ICOs – Down but not out
Initial Coin Offerings may be down, but they aren’t out. A continued story throughout 2018 has been the demise of ICOs. While the industry has certainly taken a hit, and is not what it was a mere year ago, it still has a place in the industry.
Various sentiments shared by government officials, and other industry events, have recently shed light onto a potential path towards the future.
Congressman Warren Davidson
Congressman Warren Davidson is a member of the Republican Party. Recently, he caught the attention of many, as he works to reshape the way we view tokens.
For the time being, that vast majority of tokens distributed through ICOs are being viewed as digital securities, in the eyes of the SEC. If Davidson had his way, however, he would create an entirely new ‘asset class’, that would better define and regulate tokens.
Davidson recently discussed his plans to introduce such a bill at a Blockchain conference held in Cleveland.
While this move may come as somewhat of a surprise, who is came from isn’t. Davidson has advocated for Bitcoin adoption in the past, and was key in a recent summit held on Capitol Hill. The summit, held in August, included more than 2 dozen companies from the blockchain industry. The gathering was held in hopes of establishing clearer pathways towards proper industry regulation.
In the event that ICOs will forever be subjected to scrutiny afforded by the SEC, there may be another road they can go down.
For ICOs that wish to distribute utility tokens, rather than security tokens, there exists an exemption that the SEC can grant. To be approved for such an exemption, ICOs must sit down with the SEC prior to token distribution, and essentially lay out their game-plan. When the SEC is satisfied that the tokens are indeed utilities, the companies can be granted an exemption from any future prosecution on behalf of the SEC. This exemption is contingent on the companies following strict rules regarding the use of their tokens.
While this option exists, it is an unlikely scenario. Not only would being granted the exemption be difficult, but it would be easier to simply distribute a digital security, or raise funds through traditional means.
Enough adoption has occurred now to make it evident that STOs have a clear role to play in the future of blockchain; Quite possibly a bigger role than ICOs ever did.
Despite this, ICOs still have their place in the industry. Not only do the different token types have different benefits, but the world is a large place. Not every nation has the same stance on digital securities. There are many instances where utility tokens will be welcomed, and put to good use.
While funding for ICOs has drastically decreased when compared to the beginning of 2018, quality ICOs are still successful. Thankfully, investors are becoming more discerning with market conditions.
It is important to remember that basically every asset within the industry has lost its shine during this prevailing bear market. When good times return, and the bulls are running free, people will begin singing the praises of ICOs once again.