ICO stands for initial coin offering have quickly emerged as a multibillion-dollar industry. Start-up entrepreneurs often launch ICO as a way to raise capital as quickly as possible, however, there are evidences that state that the ICO market is about to cool down. This doesn't mean that the initial coin offering is dying off. As the industry evolves, the expectancy of the crowd still raises. It is expected to significantly improve. For example, Buterin, the founder of Ethereum says that token 2.0 will be of higher quality than ICO.
Here are the reasons why ICO release date is slowing down:
The major cause of ICO cooling down is because of China's ban on token sale. The ban has occurred in early September and have led to a sharp decrease during the month of October. The ban of ICO have quickly spread to South Korea which has a more relaxed cryptocurrency regulation. As of right now, ICO continues to operate in a very regulated manner. A lot of startups are contemplating about what type of token to issue and where to implement their Crowdrise. Luckily, Europe has offered the best solution for crowd sale. That is why the region accounts for half of the ICO funding.
2. New protocol
The development of the simple agreement for future tokens which stands for SAFT project was created to self-regulate the industry while navigating the security law in the US. The SAFT may not be as safe as we have previously thought it would be. A report by Cardozo blockchain project argued that SAFT could make it more difficult to provide consumers access to meaningful new technology. If SAFT is the solution, it will take a while before the industry can adapt to its standard protocol.
3. Investor scrutiny
Investors are more prudent about ICO than they were a few months ago. The public is determined to seek out solid cases and business model pertaining to crowd raise. They want more information regarding the team and all their questions to be answered. Investors are continuously pouring money into crowdfunding campaigns, but there are hundreds and thousands of projects launching on a weekly basis that the standard for the token is rising higher than ever.
4. More scam
One of the reasons why ICO is cooling off is the increasing number of fake and fraudulent projects. Oftentimes, scammers will copy the ICO, rewrite it, and launch a website with random pictures of advisors that they have found online. They will obtain all the revenues from investors, and shut down the website and leave. The US security and exchange commission has already charged two ICO of fraud. These regulators have also warned potential investors to be cautious about false promises and unrealistic profit from token sales.