Tag Archives: ICOs

46% of ICOs Launched Without a Business Plan

46% of ICOs Launched Without a Business Plan

ICO market research report for Q1 2018 reveals some interesting statistics.

Market research on the initial coin offering

market in the first quarter of 2018 reveals that institutional investors are playing an increasing large part in funding blockchain projects despite many of them having no development before they are launched.The research was conducted by ICO Rating, an agency which (you guessed it) rates ICOs. According to its official website, its analysis team of more than 50 experts “specialize[s] narrowly in evaluating companies in the fields of blockchain, cryptocurrencies and ICOs/ITOs.” It has offices, in Amsterdam, New York, Singapore and St. Petersburg.

Findings

The report says that $3.3 billion dollars has been raised so far this year over 412 projects. This figure only counts money raised from completed ICOs (as opposed to pre-sales and unsuccessful/ongoing projects) and excludes the now-discontinued ICO of Telegram which was worth $1.7 billion alone. If these are counted the figure stands at over $6.3 billion.

The vast majority of ICO money in 2017 was the result of only a handful of projects; according to this research this trend continues this year, although to a lesser extent. It says that only half of completed projects in 2018 raised more than $100,000, while over $1 billion was raised by only 20 projects.

According to the report, only 9 percent of ICOs came from pre-existing businesses, while 46.6 percent of these fundraising projects amazingly “had no development before their ICO campaign[s]” – meaning that they raised their money on the strength of an idea only. ICO Rating CEO Sasha Kamshilov said: “Having a traditional business does not always rule out their use of blockchain with their products, however this can sometimes create some discord amongst the perceptions of entrepreneurs.”

Maturing industry?

One sign that the industry could be maturing is that the average time taken to raise the required funds has doubled – now it is two months. There were however projects which raised all of their money in one day; in the past some have been completed in minutes. 65 percent of tokens sold were for their respective company’s product/service (utility or hybrid tokens); only 3.8 percent were for cryptocurrencies. Perhaps this is for the best; according to Investing.com, there are currently 1,685 cryptocurrencies available for purchase in the market. Of fiat currencies there are 180.

Institutionalised

The report notes that “funding during public rounds has started to noticeably lag behind the infusion of institutional capital.” It adds: “Funds are ready to invest in ICOs but they are often deterred by teams’ negligence regarding organization of KYC and AML. These procedures need to be in place, and organized to a high standard, to reduce legal risks.” 25 percent of 2018’s ICOs were not legally registered, which sounds bad until you compare the equivalent figure for the previous year – 76 percent.

The report notes the increasing importance of cryptocurrency investment funds, which now hold $27.8 billion between 119 entities. However, a full 40 percent of these have not published the identity of their CEOs and 9 have already been closed down. The most popular industry by far for ICO projects is, perhaps unsurprisingly, financial services. ICOs related to this sector raised the most money too. The post-ICO value of tokens is fairly dire – median return on investment is 49.32 percent, a significant drop from the previous quarter. Of tokens traded on an exchange, only 17 percent traded above price at sale.

Geography

The country with the most registered ICOs was the US with 59, followed by Singapore with 34 and then the UK with 26. This does not strictly correlate with the amounts raised; the US ($583.9 million) and Singapore ($468.1 million) remain in the top two but the UK ($99.7 million) slides right down behind Switzerland (14 projects, $268.2 million), China (9 projects, $202.1 million), and Estonia (16 prjects, $122.6).

Interestingly two British territories raised more money than their motherland: the British Virgin Islands (5 projects, $158.5 million) and Gibraltar (6 projects, $133.7 million). Another notable point is that while Russia was home to only 13 projects, Russian nationals headed 45 of them – making Russians the busiest nationality ICO-wise, only they don’t do it at home. Overall, by far the most money was raised in Europe (46.6 percent).

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Simon Golstein | News ( CryptoCurrency )
https://www.financemagnates.com/cryptocurrency/news/46-icos-launched-without-business-plan/

Colorado Cracks Down On Two Companies For Illegal ICO Promotion

Colorado Cracks Down On Two Companies For Illegal ICO Promotion

The Colorado Department of Regulatory Agencies (DORA)

announced its investigation of two companies for promoting unlawful Initial Coin Offerings (ICOs) to Colorado residents, the Denver Post reported May 3. The Colorado Securities Commissioner said that California-based Linda Healthcare Corp. and Washington-based Broad Investments LLC could potentially be violating Colorado securities law by promoting ICOs.

DORA discovered that Linda Healthcare is promoting a “LindaHealthCoin” token on its website, which ostensibly can be used to purchase Linda Healthcare’s insurance. According to the website, the token can buy telemedical coverage “through an artificial intelligence chat service that creates medical solutions through use of blockchain technology.”

