{"id":23011,"date":"2017-11-07T16:40:21","date_gmt":"2017-11-07T16:40:21","guid":{"rendered":"http:\/\/ci027cfe70f0212697"},"modified":"2017-11-07T16:40:21","modified_gmt":"2017-11-07T16:40:21","slug":"qchains-forward-advancement-amid-changing-world-icos","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/qchains-forward-advancement-amid-changing-world-icos","title":{"rendered":"Qchain\u2019s Forward Advancement Amid the Changing World of ICOs"},"content":{"rendered":"
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Alongside Bitcoin\u2019s meteoric rise in global interest and
price has been a frenzy of activity around initial coin
offerings (ICO)<\/a>.<\/p>\n

According to the online coin offering tracker Coinschedule<\/a>,
in 2017 alone there have been nearly 250 ICOs collectively raising over $3
billion. This heightened interest combined with the potential for lucrative
returns has prompted fears in some investment circles that we are facing a
bubble. Indeed, the bubble seems to have already popped to some extent, with
far fewer ICOs hitting their target raises than they were a few months ago.<\/p>\n

Today\u2019s ICOs are being initiated by funding-hungry startups,
often with a blind eye toward any sort of regulatory due diligence. As a
result, this wild and reckless approach has raised the eyebrows of the U.S.
Securities and Exchange Commission (SEC) among other regulatory bodies
worldwide. The SEC, in fact, has opened a new cyber unit for cryptocurrency
violations to address the proliferation of these campaigns.<\/p>\n

What\u2019s problematic here is the lack of compliance guidance
with respect to ICOs relative to crowdfunding regulations or federal securities
law. This prevailing environment has ignited calls for stricter oversights
addressing scams and \u201cpump and dump\u201d schemes that are now infiltrating this
space.<\/p>\n

Startups have an enormous amounts of wiggle room when
forming an ICO token. Unfortunately, many of these campaigns are launched with
little more than a hastily constructed website and white paper with the
company\u2019s core product rarely battle-tested by real users. This heightens the
notion that reaching cash rich startup status does not ensure product success.<\/p>\n

Once acquired by investors, ICO tokens can then be exchanged
in a secondary market for liquid value. In the meantime, shareholders (mostly
founding members and lead developers) often lay claim to 10 or 20 percent of
the initial tokens tied to a vesting schedule. It\u2019s the outside token investors
that are often at risk as they, at times, find themselves subjected to \u201cpump
and dump\u201d and other nefarious schemes, harming the overall integrity of the
crypto landscape.<\/p>\n

Navigating the Ever-Evolving ICO Landscape<\/strong><\/p>\n

Wally Xie, CEO of Qchain, an emerging digital
marketing, advertising and analytics platform seeking to leverage the strengths
of both NEM and Ethereum blockchain protocol, said that that while
know-your-customer (KYC) compliance really hurt his company\u2019s recent ICO, he
felt that it was a necessary sacrifice to make in terms of long-term legitimacy
and the safe development of Qchain in the U.S.<\/p>\n

\u201cWe are finding that we perhaps made the wrong move by
targeting the cryptocurrency community at large, rather than negotiating with
\u2018whales\u2019 from the outset,\u201d Xie said. \u201cWe’ve also faced lots of legal
challenges, such as having to do stringent KYC to comply with U.S. regulations,
since lots of money laundering is also happening in the space.\u201d<\/p>\n

Xie noted that similar issues involving integrity and
credibility are plaguing the industry his company is taking aim at, namely,
native advertising. He said that as that industry\u2019s expansion leads
to improved conversion rates compared to traditional web display ads, that
has come at the cost of trust found in traditional media outlets. This erosion
of trust, he added, has helped drive a flood of people toward “fake
news” websites that make their money in confirmation biases.<\/p>\n

Xie is worried that a similar scenario may be emerging in
the high stakes game of ICO funding.<\/p>\n

