On cryptocurrencies and ICO

2017 biggest topics

2017 was undoubtedly the year of cryptocurrencies. The underdog asset showed phenomenal growth and attracted attention of all kinds. In this post, we covered the main developments in the makret in 2017.

Market growth

On January 1st, 2017, cryptocurrency market as a whole was valued around $18 bln. Throughout the year it showed spectacular 25-fold growth and reached $470 bln, with $650 bln at the peak.
Капитализация криптовалют
Price of the first cryptocurrency — bitcoin — entered 2017 at less than $1000, but ended the year in five digits. At the same time, bitcoin domination index, which represents its market share, fell from 87% to 45% due to outbreak of altcoins, such as Ethereum, Bitcoin Cash and Ripple.
Индексы доминирования криптовалют
Throughout the year we’ve covered price movements, major news, such as bitcoin futures launch, market inefficiencies, and various bitcoin forks.

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ICO Boom

But cryptocurrencies was not the only blockchain phenomen to attract massive following. The process of raising funds through issuing a digital token, known as ICO (Initial Coin Offering), is a concept where crowdfunding and venture capital meet IPO.
Although the first ICO was conducted in 2013 by Mastercoin which raised $500,000. it was largely small scale until Ethereum and its smart contracts platform arrived in 2015.
According to CoinDesk, more than $4 bln were raised through ICOs since its emergence, and 90% of this sum is attributed to this year. The biggest ICO, Filecoin, raised $257 mln.
Привлеченные на ICO средства
In 2017 we published extensive research on the topic (available in Russian at https://blog.dti.team/category/longread/).

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Government regulation

Explosive growth of cryptocurrencies and ICO lead to governments taking interest in regulating these markets.
Approaches taken by countries all over the world differed greatly:

  • Switzerland, thanks to its well-thought legislation, emerged as the world’s leading cryptohub. One of Swiss cantons, Zug, even obtained the title of Crypto Valley.
  • In US, SEC for a long time remained neutral to ICOs, but in mid-2017 told market participants to conduct their business in accord with the securities legislation. Singapore joined the list of pro-regulation countries.
  • Other Asian countries imposed even stricter rules. China and South Korea banned ICOs, although lots of loopholes still remain in legislation. Japan’s authorities did not take a decisive action yet, but repeatedly warned about risks of investing in an ICO.

On December 22nd Belarus signed a decree on digital economy, which legalized cryptocurrencies, mining and ICO.
Russia is developing its own regulation of everything crypto. Taxation remains one of the main challenges still. The law is expected to be adopted in 2018.