AMF of France Report: ICOs Account for ‘Marginal’ Share of Market

Money raised via ICO represents a tiny fraction of the world's equity market.

The Autorité des marchés financiers, France’s financial regulator, has released a report on initial coin offerings. The study reveals that while ICO financing has continued to grow in terms of money raised, it remains “marginal” in proportion to the rest of the market.

Facts and Figures

It says that since 2014, 19.4 billion euros has been raised by selling crypto-tokens. Of this figure, €5.6 billion was taken in 2017, and €13.4 billion in the first three quarters of 2018.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

The figure in 2017 is equal to only 1.6 percent of the equity finance market.

French startups have raised only €89 million raised, from 15 ICOs. This is equal to around 0.4 percent of the world total.

The AMF identified a few key features of the French cryptocurrency market:

– that most upcoming ICO projects have already raised money through traditional means;
– that these startups hold ICO fundraising drives “in order to develop a community of committed investors or to preserve the integrity of their capital”; and
– that only 6 percent of Gallic tokens present characteristics of financial instruments.

Suggested articles

Going Past the Great Wall: Things to Consider When Entering the Asian MarketGo to article >>

The regulator says that the French government is currently discussing a draft law which would offer a visa for ICO projects, ” with the aim of offering better protection for investors while allowing the development of innovative projects in France.”

A Much-Researched Area

The conclusion that ICOs are marginal may seem surprising given the share of headlines that these projects have been grabbing over the last couple of years, but similar conclusions have been reached by others. For example, an American research firm found in July that disputes regarding blockchain-based projects made up less than two percent of securities lawsuits in the US.

There have been quite a few studies of ICOs made this year, in response to the fact that people have been giving them billions of dollars. Many of them reveal interesting facts. Some examples:

  • A study conducted by cryptocurrency publication Diar in March found that almost half of the money raised in 2017 came from only 20 startups, and that of the ten that it tried to contact, only one was willing to communicate.
  • A study conducted by the Russian Association of Cryptocurrency and Blockchain, an advocacy organisation, in April found that half of the $300 million raised by ICOs in Russia in 2017 was actually wasted on pyramid schemes.
  • A study conducted by private agency ICO Rating in May found that almost half of the 416 completed ICO projects in the first quarter of 2018 had no business plan, and a quarter of them were not legally registered in their local jurisdictions. Although this last figure is an improvement on 2017’s 76 percent.
  • A study conducted by accounting corporation PricewaterhouseCoopers in June revealed that the two territories that had attracted the most money in the first half of 2018 were British Overseas Territories, while in 2017 Switzerland and the US had been the main hotspots.

More recently, the market has been conquered by big institutions, as investment funds backed by big money have been set up specifically to invest in these projects.

Got a news tip? Let Us Know