VC Investors Encouraged to Look at ICOs

Martin Arnold reported yesterday at The Financial Times Online that, “A leading European venture capital investor has warned that his industry must wake up to the potential of ‘initial coin offerings’ or it will find itself sidelined as the most promising start-ups fund themselves by issuing cryptocurrency tokens.

“‘This is going to turn arrogant venture capitalists on their heads,’ said Michael Jackson, a partner at Mangrove Capital Partners. ‘Venture capitalists are going to have to enter into the ICO game to prove their value to companies.'”

The FT article explained that, “More than $1.8bn has been raised this year through ICOs, which allow start-ups to raise funds by selling digital cryptocurrency tokens to investors, allowing them to use the digital services that the start-up plans to produce or sell them if they appreciate in value.

“The growing popularity of ICOs is thought to be behind a surge in the value of digital currencies this year. But regulators around the world have in recent weeks warned about the dangers, pointing to the risks of an asset bubble, market manipulation and fraud.

“Last week, South Korea week joined China in banning all forms of ICOs and last month, Jamie Dimon, chief executive of JPMorgan Chase, called bitcoin ‘a fraud.'”

Mr. Arnold noted that, “However, Mr Jackson predicted that regulated exchanges would soon be established from China to the UK to bring some investor protections and order to the market that he admitted still seemed ‘like the wild, wild west.'”

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