Autonomous Research noted three reasons that could explain the drop in token sale activity. “First, perhaps investors have devalued the idea of buying a utility token (does nothing yet, legally non-binding), and instead want to buy equity in the same companies,” the firm wrote. By examining “Pitchbook’s data on blockchain and bitcoin venture capital raises,” the company found:
There is indeed a lagged effect in venture as well, with increasing drips of capital, reaching over $1 billion in August 2018.
The company believes that there are two reasons for this observation: “fintech companies like Robinhood and Revolut pivoting into crypto” and “Bitmain trying to vacuum up capital before the public offering.”
The second factor for the decrease in ICO activity concerns security token offerings (STOs). According to the U.S. Securities and Exchange Commission (SEC), ICOs may be securities offerings and fall under its jurisdiction. “STOs are the new ICOs,” wrote blockchain consultant Michael K. Spencer, elaborating that “security tokens are actual financial securities.”
Citing that investments in security token offerings have not grown to full strength, Autonomous Research emphasized:
STOs won’t hit the market in earnest for another half-year at least due to regulatory indigestion.
While China attempted to shut down all service providers of cryptocurrencies and ICOs, token sale activity remains. The People’s Bank of China (PBOC), the country’s central bank, admitted last month that a number of crypto trading platforms originally set up in China have left the country to operate overseas but continue to provide service to domestic users.