5th ICO / STO Report

Crypto exchanges conquering the market for Initial Coin Offerings

The market for digital assets such as Bitcoin is growing again and reached a market capitalization of USD 323 billion by the end of June 2019. Capital of USD 3.3 billion has been raised via crypto fundraising by the end of May 2019. The Initial Exchange Offerings offered via crypto exchanges are establishing themselves as a new fundraising instrument in the blockchain sector. After various incidents, awareness of cyber security is growing.

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Zug, 26 June 2019 – While digital assets reached their lowest market capitalization in 21 months in February 2019, their value had more than doubled (USD 262 billion) by the end of May 2019. At the end of June 2019, it had reached USD 323 billion. In particular, digital assets benefited from the ongoing clarification of regulatory frameworks and renewed interest in crypto currencies from institutional investors and established companies. Bitcoin, the world's largest digital asset in terms of market capitalization, regained more than 120% in the first five months of 2019, reaching a price of approximately USD 8,587 in May and briefly reached the USD 11,000 mark by the end of June 2019.

Initial Exchange Offerings are gradually becoming established

Between January and May 2019, a total of 250 token offerings were completed and around USD 3.3 billion in capital raised. The so-called Initial Exchange Offering (IEO) has established itself as a new crypto fundraising format. With this variant, Initial Coin Offerings or Security Token Offerings can be carried out via one or more crypto exchange platforms. Bitfinex's IEO was the largest IEO in 2019, raising USD 1 billion in capital. Dr. Daniel Diemers, Head of Blockchain EMEA at Strategy&, PwC’s global strategy consulting business, explains: "The development of IEOs has accelerated significantly since the beginning of 2019. It reflects the creativity and innovative spirit of the crypto industry and shows that the demand for simple and secure solutions is growing. IEOs show that fundraising via crypto currencies is becoming more established and striving for greater institutionalization and credibility."

Cyber security is becoming a top priority for blockchain companies

Recent cases of cyber attacks such as Binance, Bithump and Coinbase have put security higher on the agenda of blockchain companies. Crypto Valley Association President Daniel Haudenschild comments, “With a continued interest in crypto assets from major institutions, the subject of cyber security becomes paramount. We see a lot of work being done in Switzerland to provide the building blocks for improved security, especially among some of the top minds at Swiss universities.” Losses and vulnerabilities are not necessarily the cause of sophisticated attacks – they are often aided by a lack of security precautions or human error. "Aspects such as key custody, KYC/AML and new capital requirements are major issues in today's crypto ecosystem. A market for new procedural solutions is emerging to protect digital assets and meet regulatory requirements," says Diemers.

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