With the valuation of Bitcoin and Ethereum soaring high in 2017, will the cryptocurrency bubble burst soon? Increasingly, the startup and the corporate world is depending on Initial Coin Offerings (ICO) to fund their businesses. According to Token Report, which is a database for cryptocurrencies, there were 105 ICO’s in the third quarter of 2017. The ICOs yielded $1.32 billion, and the cryptocurrency industry saw $956 million in sales in the first half of the year. While $100 million was raised in 2016, the numbers have reached $2.27 billion now, and the point worth noting is that all these transactions happened without any fees paid to the underwriting banks. How long until banks and other security agencies chime in?
In July 2017, the US Securities and Exchange Commission raised a warning that since the ICOs are technically ‘securities’, they mandatorily fall under the security law. The regulation charged Maksim Zaslavskiy earlier this week for defrauding real estate investors with non-existent coin offerings. Earlier this month, the Chinese government also outlawed coin exchanges as the government identified these agencies to be “concocted pyramid schemes” that “disguised as scientific and technological innovation”.
On the other hand, Japan has recognized Bitcoin as a mode of payment. India and Sweden are creating their own cryptocurrency, Goldman Sachs is exploring the possibilities of a Bitcoin-based trading platform.
The future of cryptocurrencies is conflicted, especially with the banking institution. Reportedly, North Korea is misusing cryptocurrency to fund its international operations. Drug dealers and criminals might find a way to misuse this digital currency as well. In September, Jamie Dimon, the Chief Executive of JP Morgan Chase described Bitcoin as a “fraud”.
Several industry leaders believe while Bitcoin and Ethereum currencies are here to stay, the involvement of SEC regulation will change how these currencies operate in the present market. Once the government across the nations announce regulatory procedures, there will be a rapid decrease in the number of ICO, said the CEO of Cypher Capital, Sam Feinberg. Other skeptics believe that the price fluctuation looks like investors are living in the crypto bubble.
Are the times ahead troublesome for those who have already invested in cryptocurrencies and yielded profits? Is the denouement against the digital currencies real or is it just getting started as the anti-government anti-regulatory frictionless currency?