Crypto Coin<\/span><\/span><\/p>\n<\/div>\nYou have to give the entrepreneurs in the world of cryptocurrencies credit. After the bursting of the Bitcoin bubble and increased regulatory push back, they\u2019ve developed a new way to raise millions from investors and enthusiasts still dreaming of digital gold.<\/p>\n
While Initial Coin Offerings have been pretty much declared dead, startups are now raising money through a similar method dubbed Initial Exchange Offerings. Instead of marketing coins directly to investors, companies are relying on crypto exchanges to serve as underwriters, review the projects and offer tokens to vetted customers. Think of it as a curated ICO \u2014 the way wardrobes are stylized and shipped directly by services such as Stitch Fix.<\/p>\n
Betting that the vetted IEOs reduce the chances of getting scammed, retail investors have been pouring in after many got burned in the ICO frenzy that saw many tokens lose more than 90 percent of their value. About $180 million has been raised in 23 offerings, with most taking place since February, according to crypto data tracker CoinSchedule.com.<\/p>\n
\u201cIt has the potential to be larger than the ICOs of 2017,\u201d said Bill Shihara, chief executive officer of Seattle-based exchange Bittrex, which recently held its first IEO. \u201cWe are seeing significant demand both from our users and token teams.\u201d<\/p>\n
ICO sales peaked at $5.8 billion in June and have dropped steeply since in the wake of a U.S. regulatory crackdown and market collapse. In March, they took in just $208.6 million, according to CoinSchedule.com.<\/p>\n
As with the ICO boom, the latest funding mechanism is still exposing investors to the risk of fraud. The vetting process varies across exchanges. And it\u2019s not clear that regulators will look at the IEOs any more fondly than they do on ICOs.<\/p>\n
IEOs \u201ctake everything from an ICO and make it worse,\u201d said Zach Fallon, a securities lawyer who worked on ICO issues at the U.S. Securities and Exchange Commission until about a year ago.<\/p>\n
The world\u2019s largest cryptocurrency exchange, Malta-based Binance, pioneered the IEO idea in 2017, but only put its muscle behind it earlier this year, with the popular software file sharing application BitTorrent raising $7 million in under 15 minutes. Smaller exchange Exmarkets is already leading in the number of offerings, according to CoinSchedule.com. The exchanges charge as much as 10 percent of the total sale amount, Shihara said.<\/p>\n
\u201cGolden Goose\u201d<\/p>\n
Many exchange-specific tokens such as Binance Coin have been on a tear recently thanks to the high investor expectations for IEOs, according to Jeff Dorman, a partner and portfolio manager at Los Angeles-based Arca Funds. Tokens issued by exchanges themselves are up 200 percent on average, he said in a recent note.<\/p>\n
\u201cThe irony of course is that this is directly at odds with the decentralized ethos embedded in crypto, but this has been conveniently ignored as long as it\u2019s working,\u201d Dorman said. \u201cEveryone involved is highly motivated not to kill the golden goose.\u201d<\/p>\n
Some exchanges are also profiting by making IEO issuers raise funds via their own token, or requiring traders that want to grab IEO tokens to hold large balances of the specific exchange\u2019s coins to participate in the sales.<\/p>\n
The forced use of the exchange coins make IEO tokens even more suspect for regulators, Fallon said. Because tokens created in an IEO are immediately listed on an exchange and sold in a secondary market, it makes it more likely that the SEC would view them as securities, he said. The exchange listing these tokens appear to be acting as broker-dealers, too, he said. That\u2019s probably why most IEOs so far have only targeted non-U.S. investors, and have been facilitated by exchanges based in places like Malta, where regulation is less stringent.<\/p>\n
\u201cWe need to walk before we can run,\u201d said Nejc Kofric, CEO of Luxembourg-based exchange Bitstamp, which is staying away from IEOs. \u201cThe industry needs to be better regulated before we step into this market. Of course there are exchanges that still enter this space, and I think that\u2019s short-sighted.\u201d<\/p>\n
Transparency remains an issue in the crypto world, with Bitwise Asset Management pointing out last month that many exchanges fake trading volume. Startup Algorand, for example, recently discovered that an exchange has apparently decided to sell Algorand tokens without the startup\u2019s permission. The digital-transaction platform hasn\u2019t issued a token, and doesn\u2019t have any ongoing token sale, Algorand wrote in a Twitter post this week.<\/p>\n
Just like with ICOs, many startups issuing tokens through IEOs don\u2019t yet have a product. Take Pledgecamp, which had in February conducted three IEOs \u2014 in Korea, Japan and China \u2014 in addition to an ICO, according to Eddie Lee, president of Pledgecamp. The crowdfunding startup is still building its platform, which is expected to launch in the fourth quarter.<\/p>\n
\u201cHaving a trusted intermediary is a good thing for either an ICO of a coin or an IPO of common stock, all else equal,\u201d said Aaron Brown, an investor who writes for Bloomberg Opinion. \u201cIt\u2019s not even clear to me that their promised due diligence is meaningful, even nominally. It seems to revolve more around ensuring the coins will trade than attesting to the underlying value of either the project or the coins, or the use for the funds raised, or the governance of the project.\u201d<\/p>\n
What Bloomberg Intelligence Says<\/p>\n
The pace of crypto-asset supply growth hasn\u2019t slowed enough to indicate a price bottom, in our view. There are over 3x more tradable coins than at the start of 2017, when Bitcoin was $1,000. History and the laws of supply and demand indicate that availability needs to decline or flatline for an extended period for prices to recover.<\/p>\n<\/div>\n
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u0642\u0627\u0644\u0628 \u0648\u0631\u062f\u067e\u0631\u0633<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Business News of Sunday, 21 April 2019 Source: bloomberg.com 2019-04-21 Crypto Coin You have to give the entrepreneurs in the world of cryptocurrencies credit. After the bursting of the Bitcoin bubble and increased regulatory push back, they\u2019ve developed a new way to raise millions from investors and enthusiasts still dreaming of digital gold. While Initial […]<\/p>\n","protected":false},"author":1,"featured_media":609239,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-609238","post","type-post","status-publish","format-standard","has-post-thumbnail","category-local-news"],"yoast_head":"\n
Crypto Coin Sales stage revival after bursting of ICO Bubble - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2019\/04\/21\/crypto-coin-sales-stage-revival-after-bursting-of-ico-bubble\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Crypto Coin Sales stage revival after bursting of ICO Bubble - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Business News of Sunday, 21 April 2019 Source: bloomberg.com 2019-04-21 Crypto Coin You have to give the entrepreneurs in the world of cryptocurrencies credit. After the bursting of the Bitcoin bubble and increased regulatory push back, they\u2019ve developed a new way to raise millions from investors and enthusiasts still dreaming of digital gold. 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![\"Bitcoins](\"https:\/\/cdn.ghanamma.com\/2019\/04\/99938807.295.jpg\" "\\"Bitcoins")
Crypto Coin<\/span><\/span><\/p>\n<\/div>\n