According to experts from PwC’s Strategy and Swiss-based Crypto Valley Association (CVA), cryptocurrency’s Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) generated about $20 billion in 2018.
ICOs and STOs have a number of common features, such as low entry barriers for investors as well as Know Your Customer (KYC) and Anti-money laundering (AML) regulations that are considered to be traditional venture capital and private equity fundraising characteristics.
The key difference between ICOs and STOs is that the things with the latter one are clearer: they deal with securities. With ICOs quite often everything is not so obvious. While many of them claim that they are offering to buy utility tokens, in reality, they are selling securities as well.
In total, in 2018, over $19.7 billion was raised by 1,132 ICOs and STOs. Over $5.8 billion of the volume was raised by two projects. They are the EOS Foundation that is known to have conducted the largest ICO in history with over $4 billion raised in June 2018 and Telegram messenger that managed to raise $1.7 billion.
This amount was received from investors in two private ICO rounds for Telegram’s TON crypto platform. Such a situation clearly shows that investors are more eager to invest in projects with prominent names.
Analysts at PwC’s subsidiary Strategy said STO is considered to be a more regulated and mature way of raising funds but if we classify tokens as securities, both these approaches to funding are practically the same.
This conclusion has been included in the 2019 global ICO/STO report by PwC. This is the fourth annual research of this kind. And the company has prepared it in cooperation with Swiss-based CVA.