The need for having regulations that will help in preventing the manipulations and other insecurities involved with the crypto market has been felt since long. Though the officials are giving thoughts to the necessary regulations, the crypto industry has seen a decline in initial coin offerings (ICOs).
The blockchain research group Diar, in its latest report, stated that blockchain and cryptocurrency based startups have raised nearly $3.9 billion through Venture Capital investments in the first three quarters of the year that up 280 per cent when compared to the whole of 2017. Venture capital is the financial fund that investors provide to startup companies and small businesses that have the potential to grow.
The average size of crypto and blockchain investment has increased by over $1 million in 2018 along with the VC deals. Many largest blockchain and crypto investment in 2018 has seen the beneficiary company to grow and raise more than $1.3 billion in total venture capital.
Diar explained the reason behind the sudden rise in the popularity of VC among startups that want funds and stated that 70 per cent of ICO tokens is now valued lower than during their respective sales. The group further continued stating, “the majority of tokens have dropped in price by more than 90 per cent from their all-time highs.”
The token-based fundraising has been quite recently and the research group also mentions the issues with the ICO projects that led to the drop in this fundraising model, it stated:
“Non-equity ICOs are not only scrutinized by the regulators but the founders also have very misaligned incentives as there is no contractual obligation to deliver a product – a reality that to date seems to be the case with few launches, and even less adoption.”
The report also stated that the completion of token sales and the amount raised through ICOs “is now approaching a one year low.”
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