According to DORA, Linda Healthcare offers no warnings that ICOs constitute a security in the state of Colorado. “The Linda Health Insurance network is, to date, not in operation,” officials reported. A March 19 tweet from the firm directs potential customers to consult its white paper.

As Denver Post reports, Broad Investments firm is allegedly promoting cryptocurrency using a token that is described on its website as “an equity coin that represents shares of the company, like company stocks.” The token would ostensibly give holders a right to a share in returns from Broad Investments’ strategy, which builds stock portfolios with an algorithm. Officials say that the “math-oriented value system” on the website was not operational.

DORA representatives reported that both companies did not provide any information on the risks of investing in crypto or ICOs on their websites. Colorado Securities Commissioner Gerald Rome commented that investments in ICO tokens should be done carefully: “Investment opportunities being sold through ICOs over the internet need to be approached with the same level of caution as for any highly risky investment venture.”

The firms must now prove why the should not be sanctioned under the Colorado Securities Act, according to which the firms will receive cease and desist orders. Earlier in March, the Massachusetts Securities ‎Division issued consent orders requiring the permanent suspension of five firms’ unregistered ICO sales, citing that the companies were selling unregistered securities.

Article Presented By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/colorado-cracks-down-on-two-companies-for-illegal-ico-promotion

South Korean Lawmakers Introduce Bill To Legalize New ICOs

South Korean Lawmakers Introduce Bill To Legalize New ICOs

A group of South Korean lawmakers

is working on a bill to legalize the launch of new initial coin offerings (ICOs) and digital currencies, local news outlet The Korea Times reported May 2. Rep. Hong Eui-rak of the ruling Democratic Party of Korea is leading the move along with 10 other legislators to back the bill and have it endorsed this year.

During his speech at a forum devoted to ICOs and blockchain technology at the National Assembly on Wednesday, Hong said that "the bill is aimed at legalizing ICOs under the government's supervision." He also said that the bill was based on collaborative research conducted by his office and the Korea International Trade Association (KITA).

Hong added:

"The primary goal (of the legislation) is helping remove uncertainties facing blockchain-related businesses."

According to the bill, ICOs initiated by public organizations and research centers will be subject to strict supervision by the Financial Services Commission and the Ministry of Science and ICT.

Chung Sye-kyun, a speaker from the National Assembly, underlined the role of lawmakers to eliminate political uncertainties surrounding digital currencies and

blockchain technology:

"Blockchain and cryptos can be used in various public sectors for good causes. Given their potential, we need to work to help reduce political uncertainties they face."

The move is the first parliamentary challenge to the government's ban on the opening of new ICOs, which was introduced late last year to fight speculative investments in cryptocurrencies. In March, 2018 rumors surfaced that certain entities within the South Korean government were considering to release the ban on ICOs, so long as new offerings adhered to strict government standards.

Written By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.

https://cointelegraph.com/news/south-korean-lawmakers-introduce-bill-to-legalize-new-icos

Australia’s Securities Watchdog Moves to Halt ‘Deceptive’ ICOs

Australia's Securities Watchdog Moves to Halt 'Deceptive' ICOs

The Australian Securities and Investments Commission (ASIC)

said Tuesday that it is taking aim at fraud in the initial coin offering (ICO) market. In a statement published May 1, the agency said that it is "issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive." Additionally, the securities watchdog suggested that it was moving to halt unlicensed activity as well. "As a result of our inquiries, some issuers have halted their ICO or have indicated the ICO structure will be modified," ASIC disclosed, though it didn't say how many token sales have been canceled or changed in light of the agency's actions.

ASIC commissioner John Price explained:

"If you are acting with someone else's money, or selling something to someone, you have obligations. Regardless of the structure of the ICO, there is one law that will always apply: you cannot make misleading or deceptive statements about the product. This is going to be a key focus for us as this sector develops."

As CoinDesk previously reported, the move was perhaps expected. Price spoke about token sales on April 27, declaring the agency's intention to focus on overseas-based ICOs that target would-be Australian investors. "I cannot stress enough that if you are doing business here and selling something to Australians – including issuing securities or tokens to Australian consumers – our laws here can apply," Price said at the time.

In Tuesday's statement, ASIC indicated that it would be scrutinizing a popular aspect of ICO marketing – the white paper – as it looks into whether those behind such sales are in compliance with Australian law. "In one recent example, ASIC took action to protect investors where we identified fundamental concerns with the structure of an ICO, the status of the offeror and the disclosure in its white paper," the agency explained. "In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme."

Written By

Stan Higgins
stan@coindesk.com

A member of CoinDesk's full-time Editorial Staff since 2014, Stan has long been at the forefront of covering emerging developments in blockchain technology. Stan has previously contributed to financial websites, and is an avid reader of poetry. Email: stan@coindesk.com. Stan does not currently hold value in any digital currencies or projects.

https://www.coindesk.com/australias-securities-watchdog-moves-halt-deceptive-icos/

Policing the wild frontierRegulating virtual currencies and ICOs

Policing the wild frontierRegulating virtual currencies and ICOs

A legal framework for the crypto-sphere is starting to take shape.

