One Year On, ‘Sexy’ STOs Count For Just 0.28% Of Cryptocurrency Investment
Some new cryptocurrency fundraising tools which should have “replaced” initial coin offerings (ICOs) have already failed and may never recover.
STOs Have ‘Dropped Off The Map’
That was the conclusion of fresh research which studied cash injections in the cryptocurrency and Blockchain sphere for the month of August.
Published by ICO research firm Inwara, the statistics showed that one ICO alternative in particular – Security Token Offerings (STOs) – had all but disappeared.
According to the data, total industry funding stood at $206 million in August, but STOs accounted for just 0.28% of that, or $576,800.
ICOs themselves, already known to have ‘died’ due to an ever-increasing climate of regulatory scrutiny, still managed 9.64% ($19.85 million).
By far the largest source of financing – over half the total – came from venture capital. Second largest were so-called initial exchange offerings (IEOs) on 38.35%.
“The beginning of H2 2019 has witnessed token offering projects pivot towards Initial Exchange Offerings (IEOs), while STOs have virtually dropped off the map,” Inwara summarized.
So Much For ‘Year Of The STO’
STOs arrived to major fanfare when they debuted in 2018. As Bitcoinist reported, hype around the technology soon snowballed, leading some sources to predict they would completely usurp ICOs.
“If 2017 marked the emergence of initial coin offerings and 2018 has been the year of regulatory uncertainty around those ICOs, then 2019 will belong to the security token,” Rohit Kulkani, former managing director of securities marketplace SharesPost, wrote in an article for Nasdaq last June.
Time has since proven Kulkani wrong. IEOs, despite their various controversies, have risen to become the most prominent fundraising aid, despite overall volumes being a fraction of ICOs at their peak.
Overall, however, token offerings of any kind have fallen out of favor, says Inwara. Year-on-year decreases in the number of sales now stands at 81%.
‘Blockchain Not Cryptocurrencies’
Even for VC firms, meanwhile, the picture is not an enviable one. As Bitcoinist noted in July, analysts recorded a 60% drop in funding compared to 2018.
“Even with funding down, recent corporate interest could be a good omen for blockchain startups,” the findings from CB Insights stated.
“The specific knowledge of blockchain can rarely be found in-house and will be needed as the space institutionalizes.”
US regulators have taken a hardline stance against the onward march of Blockchain fundraising. Attention currently focuses on an increasingly intense legal battle between the Securities and Exchange Commission (SEC) and Canada’s Kik, which sold tokens in a 2017 ICO.
What do you think about STOs? Let us know in the comments below!
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