The IEO safety is one of the most discussed topics in the crypto community and some wonder if IEOs are better than ICOs. We are about to find out in the latest cryptocurrency news below.
After the ICO bubble in late 2018, the projects found it hard to find new ways to raise money and the security token offering markets started the new concept: the initial exchange offering. However, is this model really that different from the original? With the ICO market growing quickly to billions of dollars in collected funds in 2017, the last months of 2018 saw the fundings dry up pretty fast. About $74 million was collected in December which is less than what some stand-alone projects raised only a few months earlier.
Unlike ICOs, Exchange offerings are launched in collaboration with crypto exchanges. Exchanges should be screening the projects that they only list only allowing legitimate projects on the platforms. The IEO safety is correlated with ostensibly selling the utility tokens which are very similar to those offered in earlier ICOs. With the changing regulatory landscape and its complexity, the lead US regulators have made clear that most ICO token sales are securities issuances. This poses a serious risk for both IEO issuers and contributors since investing in a project only to see it entering a fight with the SEC is not particularly expected to prosper.
On a fundamental level, the formulas are the same so giving the project money to obtain tokens. However the exchanges give valuable service to the issuers and in addition, they provide a ready-made platform that solves one of the crucial issues for the crowdfunding initiatives. One reason that the ICOs dropped was the inability to market them. Google, Reddit, Twitter, and Facebook all banned ICOs in the first half of 2018.
The digital ads provided a reliable medium to reach the outsiders since without them the ICOs were left to compete for the dwindling pool of existing enthusiasts. Exchanges, on the other hand, can offer a huge base of crypto traders that are spurred into action via promotional activities. The projects getting their tokens listed was also a major issue for ICOs and by creating an exchange offering, they guaranteed the ability to be easy to trade on at least one platform.
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