ICO Funding Has Slowed to a Crawl; Bithumb Reportedly Eyes Security Token Offerings

The amount of money flowing into initial coin offerings (ICOs) plunged in October to levels not seen since before the crypto boom took off in early 2017, as regulatory uncertainty and bear-market conditions continued to take their toll.

ICO Funding Plunges

Crypto startups managed to raise a mere $54.5 million in token sales last month, the lowest haul since March 2017, according to ICOData.io. That’s a far cry from the $1.66 billion raised in December 2016 and the $1.52 billion-dollar haul from this past January.

ICO funding has declined in each of the last four months following a decisive shift in market dynamics earlier in the summer. Tokens sales attracted nearly $913 million in investments in June; one month later, that figure had fallen to less than half.

For all of 2018, 1,150 ICO projects have raised in excess of $7.16 billion, easily outpacing last year’s haul. Although that still comes out to a respectable $6.2 million average raise per project, the amount of money flowing into the ecosystem has fallen sharply from peak levels.

Bithumb Pursuing STO Platform: Report

The fallout from the ICO boom has given rise to a new paradigm that seeks to address many of the longstanding issues plaguing token sales. The security token offering (STO) is a financial security that mirrors traditional shares in a publicly-traded company. STOs are governed by federal laws set forth by the U.S. Securities and Exchange Commission (SEC), putting them in the same bracket as traditional securities. This includes specific consumer protection guidelines and rules for soliciting investment from the general public.

According to a new report from South Korea’s Yonhap news agency, cryptocurrency exchange Bithumb is planning to launch its own STO platform. Citing industry sources, Yonhap reports that the exchange has already entered into an agreement with SeriesOne, a U.S. fintech firm, to begin developing the STO exchange, which would allow it to list security offerings in the world’s largest economy.

Yonhap reports that SeriesOne is looking to launch the security token platform during the first half of 2019, with Bithumb providing necessary resources to operate the exchange.

“SeriesOne actively sought to strike a deal with Bithumb after assessing it as the most suitable partner,” a Bithumb official said, as quoted by Yonhap. “Bithumb will ramp up efforts to develop into a global financial firm as the blockchain-based asset tokenization is expected to spread globally down the road.”

A platform backed by one of the world’s largest cryptocurrency exchanges could entice more startups to register as a security and actively seek contributions from U.S. investors. Until now, blockchain companies have been hesitant about entering the U.S. market due to more stringent regulations.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi