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We just crossed the halfway point of 2018, and IdentityMind has spoken with over 650 companies conducting ICOs and helped with over 100 ICOs so far, with the total rising to 175 if you include 2017. These range from large utility tokens with over 25,000 contributors needing KYC, to small security tokens with 10 contributors needing KYC and accredited investor verification. We have also spoken with 65 companies starting exchanges, and already work with over 25 exchanges around the world. Read on to learn what we’ve learned from 2018 so far, and what we expect to happen during the rest of the year.




  1. Regulatory uncertainty continues

    • ICOs are now where bitcoin was several years ago, still lacking clear guidance in the US and internationally.
    • SEC: Secretary Carney’s comments that he hadn’t seen an ICO that wasn’t a security, and subsequent letters to companies forced many companies to slow down and examine where they stand on the utility token/security question. However, recent statements by the SEC at the Yahoo Finance Summit speaks to a softening of this position that we expect to spur growth. In speaking directly with the SEC, IdentityMind was able to gain insights about this topic.
    • FinCEN: Companies are very concerned that if they’re not a security, their ICO is a Money Service Business per the Wyden letter. As discussed here, FinCEN’s March 2013 guidance states that a currency, virtual or not, that’s exchanged for another currency is a MSB. Thus, companies receiving Ethereum for ERC-20 tokens are a MSB. The question now is whether FinCEN will enforce these regulations, and if so, when.
  2. Price matters
    • The price of bitcoin has risen and then fallen this year. As the price has dropped, so has the number of ICOs, especially in recent months.  
    • We’re seeing ICOs with a similar number of contributors, raising lower amounts. This is due to the price of ethereum being 40% lower than it was towards the beginning of this year.

As we move to the second half of this year, we expect:

  • Regulation is going to get worse before it gets better. The SEC has and will continue to shut-down blatantly fraudulent ICOs, and will start targeting ICOs that claimed to be utility tokens, but are really securities and should have been security tokens from the beginning. We’re not expecting FinCEN to target a company that has conducted a utility token ICO sale for not registering as a MSB, but if they do, expect a complete halt to utility token ICO sales in or available to US residents.
  • Regulatory uncertainty is hard on the price of bitcoin and ethereum. If there is favorable regulation, expect the price to rise. However, if uncertainty continues, or agencies take aim at companies, expect a strong price dip.

IdentityMind for Token Sales


Virtual Currency Exchanges


  1. There’s tremendous growth in exchanges, you probably just aren’t seeing it.
    In 2013, it seemed like there were less than ten exchanges. However, when the price of one bitcoin went from $150 to $1,200, we saw the formation of hundreds of exchanges in the US and Japan. When bitcoin’s price increased from $13,000 to $17,000 this year, again we saw a large number of new exchanges, this time in Latin and South America, South Asia and Africa. Now there are over 300 exchanges operating around the globe, and from our conversations we are aware of plans for at least 50 more by the end of this year.
  2. Major players are moving
    While smaller players are hard-pressed to go into the larger and established markets, we are seeing the large players giving it a go, hoping to find efficiencies due to their size and ability to subsidize losses in the meantime.
    To that end:

As we move to the second half of this year, we expect:

  • Companies such as Huobi will continue to expand, competing to be one of the worldwide exchanges.
  • The shaking out and establishment of companies that will take the leadership position(s) in countries without established leaders such as India, Indonesia, and Nigeria.

IdentityMind for Virtual Currency Exchanges

IdentityMind is now working with over 10% of companies conducting a compliant ICO and over 25 virtual currency exchanges around the world. With that much interaction, we have learned that

  • US regulation is the driving factor in a significant number of ICOs, both in the US and internationally
  • There is some correlation between the number of ICOs and Exchanges and the price of bitcoin/ethereum
  • Large exchanges are going international, and are doing so with bitcoin as well as tokens

Taking the latest regulatory news into account, we expect the price of bitcoin, as well as the number of ICOs, to rise throughout the year. If FinCEN or the SEC start to targeting companies who the market had previously viewed as having compliant ICOs, there will be a significant drop in activity as well as price.