Initial Coin Offerings (ICOs), Cryptocurrency–As
the cryptomarkets approach the tenth month of a prolonged bear cycle to
characterize 2018, it seems hardly a week goes by without more negative
press towards ICOs. Initial Coin Offerings, the controversial method
for raising investment capital into new blockchain and cryptocurrency
projects, have had an up and down ride throughout 2018, one that is
beginning to reflect the negative sentiment of the ongoing downtrend in
crypto valuation.
While
we have previously reported that ICOs thrived throughout the first half
of 2018, with the total amount of capital and volume of launched
projects eclipsing that of all of 2017, the last few months have taken a
decidedly negative tone towards the industry of raising funds and
issuing new coins. In addition to several research papers which found
not only that 80 percent
of ICO endeavors in 2017 could be classified as scams but that the
majority of issued token projects were considered “dead” within four
months of launch. The end result was pressure on initial investors to
sell their coins from nearly the outset of being issued in order to
lock-in the greatest amount of return, thereby shedding light on an
industry that offers anything but security and a high amount of risk.
Last month Jihan Wu, CEO of soon to IPO crypto-goliath Bitmain, came out in an interview
stating that the ICO market is not one that will likely last. Despite
being bullish on the benefits of cryptocurrency and the looming adoption
of established currencies, Wu claimed that the ICO market constituted
an “unsustainable financial bubble,”
“I believe ICOs are kind of an unsustainable financial bubble. It will burst eventually. It’s just a matter of time. I believe it’s just one year or two. Either way, it will just disappear.”
Just last week Sonny Singh, Chief Commercial Officer for cryptocurrency payment processor BitPay, made similar comments
that the ICO market was unlikely to rebound. Like Wu, Singh made
bullish statements on the outlook for Bitcoin and the overall bright
future for the cryptocurrency industry, despite claiming that ICOs would
fail to achieve the same level of success as they did throughout the
end of 2017 and first part of this year.
Now
China’s central bank, the People’s Bank of China, has come forth to
issue a public notice to investors and the general public on the risks
associated with investing in ICOs. In addition to reminding investors of
the blanket ban for ICOs being imposed in China, the central bank also
took a harsh stance towards the financial model, claiming that it poised
“serious disruption” to the status quo and traditional economic market,
as well as insinuating that most ICO projects are criminal or corrupt
in nature,
“[ICOs are] suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”
Rather
than embracing the innovation of cryptocurrency and blockchain, China
has taken a decidedly harsh stance against the industry, stating that
claims surrounding the benefits of cryptocurrency are being made with
the purpose of luring in new investors.
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