Opinion The Resurgence of ICOs through Corporate Efforts

The Resurgence of ICOs through Corporate Efforts

August 25, 2018

The marketplace for initial coin offerings has been so far one of the most dynamic elements of the entire cryptocurrency phenomena. The ICOs came relatively late to the market forefront but since then, they managed to leave a big impression on the whole ecosystem. This applies not just to the developers and ICO investors, but also to a great extent to the government regulators of different countries.

Here, China, in particular, was seen as an essential part of the global market and a barometer on how the world would eventually react on any particular ICO trend. Of course, all of this took a different turn in 2017 when the Beijing government decided to ban all of the ICOs taking place on its territory. Some believed that this signaled the slow death of the ICO process, but the reality turned out to be quite different – today, the initial coin offering, most of which are built on the features of the ethereum tokens, are still going strong.

However, like many other aspects of the cryptocurrency environment, the ICOs seem to be stuck in a no man’s land with little chance for a big breakthrough to the general users. Yet, recent developments in the corporate domain might present a potential way of overcoming this phase for ICOs that are by no means fraudulent, but simply want to employ this means of cryptocurrency fundraising through bitcoin or any other digital currency.

WeChat and Alipay Developments

Two huge Chinese platforms for mobile payments have found themselves in a debate over ICOs and regulatory demands. These platforms are Alipay and WeChat Pay and now they are scrambling to keep up with regulatory guidelines after the recent news about the ICOs and cryptocurrencies. Both giants and their home companies have stated that they will work diligently with the government agencies.

This will be a process that will focus, among other things, on cryptocurrency transactions inside of their systems. On Friday, two large government agency, PBoC (People’s Bank of China) and the Banking Regulatory Commission issued a stark warning against any cryptocurrency-related trading and fundraising activities.

The release was published by Tencent, the company that owns WeChat Pay and soon after the news came, the company showcased three measures that would regulate any problematic systems related to the cryptocurrencies and ICOs.

The Measures for Regulatory Demands

The tech giant stated that it will stop users of WeChat to make payments to any company acting as a virtual currency transaction mediator. Aside from that, it will run daily monitoring in real time to overview transaction as well as produce risk assessment of activities that might be suspicious. The same news was mirrored by the Alibaba affiliate Ant Financial which is the owner of Alipay.

This company stated that depending on the situation, it will reserve the right to restrict or even ban any individual Alipay account that is somehow involved in cryptocurrency transactions. Clearly, there is a strong desire by both companies to assure the regulators that they will do anything and everything needed to stay compliant with the laws. At the same time, there is the notion of all of this is a necessity for the companies operating in a country like China.

There is no doubt that the companies are already under tight scrutiny. Now, both WeChat Pay and Alipay simply want to make sure that the supervision is not forced or incognito, but officially recognized by both companies as a partnership. In the previous decade, this seems to be the best option for tech companies that do not want to go against the wishes of the Beijing government or any of its official agencies.

ICO Validation

Once the regulatory needs and requirements are settled, the fact remains that both of these companies are planning to integrate the blockchain means of fundraising through ICOs. They will result in additional exposure and influx of funds for both, but for the crypto community, it will result in the validation of the concept of ICO.

While there is no denying that sometimes ICOs are fraudulent or built on shaky business foundations, the process for which they stand for is both revolutionary and very important for future financial deals on the global level. Having companies like these ones enter into the same type of venture shows that they are more than something that the media labeled as a potential tool for scammers (which it can be).

Always, activities in the cryptocurrency domain, as well as the financial platforms working on the blockchain principle, are in a need for mainstream validation. Events like the drive for compliance by both of these Chinese companies show that even in the harshest environments for ICOs, they can successfully take place and without the need to circumvent the local regulatory bodies.

The Importance of Initial Coin Offerings

The approach that is seen to be taken by WeChat Pay and Alipay is not important simply because it shows that companies can work with ICOs even in China. It also shows that these businesses see the idea of having initial coin offerings as very important for their respective business models. Both companies which are very successful in China and around the globe could have taken the easy way out and simply called off their ICOs and any similar activities.

Instead, they aggressively pursue a position where they would respect and enforce any regulatory guidelines, but at the same time, did not back down from their plans for any current or future initial coin offering. Clearly, the management of these tech and financial giants finds the ICO process a very relevant thing and will not discard them even when under direct pressure from the Chinese government.

Other companies are bound to take notice and begin creating their own plan on how they can benefit from a stable and transparent ICO process. Currently, things like eSports betting platforms and other more fringe-like ventures have chosen this path. However, with the Chinese companies now clearly in the race, it is reasonable to expect the resurgence of ICOs coming from a corporate domain.