We’ve been writing a bit more about initial coin offerings (ICOs) recently. In the blockchain world, they’re a way for a startup to raise money by creating and selling their own cryptocurrencies, without having to run the gamut of regulations that a traditional IPO would have to.
Or at least, that was the theory: a recent statement from US financial regulator the SEC warned that a number of ICOs may still fall foul of its rules.
The New York Times has a good roundup of the reaction from the companies planning ICOs, which is essentially to carry on regardless.
“Since the guidance was released on July 25, 46 new coin offerings have been announced and an additional 204 are moving toward fund-raising,” it explained. “In contrast, only three projects have said they are canceling or postponing the sale of coins because of the warning.”
In July alone, 34 ICOs raised a total of $665m. In Music Ally’s recent blockchain report, several interviewees expressed caution about ICOs.
“If any startup is going to raise a bunch of money in an ICO, you have to ask: is it building a business that just supports itself and the currency it is heavily invested in, or is it solving a problem that has not been solved?” said Dot Blockchain’s Benji Rogers.
“My concern about the ICOs is we’re basically going to have a whole bunch of companies show up that aren’t [good] businesses.”