ICO (Initial Сoin Offering)

How to estimate ICO

Main article: How to evaluate ICO

2020: Monaco passes token law and prepares ICO boom

On July 7, 2020, the National Council of Monaco adopted Law No. 1009, which defines the rules for the circulation of tokens with signs of securities. The initiator of the bill is council member Frank Julien. Read more here.

2019

Investment in ICO collapsed by 95%

The ICO procedure allowed the founders of blockchain projects to raise billions of dollars through the sale of tokens, without the participation of venture funds and crowdfunding sites. However, in 2019, venture capital accounts for a much larger volume of transactions, and this trend may well put an end to the ICO era.

At the end of March 2020, research firm CB Insights published a report according to which financing by issuing shares bypassed the initial placement of cryptocurrency coins (ICO) and became the main means of financing in the blockchain space.

The unregulated ICO boom in 2018 raised $7.8 billion, but over the year funding from the ICO fell by more than 95%, and about $371 million was raised in 2019. On the contrary, financing through the issue of shares in 2019 raised $2.8 billion. The report also noted an increase in decentralized funding. According to the report, the value of assets on such platforms at the beginning of 2020 amounted to more than $1 billion, while in January 2019 it was only $300 million.

Research firm CB Insights published a report according to which financing by issuing shares bypassed the initial placement of cryptocurrency coins (ICO) and became the main means of financing in the blockchain space

In 2019, 807 venture deals were concluded, that is, there was only a slight decrease compared to 2018 (822 transactions). However, the total amount raised fell by about 30% from $4.26 billion in 2018 to $2.79 billion in 2019. Venture capital activity increased significantly compared to 2017, however, the average amount attracted by blockchain companies was higher in 2017 ($4.22 million) than in 2019 ($3.45 million).

In addition, the report indicated that cryptophyrms are the main source of DLT funding. According to the researchers, this data points to the "commitment of crypto companies to financing their own ecosystem." While hedge fund investments in blockchain are on the rise, CB Insights also notes that the funding is mostly due to funds that specialize in cryptocurrencies.

USA The share in blockchain start-up funding is declining year-on-year - investment has been moving steadily from to USA China since 2015. Overall, the two countries accounted for 53% of global venture capital investment. In 2015, funding for blockchain projects in the United States amounted to 51% of the global volume, China and only 2%. In 2019, the United States accounted for 31%, while China's share rose to 22%.^[1]

The amount of funds that blockchain projects attracted using traditional investment procedures has already noticeably overtaken the funding received at the ICO since the 3rd quarter of 2018. So, in the first quarter of 2019, according to CB Insights estimates, projects received $609 million from traditional investors and only $120 million from investors as part of the ICO procedure. For comparison: in the first quarter of 2018, similar indicators were $549 million and $6.88 billion, respectively.

Overall, however, funding for blockchain projects through both ICO and venture capital has been severely reduced, with Q2 2019 results at CB Insights rated as the lowest in the past two years.

American financial regulator issues first ICO permit

In July 2019, Blockstack became the first company to be officially authorized by the U.S. Securities and Exchange Commission (SEC) to initially place tokens. Read more here.

2018

France legalizes ICO

In mid-September 2018, the French government legalized primary token placement (ICO). Local companies were obliged to obtain permission from the regulator to conduct such operations in the country.

As French Finance Minister Bruno Le Maire wrote on his Twitter blog, the authorities have approved new rules for regulating the ICO. The Financial Market Authority (Authorité des Marchés Financiers, AMF) will be able to monitor the activities of startups and give them permission to conduct a fundraising campaign.

French government legalizes ICO

True, companies intending to conduct an initial placement of tokens should "provide" specific guarantees for investors. " Token issuers will have to provide AMF with all necessary information, which will allow buyers to remain aware of solutions related to the ICO.

The French regulator has previously expressed concern about the lack of clear regulation regarding the sale of tokens "as an integral risk factor for ICOs," which made it more likely to lose, launder money and finance terrorism.