\u201cThe ICO space is definitely changing as it is becoming
more of a pay-to-play environment,\u201d Xie said. \u201cSuccessful ICOs now typically
already receive massive pre-ICO investment from folks like Draper, so the
feasibility of an ICO for all parties involved has definitely changed. In some
ways, it’s become a less democratic process. ICOs are becoming less accessible
and stratification is starting to happen in a manner similar to what occurs in
any maturing space.\u201d<\/p>\n

Jordan Valentine, an expert specializing in emerging
technologies at Spitzberg Partners \u2014 a boutique corporate advisory and
investment firm headquartered in New York \u2014 believes that we are fast
approaching the end of the frontier days in the ICO space, if we haven\u2019t gotten
there already. He noted that in 2017, we had seen four nine-digit coin
offerings and billions raised through ICOs. That, he said, is simply too much
money changing hands for regulators to allow this bubble to grow unfettered.<\/p>\n

\u201cGoing forward, government agencies will certainly look to
be more present in the crypto world as they develop an institutional
understanding of the issues at hand,\u201d Valentine said. \u201cMy personal hope is for
a regulatory framework that reins in some of the more reckless activity in
crypto without unduly burdening legitimate innovation.\u201d<\/p>\n

Valentine believes that this reaction is already in motion
in the U.S. In July 2017, the SEC clarified its stance on ICOs, warning that coin
offerings would be subject to U.S. securities laws. This means that coin
offerings will be judged by the Howey Test \u2014 a legal precedent for determining
whether a financial instrument is an investment contract. For U.S. investors,
this distinction connotes strict income or net worth requirements, restricting
the pool in the U.S.<\/p>\n

\u201cDigital coins can be used to confer a wide range of rights
in addition to value, so their application under securities law isn\u2019t exactly
straightforward,\u201d said Valentine. \u201cInterest in coin offerings will likely be
tempered a bit in the short term, as would-be investors wait for further
regulatory clarity and watch as the first penalties are doled out. However, the
allure of finding a big win will be enough to keep this fundraising mechanism
relevant, barring a serious clampdown from Washington.\u201d<\/p>\n

When asked about the prevailing trend toward launching
an ICO campaign without a demonstrated product or service, Valentine is
skeptical.<\/p>\n

 \u201cAn ICO backed only by a white paper and a webpage is,
in the best case, an incredibly questionable gamble; in the worst cases, these
raises are outright predatory, with the organizers bailing as soon as
possible,\u201d he said. \u201cEven in the case of a \u2018good\u2019 white paper ICO, buyers are
taking on huge risk, as they generally do not acquire any right to information
or managerial discretion.\u201d<\/p>\n

But Valentine offers this reminder:<\/p>\n

\u201cWhile most coin offerings are very much a long shot bet to
the buyer, they\u2019re not all scams. There are a number of potentially
paradigm-changing ideas supported by a token that merit the attention of the
savvy and adventurous.\u201d <\/p>\n

In response to sceptics, Xie said that Qchain made sure to have a fully-tested,
ready-to-employ platform in advance of launching its ICO campaign to avoid
giving the crypto industry a bad name.<\/p>\n

\u201cIn terms of our product, we didn\u2019t want to espouse a \u2018break
first\/fix later\u2019 ethos that has come to dominate Silicon Valley, made infamous
by such companies as Uber and Zenefits,\u201d he said. \u201cFunding is critical, but the
quality of what we are delivering will always come first.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"

Alongside Bitcoin\u2019s meteoric rise in global interest and price has been a frenzy of activity around initial coin offerings (ICO). According to the online coin offering tracker Coinschedule, in 2017 alone there have been nearly 250 ICOs collectively raising over $3 billion. This heightened interest combined with the potential for lucrative returns has prompted fears in some […]<\/p>\n","protected":false},"author":3464,"featured_media":23012,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"class_list":{"0":"post-23011","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-culture"},"author_data":{"id":3464,"name":"Btc Studios","nicename":"btc-studios","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/system-diy-promo-image-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/qchains-forward-advancement-amid-the-changing-world-of-icos.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/23011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3464"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=23011"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/23011\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/23012"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=23011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=23011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=23011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}