In response, national authorities are starting to think seriously

about a legal framework for finance’s unruly frontier. Regulators fret about how to classify ICOs and tokens (are they securities, or not?) and how to tax them. They want to stop their use for such evils as money-laundering and financing terrorism. And they worry about how to protect retail investors from the risk of losing their shirts.

Indeed, scarcely a day passes without a supervisor somewhere calling for tighter regulation, or taking action. On April 6th the Financial Conduct Authority in Britain warned firms offering services linked to crypto-derivatives that they were subject to its rules. On April 10th Taiwan’s finance ministry said it was planning crypto regulation aimed at money-launderers. On April 17th New York state’s attorney-general asked 13 crypto-exchanges for information about their operations, conflicts of interest and safeguards for customers.

Regulators are plotting together as well as separately. When the governors of the G20 countries’ central banks met in Buenos Aires in March, crypto was high on their agenda. They agreed that at present these assets are too small to be of systemic importance, but they committed themselves to extending standards to which financial institutions already adhere—such as know-your-customer (KYC) rules and procedures for monitoring unusual transactions—to the crypto-world, in order to thwart the illicit use of virtual currencies.

When bitcoin entered public awareness it was chiefly as a facilitator of anonymous, illegal sales on the “dark web” and as the currency of choice for online ransoms. Many in law enforcement thought its anonymity would make it ideal for criminals of all stripes. But until recently evidence of this was scarce. “The overwhelming view was that crypto-currencies had great utility to cyber-criminals but limited use to other criminals,” says David Carlisle of the Royal United Services Institute, a think-tank. Volatility and illiquidity limited their use for money-laundering. But evidence that crooks are making more use of them is mounting.

The most logical parts of the crypto-infrastructure to regulate are the platforms on which virtual currencies are exchanged for ordinary money. Several countries, such as Australia and South Korea, already do this. The EU’s fifth anti-money-laundering directive, which was passed by the European Parliament on April 19th, also includes measures to regulate exchanges. But many places have no rules at all. That may suit many crypto-entrepreneurs, but not all. Several exchanges are, for example, voluntarily implementing KYC standards (eg, by asking new customers to prove their identities), banning coins promising extra privacy or using software to monitor unusual transactions.

Agreed rules would help to tie exchanges into the mainstream banking system. Many of them currently choose unfussy jurisdictions or institutions, because conventional banks will not serve them. Lenders are wary both of credit risk and of abetting crime if exchanges don’t police users. Proponents of regulation say that once exchanges operate in a clear legal framework, those risks should be reduced and banks will take them on. That in turn will make it easier to keep an eye on exchanges.

Regulators disagree about consumer protection. Some see shielding investors from harm as their job; others think people should be free to gamble if this poses no wider risk. Many have warned investors to be wary of ICOs. Some authorities want both to protect consumers and to allow legitimate crypto-businesses to flourish in their jurisdictions. Gibraltar already licenses some crypto-companies. France is working on a system of voluntary licensing. Iqbal Gandham of CryptoUK, which represents some of Britain’s largest crypto-companies, believes such initiatives could help legitimate businesses gain access to banks and perhaps even advertising. “We also don’t want to have criminals on our platforms,” he says.

Authorities also worry about taxation. They spy a new source of revenue: because trading crypto can be lucrative, they are keen to levy capital-gains tax on any profits. And they fear losing existing income: virtual currencies might be used to hide money. Because most exchanges have operated in the dark, reliable data on crypto-evasion do not exist. Most countries are still working out how to define tokens, let alone tax them. Some are stepping up, however. In February Coinbase, an exchange, said it had unsuccessfully fought an American court order and would have to hand the identities of 13,000 customers to the Internal Revenue Service. Other exchanges have fled to offshore jurisdictions with more favourable tax regimes.

With so many poorly understood risks, some regulators think the only safe answer is to shut the whole crypto-sphere down. China, for example, has banned ICOs and exchanges. But elsewhere this is neither desirable nor practical (it requires tight censorship of the internet). Crypto-enthusiasts see parallels with the early days of the internet, when authorities also strove to control a new arena—and declared it a nest of criminality. Most countries have since decided that the web’s benefits outweigh its costs. It is too early to say whether this will be true of crypto-assets or the blockchain technology that underpins them. But it would be wrong to outlaw them before knowing the answer.

Policing the wild frontier:

Regulating virtual currencies and ICOs
https://www.economist.com/news/finance-and-economics/21741191-legal-framework-crypto-sphere-starting-take-shape-regulating via @TheEconomist

Original URL
https://www.economist.com/news/finance-and-economics/21741191-legal-framework-crypto-sphere-starting-take-shape-regulating

Contributor
Chuck Reynolds