According to Bruno le Maire, such innovations "will attract innovators from all over the world." Earlier, the French government cut taxes on digital money by up to 19%.

French President Emmanuel Macron is trying to make the state attractive for business, including those related to cryptocurrencies. In 2018, he launched the "Business Growth and Transformation Action Plan" (PACTE), one of the goals of which is to create a legal framework for raising funds through the sale of tokens.

By September 2018, the legal status of cryptocurrencies, ICOs and mining in Russia was not determined. Three bills have been submitted to the State Duma, designed to eliminate this gap and create regulation in the field of the digital economy.^[2]

More than half of ICOs failed

Almost half of cryptocurrencies the Initial Coin Offering (ICO) in 2017 were a failure. This is reported by the MarketWatch edition with reference to the Bitcoin.com portal, which, in turn, provides data from the Tokendata ICO tracker .

The study looked at open data, according to which 902 projects were conducted by the ICO in 2017, 418 (46%) of which later announced their closure. Among the projects deemed unsuccessful, 142 "fell off" while still at the fundraising stage, while 276 folded within a few months.

Failed ICOs

As the main reasons for the termination of the work of such startups, experts Bitcoin.com call attracting insufficient funds and theft of investors' money.

In addition, most of the new digital currencies were aimed at certain niches, such as dentistry, freight, real estate - they were never going to attract a wide audience. At the same time, others were essentially just a belated attempt to replicate someone else's success without any of their own advantages.

Another 113 projects were called "half failed" because their initiators do not keep pages on social networks and do not respond to applications. If these campaigns are considered unsuccessful, it turns out that 59% of token sales in 2017 ended in failure. About $233 million of investments were raised to support these projects.

According to the authors of the report, the ICO market in 2017 became a "digital cemetery." Some startups failed to raise money, others invested a couple of hundred thousand dollars, and someone received more than $10 million. However, the result was still a small number of workable projects, test launches and benefits to the community, experts say.^[3]

The Ministry of Telecom and Mass Communications has prepared ICO rules 

The Ministry of Telecom and Mass Communications developed in the spring of 2018 requirements for the release of digital tokens. The draft government decree on accreditation of organizations providing the possibility of issuing digital tokens is published on regulation.gov.ru. According to the document, a digital token is a record in a distributed information system created using cryptographic algorithms. The record confirms that its owner has rights to receive its initial value from the organizer of the initial issue of the digital token. It is reported by Kommersant.

Accreditation to ICO organizers will be issued for a period of five years. The procedure should become voluntary, and the Ministry of Communications will act as its organizer. Accredited organizations will be registered in Russia, their authorized capital will be at least 100 million rubles, and they will also receive a license to develop the production and distribution of cryptographic means.

In addition, the organizers of the issuance of tokens must also have a bank account with a Russian bank for transactions with money received as a result of ICO. The issue of digital tokens can be carried out only for Russian rubles through non-cash payments. The organizer of the ICO will be obliged to redeem them at a nominal price from any bearer on the basis of an irrevocable public offer.

In addition, the project provides for "the obligation of a person issuing digital tokens to use funds received from buyers of digital tokens only for purposes related to maintaining the ability to fulfill the obligation to redeem digital tokens at a nominal price." Compliance with these requirements must be monitored by an accredited ICO organizer.

10% of funds raised on ICO stolen

On January 22, 2018, Ernst & Young analysts published a study according to which hackers stole a tenth of the funds raised under the ICO.

Experts analyzed 372 primary placements of cryptocurrency tokens (Initial Coin Offering, ICO), the total volume of which amounted to $3.7 billion. About $400 million of this amount was stolen.

The most common method of cyber attack was phishing, with the help of which hackers managed to steal up to $1.5 million every month from the organizers of this or that ICO.

Hackers stole a tenth of the funds raised under the ICO

The study notes that the pace of investment in ICOs slowed down by the end of 2017. So, in November, only 25% of ICOs reached their goal, while in June this figure was measured at 90%.

