as blockchain experts discussed possible regulations for ICOs last week.

Peter Kerstens, chairman of the European Commission’s Taskforce on Fintech, pointed out that there was a “dramatic increase” of ICOs’ volume in 2018 despite the increasing number of reports on fraudulent ICO startups. The fact that ICOs have no third-party to mediate is the main concern for regulators.

A report from Bruegel, a Belgian think tank, calls for unified legislation on cryptocurencies and more scrutiny on how they are distributed to investors. Bruegel also notes that the virtual nature of cryptocurrencies limits the ability to develop regulations, while organizations running crypto trading platforms could face stricter disclosure rules, even a potential ban.

The Australian Seucrities and Investments Commission (ASIC) revealed plans to increase scrutiny of cryptocurrency exchanges and ICOs in its ‘Corporate Plan’ published last week. They aim to mitigate any “threat of harm” from the nascent industry as part of its regulatory remit.

The Intitial Coin Offering (ICO) frenzy that took place in 2017 by and large had triggered the rapid growth of the Ethereum blockchain. Ethereum has lower mining fees and faster average transation times that Bitcoin (15 transactions per second as opposed to Bitcoin’s 7 tps). However, what made Ethereum standout as a platform for new ICOs is the fact that its blockchain structure is well suited for creating new coins as well as standardizing the token creation in its ERC-20 protocol. Before the ERC-20, each new cryptocurrency token had to create its own system for verifying account balances and initiating transfers which were normally incompatible with other tokens.

As much as ICOs helped grow the Ethereum network, now they are allegedly causing its decline in price, as investors who were previously purchasing Ethereum to invest in Initial Coin Offerings (ICOs) are no longer participating or have cashed out to cover expenses or mitigate losses amid the bear market. Trading at $195 as of writing, the second largest cryptocurrency by market capitalization has completely retraced the gains made following last December 2017’s bullrun.

Bloomberg reported growing concern over the ability of Ethereum to handle the volume of transactions considering the high number of ICOs being built on their blockchain. The outcome has been other platform-focused blockchains emerging to fill the void of the rapidly growing number of ICOs, such as Cardano and Tron.

Spencer Bogart of Blockchain Capital expressed his views on the ICO market sentiment stating, “Investors are increasingly disillusioned with tokens and ICOs, most of which have been launched on top of Ethereum and we’re seeing this play out in the market with continued downward price pressure.”

Despite everything, ICOs still manage to thrive in the bearish market of 2018 but not without controversy. Bloomberg reported that a study in the year revealed that 80 percent of ICOs could be classified as scams.

This pressures ICO reviews/tracker websites like Coinschedule and GlobalFromAsia to pay closer attention to the ICOs they list and feature in their pages. We don’t know how long the ICO era will last, but it appears that it is certainly not going away anytime soon; not even with lower funding average.