2017 was the year the ICO came to town. Here’s what’s in store for 2018

Quoine co-founder and CEO Mike Kayamori. Japanese-Singaporean startup Quoine’s QASH token sale was Asia’s largest ICO in 2017. Photo credit: Quoine

Token sales, crowd sales, initial coin offerings (ICOs). Call them what you will, but they were 2017’s biggest tech trend. By working mainly with blockchain and other distributed ledger technologies, startups sold tradeable, cryptocurrency-like digital tokens. In turn, this enabled them to raise billions of dollars in funding via ICOs without turning to traditional venture capital.

By June, token sales had overtaken angel and seed VC funding for the first time, netting more than US$550 million for coin issuers compared to the US$300 million raised from VC investors that month.

With such huge amounts of money moving in the ICO space – much of it involving buyers and sellers outside the ambit of accredited investor and securities trading rules – it was only a matter of time before regulators would step in.

Source: CoinSchedule

A core issue is whether coins distributed in ICOs represent a security interest in the organization that issues them, or function as simpler utility token that grants holders some form of access to the issuer’s products and services.

There are also concerns that ICOs are fertile ground for scams, while the cryptocurrency market more generally might serve as a safe space for crime syndicates, terrorist groups, and money launderers to conduct illicit business.

Watchdogs in the Asia-Pacific region have considerably varied approaches to ICOs, from implementing blanket bans to urging caution while continuing to allow sales.

China

The People’s Bank of China effectively banned ICOs in September, taking the world’s biggest market for token sales out of the picture.

In addition to stopping future sales and halting ongoing events, the central bank’s directive also ordered all completed ICOs to liquidate and return funds to investors. Progress on these last points remains unclear.

Bitcoin and ether – the two cryptocurrencies most widely used to buy ICO-issued tokens –crashed in value by 11 and 16 percent, respectively, after the bank’s announcement.

South Korea

Japan

Singapore

Other markets

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