According to Paul Brody, who oversees blockchain innovation at Ernst & Young, the problems faced by ICO organizers in achieving their goals are partly due to the low quality of the projects themselves and the difficulties encountered in previous projects. After the explosive growth of ICO, a large amount of financing was attracted, after which the quality of transactions began to decline, he noted.

We were shocked by the quality of some business plans, we identified clear coding errors and conflicts of interest between token companies and the token-owning community, Paul Brodie told Reuters.

ICOs are often organized to finance new technology platforms or create businesses that will be associated with cryptocurrencies and blockchain. At the same time, most of these projects do not need blockchain and cryptocurrencies at all, the auditors noted.

The world leader in conducting ICO, according to the study, was the United States, where with the help of this tool the business was able to attract more than $1 billion in investments. This is followed by Russia and China - $452 and $310 million, respectively.^[4]

2017

The Central Bank and the Ministry of Finance presented a bill to regulate the ICO

The Ministry of Finance and the Central Bank presented at the end of 2017 a bill on the regulation of ICO. According to it, cryptocurrency is defined as "other property," ICO - as a type of crowdinvestment.

"When developing the bill, we tried to avoid the temptation to regulate the turnover of digital assets and raise funds using digital assets in the way we regulate financial markets," RBC quotes Deputy Finance Minister Alexei Moiseev.

Thus, the bill defines cryptocurrency as "other property," and ICO as a type of crowdinvestment (a tool for raising capital in startups and small businesses from a wide range of micro-investors).

In addition, the ministry proposes to limit the amount of funds attracted per ICO and the amount of investments in ICO from unqualified investors.

In particular, at the first stages, it is proposed to limit the amount of funds raised during the ICO to 1 billion rubles, and allow unqualified investors to invest in tokens no more than 50 thousand rubles. It is also proposed to create a special depository for storing smart contracts, and to the organizers of the ICO - on a voluntary basis to disclose information about the project and the purpose of collecting funding.

Cryptocurrency and ICO legalized in Belarus

President of Belarus Alexander Lukashenko signed a decree "On the Development of the Digital Economy" in December 2017, which legalizes ICO, cryptocurrencies and smart contracts^[5]. According to A. Lukashenko, the main goal of the document is to create such conditions that world IT companies come to Belarus, open their representative offices, development centers and create a product in demand in the world.

EY: More than $3.7bn raised through ICO

While investor demand for ICO participation remains strong, the proportion of projects that meet their desired fundraising targets has been gradually declining since mid-fall 2017^[6].

According to researchers at Ernst & Young, this is due to the fact that investors are becoming more cautious, and regulators are activated at the sign of violation of the law.

As part of the study of EY "ICO Market," the work of 372 projects was analyzed, more than 100 in detail (87% of the total amount of funds raised through ICO). The vast majority of ICO projects use the Ethereum platform - 77%, Custom Platform is in second place - 13%, Waves platform closes the top three - 4%. EY researchers note that due to the fact that the Ethereum platform is overloaded due to popularity, growing demand increases the cost, and cryptocurrencies Ethereum as a result, the cost of the ICO.

The amount of funds raised through the ICO is more than $3.7 billion. At the same time, the leader is the United States - more than $1 billion, Russia is on the second line - $310 million. UNITED STATES. The top 5 includes Singapore, China and Hong Kong (over $200 million UNITED STATES). At the same time, Moscow is ahead of Silicon Valley in the number of projects - 48 against 38, in third place New York - 27.

The main thing that determines the capitalization and cost of the token is the preparation and conduct of the ICO. There are two main ways: in the first case, the volume of attractions is limited and tokens are sold at a fixed price. As a result, there is a stir, and the ICO time is significantly reduced. Thus, 10 projects of record holders attracted funds at an average speed of 300 thousand dollars. US per second. In the second case, the volume of tokens is not limited, after the end of the ICO, tokens are distributed in proportion to all investments. The share of tokens is eroded very much, so there is no possibility of assessment, which leads to great volatility. This entails inflating the valuation of the underlying cryptocurrency and tokens.

