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• Global token volume has stagnated since mid-2019.
• The Bitfinex, Kinesis and GCBIB cryptocurrency exchanges have advanced to the Top 15.
• In the country rankings for the most important innovation centres for tokenisation, Switzerland leads Europe together with the UK.
• Switzerland is particularly suitable as a tokenisation centre. Thanks to the established blockchain ecosystem.
• The new dynamism of Initial Exchange Offerings (IEO) indicates increased maturity.

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Zurich, 28 January 2020 – In the first ten months of 2019 more than 380 token offerings were settled as initial coin offerings (ICOs), security token offerings (STOs) or initial exchange offerings (IEO).

This is shown in the sixth ICO/STO Report (Winter 2020 edition) by Strategy&, PwC’s strategy consulting team, in cooperation with the Crypto Valley Association Switzerland.After the record year 2018, the global volume of tokens declined from January to October 2019 to USD 4.1 billion.

“For crypto fundraising instruments to regain momentum, greater regulatory clarity is needed. In addition, offerors must upgrade their infrastructure, for example for exchanging tokens or for reliable market data,” explains Andreas Pratz, Partner Financial Services of Strategy&.

Global volume stagnant from mid-year

The market for digital assets grew solidly through the first half of 2019. As a result, market capitalisation reached a high of USD 370 billion at end-June. In the middle of the year the total fundraising volume of ICOs/STOs fell from around USD 1,322 million in May to USD 151 million in June.

Up to end-October, the average monthly fundraising volume fluctuated around USD 171 million. For comparison, the monthly average from January to May 2019 was USD 653 million.

Fintech newcomers

Specialising in fintech companies, the young cryptocurrency exchanges Bitfinex, Kinesis and GCBIB have advanced to the list of the Top 15 cryptocurrency platforms. In 2019 they earned together 32% of total token volume created since the start of the year.

The IEO of Bitfinex (Hong Kong) was the biggest IEO of 2019, raising capital of USD 1 billion, while Kinesis (Cayman Islands) raised USD 194 million and GCBIB (United Arab Emirates) raised USD 143 million.

Switzerland is a European leader

As in the previous year, the USA, Singapore, Hong Kong and UK are the leading token hubs worldwide, in terms of both fundraising volume and the number of offerings. With 69 completed token offerings and USD 894 million, Switzerland ranked sixth in 2018.

This makes it the joint European token hub leader alongside the UK. Countries with relatively small domestic financial centres, such as the British Virgin Islands, Cayman Islands, Estonia and Latvia, are still attractive locations for digital currency offerings.

Industry with great potential

There was no significant growth in STOs in 2019 in terms of either fundraising or the number of token offerings. In the second half of the year, there were virtually no STOs. Even so, they gained in relevance within the group of crypto fundraising instruments, particularly in comparison with tokens directly issued by companies and private placements.

Security tokens have enormous potential, as they are an attractive alternative to conventional capital procurement. The STO industry is still young, but fit for the future.In the last few years, numerous tokenisation companies with strong ecosystems have emerged, several of them in Switzerland.

Jonas Heydasch, FinTech & Crypto Finance Expert at Strategy& and co-author of the study: “Switzerland is an outstanding location for tokenisation.

It offers an innovative environment with strong links with technology, the best basis for a strong cryptofinance ecosystem.

”Initial exchange offerings growing dynamically

Despite the overall stagnation in token offerings from June to October 2019, IEOs have significantly increased their relative share in the number of all completed offerings.

This growth indicates their advancing institutionalisation and definitive establishment as a fundraising instrument based on blockchains. IEOs are seen as a further development of ICOs and a format with maximum security.

The three-party investment has firmly established itself in the crypto market over the past 12-18 months.

Download Full Report here: 
https://www.pwc.ch/en/publications/2020/Strategy&_ICO_STO_Study_Version_Spring_2020.pdf

The police hoped that taking down online black markets would chase away criminals. But the amount of Bitcoin spent on illegal purposes has reached a new high.

SAN FRANCISCO — The last few months have not been good for Bitcoin. The value of the digital tokens has steadily dropped. Bitcoin trading on cryptocurrency exchanges has slowed. And using Bitcoin to buy legal items? That has also dropped.

But one corner of the Bitcoin economy is still going strong: the sale of illegal drugs and other types of lawbreaking.

The amount of cryptocurrency spent on so-called dark net markets, where stolen credit card information and a wide array of illegal drugs can be purchased with Bitcoin, rose 60 percent to reach a new high of $601 million in the last three months of 2019, according to data released Tuesday by Chainalysis, a firm that tracks every Bitcoin transaction and serves as an adviser to an array of government authorities.

The continuing growth of illegal transactions underscores the difficulties that Bitcoin has had in moving past its reputation as a refuge for scoundrels, even as Wall Street institutions have begun buying and selling the digital tokens.


