IdentityMind Global releases ICO, virtual currency exchange review

IdentityMind Global today announced key mid-year 2018 insights into ICOs and virtual currency exchanges including key findings in regulation uncertainties, dynamic pricing movements, and an acceleration of new virtual currency exchanges .

“IdentityMind is now working with over 10 per cent of companies conducting a compliant ICO and over 25 virtual currency exchanges around the world,” said Neal Reiter, director of IdentityMind’s ICO and Virtual Currency Business Unit. “With that much interaction we have gained a huge amount of knowledge and insights about the ICO and virtual currency markets.”

IdentityMind has assisted more than 165 clients conduct an ICO or STO. More than $6 billion was raised through those methods in 2017. That number has ballooned to $13.7 billion in the first half of 2018.

“IdentityMind insights are unique given our ongoing consultations with government regulatory bodies worldwide, existing clients, domain expertise in ICOs, STOs, digital currencies and virtual currency exchanges,” said Mr. Reiter. “The bottom line? We facilitate regulatory compliance, fast track onboarding, and accelerate time to revenue for our clients.”

He added IdentityMind’s unique insights are based on conversations and consultations with 650-plus global companies holding ICOs in 2018, ranging from large utility tokens with more than 25,000 contributors requiring KYC assistance to small security tokens with 10 contributors needing KYC and accredited investor verification. IdentityMind also spoke with more than 65 companies launching a virtual currency exchange in 2018 and today works today with 25-plus exchanges worldwide.

Listed below is what IdentityMind learned at mid-year 2018, and what the company expects to happen the rest of the year.


  • Where Bitcoin was several several years ago, is where ICOs are today – lacking clear guidance in the U.S. and internationally;
  • SEC commissioner Robert Jackson’s recent comments he hadn’t seen an ICO that wasn’t a securit and subsequent SEC letters have forced many companies to slow down and examine where they stand on the utility token/security question. More recently, Mr. William Hinman, SEC’s director of the Division of Corporation Finance, stated neither Bitcoin nor Ethereum are securities, which eased some concerns, as the majority of ICOs are based on Ethereum.  In speaking directly with the SEC, IdentityMind was able to gain insights about this topic;
  • Companies are very concerned that if they’re not a security, their ICO is a money service business (MSB) 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;
  • Bitcoin’s price has risen and then fallen this year. As the price has dropped, so has the number of ICOs, especially in the last few months. We’re seeing ICOs with a similar number of contributors, but lower amounts raised as the price of Ethereum is 40 per cent lower than earlier this year.

Looking out at  the second half of 2018, IdentityMind anticipates the following events transpiring on the ICO front:

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,” said Reiter. “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 U.S. residents.”

Regulatory uncertainty affects the price of Bitcoin and Ethereum: “If there is favorable regulation, expect the price to rise,” said Reiter. “However, if uncertainty continues, or agencies take aim at companies, expect a strong price dip.”

Virtual currency exchanges

Explosive growth: According to Reiter, there’s tremendous growth in exchanges, but most people probably just aren’t seeing it. “In 2013, when the price of one Bitcoin went from $150 to $1,200, we saw the formation of hundreds of exchanges in the U.S. and Japan,” he said. “However, this year while Bitcoin’s price has fluctuated from $17,000 to $6,000, and while we again saw a large number of exchanges, this time they were in Latin and South America, South Asia and Africa.”

Major exchange migration: While smaller players are hard-pressed to go into larger and established markets, they see 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:

  • BitFlyer and Huobi going to the U.S.;
  • Coinbase is going to Japan ; and
  • Finance is investing in Bermuda and opening an exchange in Uganda.

As we move into the second half of 2018 IdentityMind anticipates the following developments:

  • Companies like Huobi will continue to expand and compete to be worldwide exchanges;
  • The shaking out and establishment of companies taking leadership positions in countries without established leaders such as India, Indonesia, and Nigeria.


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