Digital tulips? New research highlights ICO risks

Although over 4,000 ICO projects have managed to raise a combined total of around $12 billion to date, and nearly all since January 2017,just 44.2% of token projects are active into the fifth month or beyond.

The research concludes that ICOs have the potential to change how startup companies raise money, providing more control to entrepreneurs, greater liquidity to investors, and additional investment opportunities to early adopters. “Our paper shows that ICOs investors are compensated handsomely for investing in new unproven platforms through unregulated offerings,” say the authors, Hugo Benedetti and Leonard Kostovetsky.

They add: “It suggests that scams, while plentiful in number, are not as important in terms of stolen capital because investors are shrewd enough to spot (and underfund) them. It also shows how ICOs are both similar to and different from IPOs. Regulatory uncertainty in the United States and around the world has recently slowed the explosive growth in ICOs, but our findings suggest that while regulators should continue to deter fraudulent activities, they need to be careful not to throw out the baby with the bathwater.”

Further details here.