High Networth Individuals

ICOs are Ideal for High Networth Individuals – Retail Investors and Crypto Enthusiasts cannot be Cut Off

February 19, 2019 Off Steven Anderson By Steven Anderson

Several analysts believe that Bitcoin will lose its market dominance to Ethereum and several other Altcoins over the long run.

ICOs are now set to be available only to high net worth individuals.  Flippening 2.0 is a market trend that reports this trend. 

Matthew Fell, the Chief UK policy Director stated, “Providers of public services know they must be accountable for their performance and behaviors. But if the ICO’s efforts are to succeed in contributing to a more sustainable marketplace, its proposals require a radical rethink. It should begin by talking to businesses about what works, starting with greater use of standardized contract clauses and disclosing information proactively.”

The Flippening situation is ironical because it was created to keep Wall Street intermediaries away. However, the cryptocurrency market is now dependent on traditional investors to raise their capital.  The market is moving away from the hands of retail investors, and institutional giants are slowly dominating it.

Regulatory authorities also have played a major role in Flippening 2.0.  Particularly in the US where there is a great deal of scrutiny over ICO sales, entrepreneurs are looking upon institutional investors.

In reality, any entrepreneur who does have an audacious idea should be able to raise capital for their project by creating a website and building a website containing the details of the project. However, things became difficult to even for entrepreneurs with bold ideas to be able to raise funds, after the numbers of ICO scams increased.  Regulators thus became vigilant. Therefore, entrepreneurs with a winning idea are now looking to attract the interests of accredited investors as opposed to looking for funds from the public sale of ICOs.

Even those who dare to work on a public sale, land up with regulatory risks like “unregulated security”  “cease and desist order” and other regulatory hiccups.

Raising private capital is highly beneficial because the environment is particularly professional and conducive to work on the future prospects of the company. While several retail investors are interested in making short term profits and quick returns, institutional investors are interested in creating long-term profits, and they have more to offer in terms of leveraging private connections.  Retail investors have nothing to offer other than the money.

However, this does not mark the end of ICOs for retail investors, because apart from fundraising ICOs provides a mechanism to distribute the tokens to cryptocurrency enthusiasts, developers, and retail investors.  Community support is essential because only with community support it will be possible to support the blockchain startup. It is not possible to cut off retail investors completely out of the market.

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