2018 is shaping up to be a record-breaking year for initial coin offerings (ICOs) with more than $2.7 billion raised over the first two months. Much like January, February was another billion-dollar haul for the controversial but effective crowdfunding model.
ICOs Cross $1 Billion Mark in February
More than $1.2 billion flowed into crowdfunding campaigns last month, according to data provider ICOData.io. That followed a $1.4 billion intake in January.
February marked the third consecutive month ICOs have raised $1 billion or more. The market barely existed just one year ago.
If the first two months are an indication of what’s to come, ICOs will easily shatter their 2017 record of $6.1 billion by the spring. Including early March figures, a total of 332 crowdraises have been launched this year.
With thousands of projects scheduled this year, the sky is the limit for how much the market can generate. The multi-billion-dollar token sale issued by Telegram is expected to inflate these metrics this year as the project moves from private sale to public ICO. Private investors have already pledged $850 million to the popular messaging service, according to the company’s recent filing with the U.S. Securities and Exchange Commission. The total crowdfunding amount is expected to top $2.1 billion.
ICOs Under Scrutiny
Coin offerings have faced greater scrutiny from the SEC and are at the center of the regulator’s growing investigation into cryptocurrencies. It has been reported that around 80 cryptocurrency companies have been subpoenaed by the securities regulator, including Overstock, the parent firm behind tZERO. Although ICOs remain legal in the United States, regulators are not buying the distinction between “utility” tokens and “security” tokens. To avoid any run-ins with the SEC, many crowdfunding campaigns have simply barred U.S. residents from participating.
Within the cryptocurrency community, efforts are underway to develop a more transparent crowdfunding platform. Although we’ve all heard of SAFTs, the mind behind Ethereum is looking to implement DAO structures to crowdfunding campaigns. The result is a new model that goes by the name of “DAICO.” The DAICO behaves very much like an ICO in capital raising but has certain rules hardcoded into the system that dictate how the organization runs. This includes, among other things, how the funds are deployed following the crowdsale.
Hacked recently reviewed The Abyss, a next-generation gaming platform that is also the first to pilot the DAICO concept. In the review, Aakash Kawale wrote the following:
“The token raise will represent an advanced and improved ICO mechanism, allowing token holders to control the fund withdrawal limit, also providing an option to vote for the refund of the remaining contributed money in case the team fails to implement the project.”
The Abyss scored favorably with an overall rating of 7 out of 10.