It is clear that large volumes of ICOs are attracting increased attention from hackers. According to Group IB, more than 10% of ICO funds are lost as a result of attacks. Attackers use phishing tools and hack sites. The authors of the study note that at present in Russia there is no single position regarding tokens and cryptocurrencies. In accordance with the current legislation, the ruble is the only calculation tool, and the creation of currency surrogates is prohibited.

Starta Ventures Data

The first type of ICO includes the basic infrastructure on the blockchain and protocol ICOs that were originally used in the blockchain community. These ICOs existed even before the hype, which rose in 2017, and they will not go anywhere. Starta Ventures Predicts Further Trend for ICO Investment of Infrastructure Projects as Blockchain Technology Evolves and Gains More Popularity in the "Real World"^[7].

The second type of ICO is the ICO of niche products that were not originally in the blockchain system. Such an ICO is used to attract investment so as not to give a share of capital to venture capital investors. ICOs of this type reached the peak of their popularity in the third quarter of 2017 - then companies that were in the early stages of financing raised an incredible amount of money. But as the market evolves, such ICOs will disappear as they are neither competitive nor connected to the blockchain community. This was already clear in October-November 2017, when a huge number of such projects failed to attract the minimum amount of expected investment.

Starta Ventures notes that such ICOs will die out until they fit into the traditional venture investment model and become part of the infrastructure that works according to the rules.

ICO trends

ICO becomes too expensive for startups:

The days when the startup could attract millions of investments with white paper alone and a beautiful site are behind it. In recent months, the average cost of conducting a successful ICO has skyrocketed due to the huge volume of new primary token placements. Personal experience in conducting ICOs and consultations in this process of third-party companies allows Starta Ventures to conclude that the cost of conducting a successful ICO is not only directly related to the ultimate goal, but also increases exponentially as more new ICOs become available every day.

The cost of a successful ICO reached $500-700 thousand, which is equivalent to a good sowing round. If you take into account various legislative nuances, then for an ordinary startup, the launch of ICO looks less attractive than traditional methods of attracting investment.

Average ICO Spend

What these costs include

Investment ICO process goes offline

The process of attracting investment through the ICO becomes increasingly similar over time to conducting a typical round of venture capital investment. Now the ICO is increasingly taking place at offline meetings with funds and blockchain conferences, where projects are trying to contact selected godfathers of bitcoin. Digital marketing tools, with which it was possible to easily promote ICOs a few months ago, are already outdated, because potential investors are inundated with advertising for new projects.

Given the number of new ICOs, crowd investors are increasingly relying on the reputation of specific project founders and consultants and are increasingly looking at advertising. The focus thus shifts from digital marketing to direct engagement and attempts to connect with serious names in the market.

ICO 2016-2017 Starta

$300 million has already been stolen at ICO

In 2017 ICO , 3.5 billion were attracted through, dollars while 300 million of them were stolen, according to banki.ru^[8] portal^[9]

Statistics shared with users "Kaspersky Lab (Kaspersky)." The interest of hackers in ICO, according to experts, is primarily associated with large amounts that participants invest - on average, deposits amount to $5,000. Hackers have developed several methods of fraud related to ICO. The most popular of these is attacks on ongoing ICOs. Hackers also use phishing sites, spam emails urging them to invest in fake ICOs.

Attacks on cryptocurrencies have increased over the past year. Several main types of attacks have been identified. Firstly, this is mining technology. Experts noted an increase in the number of viral sites that mine users' cryptocurrency. Secondly, incidents of corporate mining have become more frequent, when for the purpose of hacking, company employees use work servers secretly from employers. Finally, in Russia, a case was recorded of the transition of attacks on cryptocurrency from the network to the real world - gypsies sold cryptocurrency on the streets in the form of coins.

Token Report: 75% of the top 65 ICOs could fall under SEC regulation

Tokens nearly 75% of the 65 largest ICOs could fall under SEC regulation as securities, according to a Token Report study. The study took into account information about whether the creators of the projects published statements about the potential benefit to investors, and whether the startup has working products.

