Bitcoin and, to a lesser extent, digital currencies such as ethereum, ripple and bitcoin cash command most of the attention in the cryptocurrency space, but there are over 1,500 alt-coins in this universe. How successful some of the less mainstream cryptos are remains questionable.
While many crypto market news reports have been focusing on the massive declines experienced by bitcoin this year, what has been receiving little fanfare is the massive amount of cryptocurrencies that are dying.
“As of last month, more than 1,000 cryptocurrencies have failed so far this year, while Bitcoin has fallen roughly 70 percent off its pinnacle from last year,” reports United Press International (UPI). “Data show that hundreds cryptocurrency projects ranging from abandonware to outright scams have failed in 2018 after emerging through a process called initial coin offering, or ICO.”
Currently, the combined market capitalization of the entire crypto space is $267.73 billion, but bitcoin alone represents over $112 billion of that total. Ethereum and ripple combine for $65.77 billion.
ICO Warnings from SEC
U.S. regulators have taken strong measures to warn investors about the potential dangers associated with ICOs.
ETF Trends recently reported that William Hinman, Head of the Division of Corporate Finance for the SEC, said in a speech at the Yahoo All Markets Summit: Crypto conference in San Francisco that bitcoin and ether are not securities. However, he did establish that a majority of initial coin offerings (ICOs) are securities that should fall under the regulatory control of the SEC and its securities laws.
“Companies raised $3.8 billion via ICOs in 2017, but the number this year has already climbed to $11.9 billion,” reports UPI. “Experts say some of the new digital currencies died because they were scams or jokes.”
Related: $50k Bitcoin Forecast Still in Play, Says BitMEX CEO
The SEC points out that some digital currency market participants and promoters of initial coin offerings (ICOs) are not following federal and state laws that govern other parts of financial markets, such as stocks and bonds.
“Unfortunately, it is clear that many promoters of ICOs and others participating in the cryptocurrency-related investment markets are not following these laws. The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the SEC said earlier this year.
For more information on the cryptocurrency market, visit our Bitcoin category.