Crypto Investing in Q1 2019 – STOs On The Rise

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Most recently, the Circle Report presented the rising volume of cryptoassets under management (cAUM) among institutional investors in Q1-19. That’s good news for the market in principle. The recent InWara report shows that the rise of the number of launched Securities Token Offerings (STO) in 1Q19 was remarkable, replacing Initial Coin Offerings (ICO) as a fundraising instrument for startups. STOs are an interesting, albeit very risky, alternative to FOREX and CFDs for speculative retail investors. However, extreme caution is still advisable. However, crypto investing is here to stay.

ICO Era is over

According to the InWare Report, 280 Initial Coin Offerings (ICO) were launched during 1Q19 which is a significant dip from the 662 ICOs launched during 4Q18. The number of ICOs thus have shrunk by as much as 61% across all jurisdictions. This is the lowest number of ICOs projects recorded since ICO hype period. Even in jurisdictions with friendly ICO environments like the UK and Singapore, the number of ICOs conducted in Q1 has dramatically decreased with 44% and 58% respectively. In the United States, ICO numbers dropped by only 52%.

The 1Q19 numbers suggest that ICOs as crypto investing instrument lost their attractivity for investors. This is not surprising in view of the many ICO scams and the resulting losses for retail investors. ICOs were largely unregulated and therefore attracted many scammers and fraudsters. It is estimated that more than 80% of all ICOs were either scams or non-value projects. Until today the market is characterized by these “Shit Coins” and “Dead Coins“.

Security Token Offerings on the rise

The number of Security Token Offerings (STO) during 1Q19 observed a meteoric rise with over 130% growth over the previous quarter. When regulatory authorities in major countries like the US imposed stringent ICO sales regulations, this created a hostile environment for launching an ICO. The many ICO scams and the resulting crackdown on ICOs by regulators and enforcement authorities are likely the reasons for the rise of regulatory compliant STOs which are still in its very early days. According to the InWara report, a total of $122m has been raised via STOs in 1Q19.

The crypto tokens issued in the course of STOs are to be regarded as securities within the meaning of the relevant securities laws. Issuers are, therefore, obliged to comply with the relevant regulatory framework conditions when issuing, listing and trading these securities (cryptoassets).


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