Are ICOs Becoming an Exclusive Playground For The Rich?

A quick look at the basic Initial Coin Offering (ICO) definitions would tell you that companies and startups now prefer it as a way of raising money because it’s less regulated.  It’s a way to get investors without jumping thru the hoops of requirements and regulations.

But as ICOs gained more attention due to ICO scams and questionable businesses, increasingly it is becoming more regulated (which might not be a bad thing). The good ICOs, the ones with the ability to jump thru the hoops of scrutiny are definitely better in terms of the team working behind it. They have higher trust ratings, and of course, a higher probability of success. (they still have a huge chance of failure, but the transparency is there, and it’s not a scam)

But this has unforeseen results that are bad for the ICOs being seen as a revolutionary way to let the public invest early on in prime projects with possible good returns. Because of regulations, ICOs are now circumventing rules and regulations by having private sales. Previously, anyone with an internet connection can buy in but increasingly, the new sales are targeting companies, venture capitalists, crypto hedge funds, and rich investors.

Telegram, one of the biggest ICOs this year raised $1.7 Billion thru a private sale, as well as Tatatu, Basis, Orbs, and Pumapay. According to CoinSchedule among the 10 largest ICO this year, most were conducted thru private sales. The private sales were so successful that Telegram decided to stop their public sale in favor of the private sale.

Top 10 ICos 2018

(Screenshot from Coinschedule -Cryptocurrency ICO Statistics)

Does this mean that ICOS have lost some of its more revolutionary concepts and democratization? As government intervention escalate, a lot of these ICOs simply find it easier to get funding from traditional investors and Wall Street middlemen. While presumably, this has made the ICO industry more robust, depending on who you ask, it either means that the ICO industry is growing up or betraying its grassroots origin.

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