Next Generation of Blockchain Startups focus on Business-readiness and Regulatory Compliance
A new crop of blockchain start-ups that I call “ICO facilitators” are emerging that offer a one-stop resource for companies looking to conduct an STO or ICO. Key services these companies aim to provide are ensuring compliance with the relevant legal frameworks and regulations surrounding the issuance of security tokens, which is becoming clear are going to be regarded as equity tokens for the purposes of the SEC and other governments.
Wild West of Blockchain Capital Raising and Investing
While the past few years have seen huge growth in the number of blockchain projects under development, the current landscape is a bit of wild west.
Most ICO and STO campaign actually fail. They fail to raise enough funds to complete the underlying project. The majority of ICOs in 2018 raised under $500,000 and a good portion of these raised under $100,000.
There is also a high initial investment for projects that conduct ICOs. The scarcity of qualified advisors and initial project backers means that their fees are very high and erode raised funds before they can be applied to the underlying project.
There are problems for investors as well. currently, there are too many scams and half-baked business models pervading the cryptocurrency space. Much of the marketing in the cryptocurrency space is unreliable or fraudulent. Finally, too many issued coins fail to get listed on exchanges. This means investors’ capital (the coins) is completely illiquid (i.e. practically usless)
One new example of maturation of the cryptocurrency space is the emergence of a project like Ichiba, which aims to offer a kickstarted blockchain-based platform for all types of projects. The platform will support ICO, crowd-funding and crowd investing models.
Ichiba will retain stakes in each project whose ICO is launched on the platform. This is an interesting aspect of the cryptocurrency sector. Because projects issue their own coins, it is possible to “pay” for services by giving something very close to the company, i.e. native tokens or coins. This gives people a shared interest in the success of the company. That is, those with who the project conducts business has a common interest in the companies success. This is quite a bit different than normal marketing. In this case, Ichiba shares an interest in the future success of the projects it hosts, well-beyond the ICO, because it retains a stake in the project.
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