At the beginning of 2019, Binance – the world’s leading cryptocurrency exchange, announced that it will start launching one token sale every month exclusively through its Launchpad fundraising platform.
The initiative grew popular in an instant, as the first two sales of 2019 – the one of BitTorrent (BTT) and that of Fetch.AI (FET) reached their designated targets in a matter of minutes. Moreover, the price of the tokens increased massively immediately after they began trading on Binance.
Other Major Industry Players Follow
It seems that Binance Launchpad has inspired other well-known cryptocurrency exchanges to follow in its footsteps: Michael Gan, CEO at KuCoin – a digital currency exchange with over $10 million in daily traded volumes, announced that they are working on a similar initiative called Spotlight.
A new program of us, we name it Spotlight, is coming soon, and we believe it will be a launch platform for hidden gems in blockchain that have real potential and value. pic.twitter.com/SuQRN3WQRu
— Michael Gan (@gan_chun) March 11, 2019
While there’s not a lot of available information, the announcement clearly hints at activities close to these of Binance Launchpad. KuCoin, however, is not the only exchange to jump on the recently popular fundraising bandwagon.
Bittrex – a well-known veteran cryptocurrency exchange with over $77 million in daily traded volumes, has also stepped in, announcing its first ever Initial Exchange Offering (IEO).
The first project to have its IEO featured on Bittrex will be RAID – an international gaming data blockchain which aims to develop technologies geared to rewarding gamers for sharing information which improves marketing, business developments and other endeavors of gaming companies.
The event will take place on March 15th at 10 AM KST and it will be available for authorized Bittrex users. They will be able to purchase RAID (XRD) tokens using Bitcoin directly on the Bittrex International platform.
It also looks like this is not just a one-off forray of Bittrex into the field of fundraising. Speaking on the matter, Bill Shihara, CEO at Bittrex, said:
“Now our international users have direct access to blockchain projects with the peace of mind that comes from Bittrex International regulated in Malta. We are excited for this IEO and look forward to helping similarly innovative teams connect with users to build their platforms for the future.”
Are ICOs Coming Back?
That’s obviously the big question. Initial Coin Offerings had a tumultuous 2018, kicking it off incredibly strong towards the beginning of it. In February 2018, ICO projects managed to raise a whopping $2.6 billion.
However, as the year progressed, investors started being wary as more and more projects turned out to be blatant scams or incapable of delivering on their promises. As such, November saw as little as $65 million raised through ICOs.
The US has been clamping down on this particular model of fundraising, subjecting it to the scrutiny of its securities laws. Per the words of the Chairman of the US Securities and Exchange Commission (SEC), Jay Clayton:
“ICOs can be effective ways for entrepreneurs and others to raise capital. However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
If there’s one thing to stress about ICOs, however, is that they revealed an alternative to traditional VC investments. Moreover, it’s an alternative with far less barriers to entry, a lot more accessible, flexible, and quick, to say the least.
So What Has Changed?
These new initiatives of major cryptocurrency exchanges do follow the traditional ICO structure – tokens are being issued and purchased in order for a certain company to raise funds needed for the development of new or the improvement of existing products.
The main difference, however, is the fact that these new projects are backed by major participants from the cryptocurrency industry. Binance, for example, puts its reputation on the line when it features a fundraising event on its platform because it’s particularly easy to lose all credibility in case it promotes a sham project.
Hence, perhaps what we are observing is the comeback of ICOs but in a new, more credible form. And if we have to judge by the projects that have already been featured and completed, we could probably assume that they are definitely staging a comeback. And that’s good.