2017, The Year of ICOs, Ethereum & BTC
2017 was the year of Bitcoin & Ethereum's parabolic rise as well as the mania behind Initial Coin Offerings (ICOs). 2018 is the painful year of regulation. 2019 and 2020 will mark the parabolic rise of Security Token Offerings (STOs) or IPOs 2.0. I made a post a while back on the potential of Polymath, the first STO Platform but I really felt a need to make another post on the disruptive potential of STOs because I believe there are things that are happening in the crypto and blockchain space which can seem really confusing and speculative to investors.
You will hear repeatedly that 90%+ of current cryptocurrencies will not be around 5 years from now. And it's not a bad assumption given that CoinMarketCap charts look very different every year, let alone every month. Markets may be down, but the space continues to evolve at breakneck speeds and I have been observant during this bear market of various trends occurring in the space. However, I can not predict the future and neither can the pundits, media or anyone else for that matter. What I can tell you is my opinion based on reasonable trends I see happening.
Regulation of Crypto Markets in 2018
Regulation is coming to the cryptomarkets in China, Korea, the EU and the US whether you like it or not. I am a fan of decentralization, do not get me wrong. However, KYC and AML as well as securities/regulatory laws are going to be brought to the crypto space. Regulators missed the blockchain and crypto space because institutions weren't making plays on it in 2017 and the parabolic rise to a near 1 Trillion Dollar Market Cap was mainly caused by retail investors like you and me. But they had to come in the space after governments, institutions and corporations around the world saw the trajectory that the disruptive space was moving with.
While we speak, in 2018 governments around the world are moving forward on how to regulate this space properly and carefully. They don't want to diminish innovation but they don't want money to be moving without their knowledge. This is why banks today have heavy KYC and AML regulations that they must comply with so financial transactions and data is indexed.
Coins that focus on compliance will succeed because they will not face lawsuits and securities laws violations brought on by governments. This applies to utility tokens and security tokens. The governments want to track transactions on the blockchain and collect their due taxes. They want to prevent money laundering, fraud and terrorism as well. Regulators also want to prevent fraud and exit scams from hurting investors like Bitconnect did in 2017. This is healthy for the markets because it will knock out a lot of the crap we see today.
Institutional Investors & STOs in 2019-2020
As governments finish up their regulatory overhaul in the blockchain space in the latter months of 2018, I believe the road will be paved for institutional investors (Hedge Funds, Pension Funds, Banks, etc) to come in the space full-force. They are watching very carefully and want a piece of the pie. They don't want to miss out like they did in 2017. They will pour trillions of dollars into the blockchain and crypto space starting from 2019. However, they will not pour their money into shitcoins, cryptos with obscure usecases or cryptos that sound good. They will do heavy research and only enter a select few (10% of coins/utility tokens today) which really have the best fundamentals. It is hard to say which these projects will be, but I am guessing that they will most likely be (Icon, Neo, Ethereum, Iota & a few others). Now they will only enter a select few utility tokens, and those will rise massively, while there will be a massive reckoning and culling of 90% of the market as we know it today, I believe. They will pour most of their money, however, into security tokens (STOs). Read my review on Polymath, and why I believe this Security Token Platform is primed to succeed (Much of the background is given in this post itself). The future of securities (Stocks, Bonds, Etc.) is tokenized on the blockchain.
This is a paradigm shift for Wall Street & Capital Markets, particularly in America because STOs can lead to the disintermediation of traditional finance and wall street. According to a CNBC article, in the US there are fewer listed companies today than in 1976; in fact, U.S. listings dropped 50 percent from 1996 to 2016. Gone are the days of Accredited Investors having access to capital markets and the ability to invest in IPOs. Gone are the days of large cap IPOs. Gone are the days of Investment Bankers underwriting securities. This renaissance will lead to small-time investors investing with no minimum amounts into liquid STO shares for their share of the pie increasing liquidity in the securities markets. It will lead to a boom in fintech and automated underwriting of securities (Automated Banking & Financial Services) threatening existing power structures today. And it will also lead to to an influx of capital into new markets such as smaller cap STOs & small businesses.
