The cryptocurrency capital market is challenging the financing methods of traditional investment banks. Existing investment banks are still absent from the emerging cryptocurrency capital market and may gradually lose their customers.
According to Forbes, in the second quarter of 2018 in the United States, ICO financing accounted for 45% of traditional IPO financing, accounting for 31% of the total venture capital market. The first quarter accounted for 40% and 30%, respectively.
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(Image Source:coindesk)
ICOs replacing IPOs?
ICOs are defined as raising funds through the issuance of tokens on the blockchain, and Forbes says the number of U.S. public companies has decreased over the past 20 yearsabout halfimage description
(Sources: Jay R. Ritter, University of Florida, Warrington School of Business Administration; Center for the Price of Security, University of Chicago)
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(Image Source:coindesk）
There is no doubt that Wall Street banks are targeting Telegram as a traditional IPO target. But Telegram chose an ICO instead of an IPO. The reason is obvious, why bother with the tedious procedures of an IPO when you can get financing quickly and easily through an ICO?
Many companies can now raise billions of dollars through tokens instead of issuing traditional equity or debt. Therefore, there is a view that ICO will change the capital structure of enterprises.
For private companies and non-investment-grade companies, ICOs are especially issuer-friendly, as they do away with the preferences and covenants of traditional markets.
Multiple funds enter the encrypted capital market
Forbes reported that traditional hedge funds are becoming important players in cryptocurrencies, although most currently operate in segregated proprietary funds, but the participation is not small. As disclosed in November 2017 by DRW, Chicago's largest liquidity provider, last year's trading$20 billionencrypted assets. Thereafter,sorosJoined the group, and others are quietly doing the same. Many hedge funds and family offices have entered the industry, pension funds andRaised fundsalso started to enter.
For these pension funds and mutual funds, the lack of qualified custodians is a major barrier to entry, but many smart players are working on this issue,Forbes says, will successfully break through next year.
I am Xiao Parker, the author of Odaily. I am exploring the real blockchain. If you are looking for reports, please add WeChat lmm662381. Please note your name, company, and position. For reprint/content cooperation, please email report@odaily.com.
I am Xiao Parker, the author of Odaily. I am exploring the real blockchain. If you are looking for reports, please add WeChat lmm662381. Please note your name, company, and position. For reprint/content cooperation, please email report@odaily.com.
