Let’s admit it, 2018 was a forgettable year for the cryptocurrency market. The price of Bitcoin plummeted from $17,000 to $3,000, while the collective market shaved over $700 billion off its market cap.
The only standout, if there was one from the dreaded crypto-winter, was the rise and fall of the Initial Coin Offering [ICOs] market.
As the calendar flipped from 2018 to 2019, the market decided to chuck the “C” and replace it with an “E” as Initial Exchange Offerings [IEO] became the new craze. IEOs became the go-to funding module not just because of the sheer growth of exchanges, but mainly due to the regulatory crackdown on ICOs, particularly in the US, coupled with the overvaluation of certain projects.
Longhash, the cryptocurrency analytics firm, detailed this regulatory debacle that led to the exodus of ICOs in their latest report. One of the main reasons for the ICO success of 2018 was the market’s head-start, relative to the Securities and Exchange Commission [SEC] which played “catch-up.”
The latest attack on coin offerings by the regulatory behemoth was early this month, when the SEC made clear its plan of suing Kik, the Canadian messaging application over an “unregistered token sale,” which was indeed the cherry on top of a melting ICO cake.
With the SEC announcing last year that all tokens released via ICO will be placed under the category of “securities” and hence will be subjected to the appropriate law, the market has been in decline.
Since securities offerings come directly under the jurisdiction of the SEC, the financial watchdog will confer if an ICO is operating as the same. However, a token sale project does not have to register with the SEC before its initiation.