This year has arguably been the "Year of Cryptocurrencies" as Bitcoin experienced an unprecedented boom, cryptocurrencies have entered into the mainstream and retail industry, and regulatory bodies across the world have been scrambling to address the growing popularity of these digital currencies.
However, an important aspect of cryptocurrencies are their initial coin offerings (ICOs), which have come under increasing scrutiny as of late. More and more startups have turned to ICOs for raising millions in capital in just a few hours. Research conducted by Bloomberg recently confirmed that the overwhelming majority of coins sold via ICOs go unused the moment the campaign has concluded.
According to Token Report, only one out of every ten tokens issued via an ICO is used after the ICO sale ended. In their investigation Token Report included a total of 226 ICOs. Of the 226 ICOs, only 20 continued to run their network after their ICO. According to Galen Moore, CEO of Token Report, the remaining tokens are generally used for trading purposes and are viewed as speculative instruments by the community.
The rising trend of inactive ICOs simply looking to make a quick sale is worrying. In this past year alone, investors have invested over $3 billion in 200 ICOs. September was a notably busy month, as 37 different ICOs popped up and collectively raked in close to $850 million. According to Bloomberg, there are currently more than 1000 digital tokens available on the market.
Moore issued a warning that due to the low rates coins are generally sold at, it is possible that ICOs could soon become subject to increased regulations. Once a coin is regulated, it is viewed as a security and not as a utility. This often imposes several limits in how people invest in an ICO. However, the rising trend in fraudulent ICOs has also begged the question as to whether ICO developers would be willing to launch ICO campaigns that are in compliance with official regulatory requirements.
The new data has come to light at a particularly turbulent time when countries across the globe are hard at work to establish a proper regulatory framework and relevant taxation measures. Most countries have issued warnings to their citizens regarding the risks involved with ICOs. While some countries, such as Japan, have chosen to regulate ICOs more carefully. Moreover, other countries, such as China and South Korea, have opted to completely ban the process altogether.
A few weeks after China announced their ICO bans, South Korea followed suit. According to South Korean regulators, ICOs to launch cryptocurrencies are readily pushing the market in a non-productive and speculative direction. Several other regulatory agencies located in the US, China, Hong Kong, Singapore, and Russia have all issued warnings regarding the severe lack of regulations which make ICOs an increasingly popular and effective method for scammers.
However, an important aspect of cryptocurrencies are their initial coin offerings (ICOs), which have come under increasing scrutiny as of late. More and more startups have turned to ICOs for raising millions in capital in just a few hours. Research conducted by Bloomberg recently confirmed that the overwhelming majority of coins sold via ICOs go unused the moment the campaign has concluded.
According to Token Report, only one out of every ten tokens issued via an ICO is used after the ICO sale ended. In their investigation Token Report included a total of 226 ICOs. Of the 226 ICOs, only 20 continued to run their network after their ICO. According to Galen Moore, CEO of Token Report, the remaining tokens are generally used for trading purposes and are viewed as speculative instruments by the community.
The rising trend of inactive ICOs simply looking to make a quick sale is worrying. In this past year alone, investors have invested over $3 billion in 200 ICOs. September was a notably busy month, as 37 different ICOs popped up and collectively raked in close to $850 million. According to Bloomberg, there are currently more than 1000 digital tokens available on the market.
Moore issued a warning that due to the low rates coins are generally sold at, it is possible that ICOs could soon become subject to increased regulations. Once a coin is regulated, it is viewed as a security and not as a utility. This often imposes several limits in how people invest in an ICO. However, the rising trend in fraudulent ICOs has also begged the question as to whether ICO developers would be willing to launch ICO campaigns that are in compliance with official regulatory requirements.
The new data has come to light at a particularly turbulent time when countries across the globe are hard at work to establish a proper regulatory framework and relevant taxation measures. Most countries have issued warnings to their citizens regarding the risks involved with ICOs. While some countries, such as Japan, have chosen to regulate ICOs more carefully. Moreover, other countries, such as China and South Korea, have opted to completely ban the process altogether.
A few weeks after China announced their ICO bans, South Korea followed suit. According to South Korean regulators, ICOs to launch cryptocurrencies are readily pushing the market in a non-productive and speculative direction. Several other regulatory agencies located in the US, China, Hong Kong, Singapore, and Russia have all issued warnings regarding the severe lack of regulations which make ICOs an increasingly popular and effective method for scammers.