2017 was the year of ICOs. More than $3 billion has been raised as of November, the mainstream public has heard about this new way of raising funds, top bankers and government officials have offered their view on the matter. With that, lots of scammy ICOs successfully fished tremendous amounts of money from the inexperienced investors, regulators here and there limited or even banned ICOs, and the number of skeptics gradually increased. Will 2018 be another year of ICO? We think so, and here’s what to expect.

Mainstream adoption

Indiegogo has just launched its platform for ICOs. Bitcoin futures are being actively traded. Though some top bankers like Jamie Dimon remain skeptical, more and more professional traders get involved with cryptoassets. The mainstream financial world is getting serious about ICOs. Moreover, as the price of bitcoin and ether skyrocketed, investors big and small happened to have increasingly large amounts of capital in cryptocurrencies. The larger the investment, the less viable it is to simply withdraw it back to USD (commissions and taxes are among the top factors). All this new cryptocapitalists are interested in making their cryptomoney work and generate even more money. ICO is one of the obvious ways to make cryptoassets work. The more capital is held in, say, bitcoin, the more ICOs and blockchain startups the market needs. With this increased demand and mainstream adoption in 2018, we will see more and more blockchain projects tackling serious issues and offering a robust product or service simply because they will need to attract the attention of the more experienced and demanding investors.

Rise of the utility tokens

Recent US Securities and Exchange Commission Public Statement on Cryptocurrencies and Initial Coin Offerings helps us to understand what will be the top reason for any ICO to be seen as unlawful: “…when the promoters of these offerings emphasize the secondary market trading potential of these tokens”. This leads to two important implications for the ICO sphere. First, at least in H1 2018, the ICOs will focus on the European and Asian investors and will prevent US citizens from participating in crowdsales; this will not change until more clear regulations or guidelines are developed in the US. Second, the majority of projects will focus on their tokens being utility tokens; in other words, they will market them only as an instrument for transactions inside their future offerings. Certainly, many tokens will rise in price and bring profits, effectively making them a security, but they won’t be marketed that way. On the one hand, this will decrease the enthusiasm around ICOs among the non-professional investors; on the other hand, ICOs become less attractive for scammers, which is great for the industry. Unfortunately, this means ICOs will remain in a grey area for the regulators for at least first 3-6 months of 2018.

ICO from a major player

For now, only new startups that were born in blockchain hold ICOs. However, ICOs got too big to be ignored by the more established players. The very nature of the token economy, of course, implies that we will not see, say, Oculus surprisingly raising money via ICO and tokenizing their offering (though that is something one can actually imagine Airbnb is capable of). However, in 2018 we will certainly see relatively established tech projects dipping their toes in blockchain and even holding and ICO, most probably in H2. Time will tell what companies will leverage ICOs first, but our bet is on IoT startups.

2018 is going to be an exciting year for ICOs, and we are looking forward to it as much as amazing blockchain projects that are waiting to achieve tremendous growth next year.