Following the unprecedented rise of ICOs in 2017 and their subsequent drop-off in the latter half of 2018, questions have swirled around both the regulatory and crowdfunding future of the Initial Coin Offering.
Unfortunately, the ease and obscurity of raising funds amid the altcoin mania of late 2017 led to nearly 80 percent of ICOs being identified as scams in that same year. As a result, regulators took notice and, although they have been painfully slow in rolling out guidelines, finally unveiled some decisive outlines on tokens and their legal status.
The SEC officially released its long-awaited ‘Crypto Token Framework,’ but it left many unanswered questions and issues that need further discussion. That being said, it is a start, and its impact on the ICO scene, and by extension, the IEO has yet to fully unfold.
Initial Exchange Offerings (IEOs) have emerged out of the crawling pace of ICOs over the last several months — seemingly improvements over the traditional ICO. While IEOs do offer some noticeable advantages, they also still have the caveat of trusting intermediaries who have proven themselves prominent players in the ‘Dark Underbelly of Cryptocurrency Markets.’
So, what exactly is an IEO and what are their implications?
What is an Initial Exchange Offering?
At its core, the IEO is basically an ICO but run through an exchange (or ‘launchpad’) as the intermediary conducting the sale. They have gained prominence among media outlets following several of the first sales — particularly BitTorrent’s token sale on Binance’s Launchpad.
BitTorrent raised $7.2 million in 18 minutes, and Fetch.AI recently raised $6 million in 22 seconds on Binance’s Launchpad as well. So why are these projects selling out like its Fall 2017?
You could chalk it up to the hype around the projects, but the IEO likely plays the more influential role in supplementing such successful sales.
As ICO interest has faded, private placement (i.e., VC seed investment) has…
