There is no doubt that the ICO landscape is changing these days. As a Coin Telegraph writer pointed out, some 75% of recent ICOs have failed to reach their soft cap, which is indicative of an important turnaround in this sector. One of its effects is to squeeze out the scammers and introduce a new generation of ICOs that go way beyond the need to simply raise money for a startup.
According to Nick Ayton, a London-based Fintech journalist, there are “several forces shaping the ICO market.” He is right to point out that 2017 has been the year that the ICO really took off, but like many he is curious about what 2018 will bring. Will it be very different? For example, will ICOs get bigger in terms of the deal, but fewer in number? And, will the pre-ICO sale be a thing of the past?
There are lots of factors to consider. For a start, Bitcoin has had a rocky few months over the Segwit2X fork, now abandoned, and Ethereum seems to be still trying to work out how to handle scalability for all the ICOs that are using its network. But, crypto is still gaining ground and Ayton predicts that it will reach a $500 million market cap early on in 2018.
ICOs overtake venture capital
In October 2017, ICOs reached a peak number and overtook venture capital as a source of funding. However, just to put this into some perspective, it must also be remembered that some ICO funds were hacked and money stolen (CoinDash is one example) and some ICOs have had to return money to token buyers, because the project didn’t meet its soft cap. There has been a lot of discussion over just how many ICOs were scams, which has inevitably led to the arrival of regulation.
The arrival of regulations
It is fair to say that ICOs must now consider not only existing banking and payment regulations, they are aware that there are new ones coming down the pipeline, although quite what they will be nobody knows, which is another issue. Some governments, particularly in southeast Asia want to ban ICOs, whilst others are embracing them, like Russia and Japan.
Places like the UK are keeping their powder dry. We’re not sure how it will position itself on ICOs in 2018, although it already has a regulatory framework in place with its eMoney Laws and Collective Investment Scheme rules. We do know that the FCA has created a sandbox to test out various propositions, and that the USA would love to dictate what happens with crypto worldwide.
ICO costs will explode
One thing we can be fairly certain of is that the ‘bootstrapping’ ICO is coming to an end. In the future, launching an ICO is likely to cost in the region of $250k – $500k, which is a price that will