In the first 10 months of 2017 alone, startups have already allegedly raised more than $3 billion through ICO. In September, the figure was only at around 800 million, and in April the value was less than $100 million. The number of completed primary placements alone exceeded 200.

In July 2017, the U.S. Securities Commission (SEC) disclosed the risks associated with the ICO. At the same time, the SEC identified the tokens of The DAO project as securities. Only qualified investors should be allowed to purchase securities, and the tokens themselves should be registered with the SEC. Regulators can also demand that all money be returned to investors and fine the organizers of the project.

not an exact science. All ICO projects can do is consult with lawyers and set up their work in such a way as to reduce the likelihood that the SEC interprets the token as a security, "says Alex Michaelis, co-founder of the CoinSchedule ICO tracker.

In order to determine whether a token is a security, the SEC uses the standard Howie test, which appeared after a scandalous lawsuit back in 1946. According to this test, a token can be recognized as a security if it is an investment in an enterprise with an expectation of profit. Moreover, profit should come mainly from third parties. According to the lawyer from Cooley LLP Marco Santori, even cryptocurrency exchanges can fall under these criteria.

In 2017, most ICO organizers say they are exempt from regulation because they issue technical tokens. Because of this (according to the ICO organizer), they are not qualified as securities, relying on the Howie test.

A lawyer for Meyers & Heim, Robert Heim, formerly an assistant to the head of the SEC branch in New York, described how startups can protect themselves from regulation. It is necessary to limit ICOs to selling tokens to accredited investors and provide more information in their White paper (for example, talk about conflicts of interest, executive salaries and risk factors).

to protect their investment. If they invest money, and it turns out that there is a violation of the securities law, then the company will not be a successful candidate for investment. "

Some companies are trying to use the Simple Agreement for Future Tokens (SAFT) approach, which Cooley was involved in developing. Under this scheme, startups issue options to buy tokens instead of the tokens themselves. However, because of this, companies may be on the radar of the Term Exchange Trading Commission (CFTC). At the same time, many startups believe that tokens fit the definition of virtual currencies (the CFTC does not plan to regulate them).

However, Lex Sokolin, director of fintech strategy at Autonomous Research, believes that startups should be concerned that token buyers are participating in ICOs in anticipation of profits.

Putin instructed to regulate ICO

In October 2017, Russian President Vladimir Putin instructed the government and the Central Bank of the Russian Federation to ensure the regulation of public attraction of funds and cryptocurrencies by placing tokens (ICO). This is stated on the Kremlin website.

It is planned to settle by analogy with the regulation of the IPO ─ the initial placement of securities. The ruble is recognized as the only legal tender for cryptocurrency. By December 20, 2017, the Central Bank will create a test platform for testing "innovative financial technologies" before their legislative settlement.^[10]

Putin instructed the government to prescribe the regulation of cryptocurrencies

The legislation will include a definition of such concepts as "distributed register technology," "digital letter of credit," "digital mortgage," "cryptocurrency," "token," "smart contract" and "mining."

In addition, the government and the Central Bank will need to establish requirements for the organization of mining, come up with the principles of registering miners and taxation for miners. Amendments to the legislation must be prepared by July 1, 2018.

By March of the same year, the Bank of Russia and the government should think over a single payment space for the countries of the Eurasian Economic Union, in which new financial technologies (including blockchain technologies) will be used.

The presidential administration prepared a list of instructions following a meeting on digital technologies in the financial sector, which took place on October 10, 2017.

According to the Kommersant newspaper, earlier the heads of ministries and departments agreed on the need to regulate the processes of issuing cryptocurrencies, their circulation and mining. The Ministry of Finance until the end of 2017 is going to determine the basic regulatory positions for the new market and "make a framework law."^[11]

First ICO fraud case opened in US

In the United States, for the first time, they will be brought to trial for fraud in the environment of ICO.^[12]U.S. Securities and Exchange^[13] (SEC) announced the freezing of all operations and termination of ICOs for REcoin Group and DRC World (also known as Diamond Reserve Club).

