Token tsunami: ICOs raise $13.7bn in first five months of 2018

29 Jun 2018

Blockchain haven Zug in Switzerland. Image: Denis Linine/Shutterstock

Cryptocurrency craze is in full swing as ICOs in 2018 have already raised almost twice the amount raised in all of 2017.

Virtual currency sales from 537 initial coin offerings (ICOs) in the first five months of 2018 raised $13.7bn, according to a new report.

This is almost double the $7bn raised from ICOs in the full year of 2017.

The study was carried out by PwC’s strategy and consulting division, Strategy&, and the Zug-based Crypto Valley Association.

‘Hybrid models of combined venture capital and ICO financing are increasingly bringing together the best of what both have to offer’

ICOs by blockchain start-ups are emerging as an alternative route to funding instead of traditional financing via banks or venture capital.

However, a hybrid model of combining ICOs with traditional venture capital rounds is also beginning to emerge.

Blockchain technology – which underpins emerging digital, virtual or cryptocurrencies – consists of blocks that hold timestamped batches of recent valid transactions, which form a chain, with each block reinforcing those preceding it. This creates an indelible, accountable narrative that could empower businesses and consumers in the decades to come.

A Swiss roll

The report sheds a positive light on the local blockchain ecosystem in Switzerland, a large degree of which happens to be concentrated in and around the Swiss municipality of Zug.

“This report shows that Switzerland is still a leading hub for ICO and blockchain activity,” said Oliver Bussmann, president of the Crypto Valley Association.

“To my mind, Switzerland is the standard bearer in terms of establishing a regulatory environment for the digital economy. The Crypto Valley in Switzerland offers a unique environment that embraces blockchain technologies and the potential of ICOs while always embodying Swiss values, such as privacy protection and confidentiality. I’m delighted to see that Switzerland continues to be very attractive to visionary entrepreneurs within the crypto space.”

Emergence of a hybrid VC-ICO model is worth watching

While Switzerland, the US and Singapore continue to be leading centres for ICO activity, the UK and Hong Kong have emerged in 2018 as increasingly significant actors within the nascent global market.

Smaller jurisdictions including Liechtenstein, Gibraltar and Malta are also following in the footsteps of Switzerland to position themselves as ICO-friendly hubs.

In addition, the report highlights regulatory developments surrounding ICOs globally, noting three distinctive approaches that can be used to characterise the majority of emerging frameworks:  ‘securities-driven’, ‘balanced’ and ‘binary’, most clearly observed in North America, Europe and Asia, respectively.

“After all the hype of 2017, this year has seen the ICO sector becoming more mature and established, with an improved focus on best business and legal practice, investor relations, and fundraising,” said Daniel Diemers, fintech leader for Switzerland and head of blockchain EMEA at Strategy&.

“Hybrid models of combined venture capital and ICO financing are increasingly bringing together the best of what both have to offer, so that the soundness of a business is validated while it realises its market potential by receiving crowd support,” Diemers added.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years