Why have investors poured closed to $12 billion so far this year into initial coin offerings at a time when many ICOs will fail, some are found to be scams and U.S. regulators consider many of them securities and thus within their purview? Perhaps the thought of a big reward outweighs the big risks.
The Wall Street Journal decided to crunch the numbers on ICOs and found they raised $11.8 billion this year through May, more than double the $5.5 billion such offerings raised in all of 2017. The Journal analyzed nearly 900 offerings listed on ICOBench.com. The newspaper pointed out that fundraising amounts weren’t independently verified, and monthly figures were compiled based on the date each offering ended.
Approximately 490 ICOs raised an average $24 million in the first five months of 2018, while 300 startups raised an average of $14 million over the final five months of last year, according to the Journal’s analysis. U.S.-based startups continue to dominate the market, but that isn’t expected to last as other nations, such as Switzerland, work to make themselves more crypto-friendly countries and as U.S. regulators, starting with the Securities and Exchange Commission, look harder at the digital currency market.
Some of the bigger ICOs the Journal found: Telegram Group, the developer of the popular messaging app Telegram, raised $1.7 billion earlier this year, while Block.one finished raising an estimated $4 billion for its EOS network in June. Read more here.