According to the SEC, the owner of the companies, Maxim Zaslavsky, offered depositors to invest capital in real estate and precious stones. He claimed that the company uses legal brokerage and accounting services. However, according to the Commission, the company did not receive these services. Also, the head of REcoin distorted the real amounts of attracted investments, indicating them at $2-4 million, when their actual amount was about $300 thousand.

At the moment, Zaslavsky's assets are frozen, and the SEC has launched an investigation. If guilt is established, the entrepreneur will have to return all invested money to depositors and pay penalties.

In turn, Maxim Zaslavsky expressed his readiness to return the money to customers and noted that his company did not mislead anyone, according to[1] the^[14]

South Korea bans ICO following China

The Financial Services Commission of South Korea announced a ban on all forms of token placement (ICO - initial coin offering), it said on September 29^[15]According to the South Korean regulator, raising funds through ICO increases the risk of financial fraud, in this regard, all types of token placement will be prohibited. The regulator also announced that penalties will be applied to all financial institutions and persons involved in the release of new cryptocurrencies, and stressed that^[16] should strengthen control over cryptocurrency trading^[17]

The South Korean commission's decision comes less than a month after similar measures were introduced by the People's Bank. And China just like in early September, the cryptocurrency market reacted with a temporary drop in quotations and a rapid recovery to almost the same values. Moreover, this time the depreciation bitcoin was not so significant. In our opinion, this is due to the fact that the volume of the South Korean cryptocurrency market is significantly less than the Chinese one. This may also indicate that the cryptocurrency market is becoming more stable and ceases to react sharply to statements and actions of regulatory ^[18]

It is also important to note that the statements of financial regulators in China and South Korea coincided almost to the last comma. Meanwhile, the financial markets of these countries are very different from each other. In relation to the Chinese market, experts periodically use the definition of "authoritarian," referring to the excessive number of state-imposed restrictions, while the South Korean market is recognized as one of the most liberal in the world.

This contradiction seems to be, since in these statements the background traces another topic, especially important for the Chinese authorities. We're talking about controlling financial flows. For Beijing, financial security is the top priority of economic policy. Therefore, targeted policies to restrict the shadow banking sector, illegal lending mechanisms, legalize criminally acquired income and outflow of funds from the country lead the Chinese government to impose restrictions on all financial mechanisms that can contribute to the withdrawal of cash flows from control. states Today, such a mechanism is presented. cryptocurrencies

At the same time, the restrictive measures introduced in China and South Korea should not be considered as a final solution. These actions are designed to give regulators time to work out the rules of the game that suit all parties. The elimination of gray zones in the legislation will give cryptocurrencies a clearly defined legal status, introduce them into economic circulation and protect the interests of potential investors in controversial cases - for example, if problems arise with the implementation of a project for which funds were collected using ICO. To that end, South Korea's Financial Sector Oversight Commission plans to remove anonymity from cryptocurrency transactions. As one of the options, the possibility of introducing an authentication system is considered. It is also planned to develop mechanisms to track suspicious transactions.

Until the new rules of the game are made public, Asian investors will look for marketplaces in countries with a friendlier legal climate towards cryptocurrencies. Today, such a quiet harbor could be Japan, which recognized cryptocurrencies as means of payment in April 2017.

On the same day the restrictions were announced in South Korea, Japan's state Financial Services Agency approved 11 companies as operators of cryptocurrency exchange exchanges. In addition to mandatory registration with the government, such companies are required to create a powerful computer system to ensure the stable operation of the exchange, ensure the identification of customers' identities, as well as comply with anti-money laundering standards and a number of other requirements. At the same time, the Japanese authorities do not plan to prohibit raising funds with the help of ICO. In the future, this could lead to the fact that more than 60% of operations with cryptocurrencies will be concluded on Japanese trading floors.

