Initial coin offering (ICO) fundraising reached a significant milestone this month, rushing past the $3 billion mark for the year despite the watchful eye of regulatory agencies across the world.
ICOs had come a long way since 2013 when J.R. Willett raised $500,000 to develop Mastercoin (now known as Omni). According to data published on CoinSchedule, so far this year there were more than 200 ICOs held. Those ICOs have raised a combined $3 billion, with over $800 million of that sum coming from ICOs finished in September.
Filecoin’s $257 million ICO is still the leading crowdsale, while the $232 million worth of cryptocurrencies raised by Tezos has reportedly grown in value to almost $400 million, besides the internal fights of the project management. Altogether, the top 10 ICOs this year have raised a combined sum of $1.2 billion. However, these impressive numbers could be soon eclipsed by the tZERO ICO, which Overstock chief executive Patrick Byrne predicts will “raise a fortune,” aiming at $500 million — or more.
Strong infrastructure projects such as Tezos and EOS have attracted more than 39 percent of ICO contributions, while trading and investment products — such as AirSwap’s decentralized token exchange — account for another 14 percent.
ICO contributions have skyrocketed up throughout the year, even as regulators across the world have started to observe this suspicious fundraising model with increasing scrutiny. China experienced a temporary market crash after country's regulators ruled that ICOs were illegal. South Korea followed the practice, by banning domestic startups from engaging in this fundraising model.
In the U.S. both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have taken steps to increase their supervision of the ICO markets. After ruling that some ICO tokens are subject to federal securities laws, the SEC set ICO oversight as one of the top priorities. They even established a cyber task force that would, besides other tasks, scrutinize startups that try to bypass securities laws by describing their tokens as “utility coins” even though they have the properties of security.
Despite these regulation attempts, blockchain startups continue to utilize ICOs to raise funds and even well-established companies such as Kik Interactive have started using this funding model instead of traditional venture capital. With two months left in the year, it would not be a big surprise to see ICO rushing through the $4 billion barrier before the end of the year.