ICO ban in China and South Korea

Following China, the authorities of another economically developed Asian country - South Korea - decided to pay close attention to how the situation in the cryptocurrency market is developing. Moreover, the attention of the state to a greater extent complicated the life of participants in this market, rather than adding optimism to them. Thus, we are talking about repeating not the Japanese, but the Chinese scenario.

This refers to the decision of South Korea's financial market regulator, the Financial Sector Oversight Commission, to ban all forms of ICO. The regulator considered the reason for the ban to be the fact that in some cases the collected funds were sent to unproductive or speculative areas, as well as the fact that with the help of cryptocurrencies there are additional opportunities to evade taxes. In addition, under ICO, investors are more likely to fall victim to fraud. As a result, the regulator warned of penalties that will be applied to companies and persons organizing new ICOs, and specifically stressed that control over cryptocurrency trading should be strengthened.

The South Korean commission's decision comes less than a month after similar measures were introduced by the People's Bank of China. And just like in early September 2017, the cryptocurrency market reacted with a temporary drop in quotations and a rapid recovery to almost the same values. Moreover, this time the depreciation of bitcoin was not so significant. In our opinion, this is due to the fact that the volume of the South Korean cryptocurrency market is significantly less than the Chinese one. It may also suggest that the cryptocurrency market is becoming more resilient and ceases to be acutely responsive to regulatory statements and actions.

It is also important to note that the statements of financial regulators in China and South Korea coincided almost to the last comma. Meanwhile, the financial markets of these countries are very different from each other. In relation to the Chinese market, experts periodically use the definition of "authoritarian," referring to the excessive number of state-imposed restrictions, while the South Korean market is recognized as one of the most liberal in the world.

This contradiction seems to be, since in these statements the background traces another topic, especially important for the Chinese authorities. We're talking about controlling financial flows. For Beijing, financial security is the top priority of economic policy. Therefore, targeted policies to restrict the shadow banking sector, illegal lending mechanisms, legalize criminally acquired income and outflow of funds from the country lead the Chinese government to impose restrictions on all financial mechanisms that can contribute to the withdrawal of cash flows from state control. In 2017, cryptocurrencies are such a mechanism.

At the same time, the restrictive measures introduced in China and South Korea should not be considered as a final solution. These actions are designed to give regulators time to work out the rules of the game that suit all parties. The elimination of gray zones in the legislation will give cryptocurrencies a clearly defined legal status, introduce them into economic circulation and protect the interests of potential investors in controversial cases - for example, if problems arise with the implementation of a project for which funds were collected using ICO. To that end, South Korea's Financial Sector Oversight Commission plans to remove anonymity from cryptocurrency transactions. As one of the options, the possibility of introducing an authentication system is considered. It is also planned to develop mechanisms to track suspicious transactions.

Until the new rules of the game are made public, Asian investors will look for marketplaces in countries with a friendlier legal climate towards cryptocurrencies. Japan can become such a quiet harbor, which recognized cryptocurrencies as means of payment in April 2017, - said Oleg Yakushev, an expert at CERIH Capital Management.

On the same day the restrictions were announced in South Korea, Japan's state Financial Services Agency approved 11 companies as operators of cryptocurrency exchange exchanges. In addition to mandatory registration with the government, such companies are required to create a powerful computer system to ensure the stable operation of the exchange, ensure the identification of customers' identities, as well as comply with anti-money laundering standards and a number of other requirements. At the same time, the Japanese authorities do not plan to prohibit raising funds with the help of ICO. In the future, this could lead to the fact that more than 60% of operations with cryptocurrencies will be concluded on Japanese trading floors.

Holding an ICO for $1 billion in the first half of the year

In the first half of 2017, more than $1 billion was raised through ICO^[19]At the same time, in 2016, according to Smith +^[20], only $102 million was raised at the ICO. The largest ICO is considered the placement of tokens for the Filecoin project (development of a decentralized network for data storage), during which in August 2017 it was possible to raise $257 million.