The enduring success of Bitcoin-fueled illegal activity also points to the struggles that the authorities have faced in containing the new kinds of bad behavior that cryptocurrencies have helped enable.Bitcoin played a crucial role in the recent growth of so-called ransomware attacks, in which hackers steal or encrypt computer files and refuse to give them back unless a Bitcoin payment is made.

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Bitcoin is still popular among currency speculators, and illicit activity accounts for only 1 percent of all Bitcoin transactions. But that nearly doubled from the previous year. Illegal activity appeared to be one of the few parts of the Bitcoin economy impervious to changes in price, according to Chainalysis’s new Crypto Crime Report.

Chainalysis’s data is likely to understate the number of Bitcoin transactions going to illegal purposes because the company cannot identify some of the activity dedicated to ransomware, tax evasion and money laundering. It is widely assumed that some of the people buying Bitcoin on legitimate trading exchanges are doing so to skirt national laws.

The rise in black market sales is particularly notable in 2019 because global authorities took down two of the biggest illegal online markets. New markets quickly popped up to fill the void.


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Monopoly is one of the newest online black markets. 

That illicit activity is “pervasive” on the dark net, said Calvin Shivers, the assistant director of the F.B.I.’s criminal investigative division, but he added that the F.B.I. remained “undeterred” and was “surging resources” to tackle the problem.

In addition to the online black markets, the authorities have been aggressively targeting cryptocurrency schemes.

But the amount of Bitcoin going into fraudulent activity still hit a new high.

 Fraudsters more than tripled their take from the year before, grabbing $3.5 billion from millions of victims in 2019, the Chainalysis data shows.Illegal transactions have been a central part of the Bitcoin story since the first online black market, the Silk Road, helped give people a reason to begin using Bitcoin in 2011.

Bitcoin was useful for the Silk Road because the structure of Bitcoin, without any central authority, makes it possible for a user to create a Bitcoin wallet and use the tokens without registering an identity with anyone.

[What is Bitcoin, and how does it work?]

There was hope among some in the Bitcoin community that the cryptocurrency would find a broader use as electronic cash, as the inventor of Bitcoin originally posited.


As the value of Bitcoin increased, big companies like Expedia and Stripe announced that they would begin taking Bitcoin. But when users realized that Bitcoin had many drawbacks as a way of making purchases — like being slower and more expensive than traditional cash — there was little uptake.

Bitcoin aficionados now believe the cryptocurrency is more useful as a new kind of alternative asset, like gold. Many people on Wall Street have bought into that idea, and the Chicago Mercantile Exchange and the owner of the New York Stock Exchange both allow traders to buy and sell derivatives based on Bitcoin.

Trading, however, has been tepid.

Some believed that the digital token might prove to be popular in countries like Venezuela or Argentina, where local currencies are even less stable than Bitcoin.

But in those places, interest has recently fallen off, data gathered by the Block, a research firm, suggests.

Bitcoin prices and trading did spike in the middle of last year, soon after Facebook announced its intention to create the Libra cryptocurrency.

The price of Bitcoin rose from around $4,000 to more than $12,000. But it has become clear that Libra might face just as many legal difficulties as Bitcoin. The price of a Bitcoin has recently hovered around $9,000.

Even with the recent declines, Bitcoin trading and prices are still far ahead of where they were at the beginning of 2017, before a price run that took Bitcoin to nearly $20,000.

Bitcoin advocates have generally been unconcerned about the amount of illegal activity done using Bitcoin, because they see much larger amounts of illegal activity with traditional currencies, and because Bitcoin has significant drawbacks for criminals.

“Bitcoin is still a pretty lousy currency to use for cybercrime,” said Ryan Selkis, the founder of the cryptocurrency consulting firm Messari. “Maybe it is good for petty crime, but if you are running a cartel, it is a different story.”


Listings for opioids on one of the biggest online black markets.

The ledger of all Bitcoin transactions, known as the blockchain, publicly records every transaction. Names are not assigned to Bitcoin addresses, but firms like Chainalysis have tracked criminals by tracing transactions through the blockchain to places that know the identity of their users, like Bitcoin exchanges.

Some new dark net markets have pushed customers to use alternative cryptocurrencies that leave less of a trail. But criminals seem to be undeterred by Bitcoin’s drawbacks. The spread of fentanyl, which is blamed for the opioid crisis in the United States, was made possible, law enforcement has said, by Chinese labs selling the drug online for Bitcoin.

One of the new black markets that have become popular over the last year, Empire Market, has several pages of listings for fentanyl in various forms, from 12 grams for $1,600 in Bitcoin to a patch for $41.

Almost all of the new sites have lengthy sections on why, even with the drawbacks of Bitcoin, they will remain the place to buy drugs online.

“We welcome all honest vendors to set up shop here, there really is no reason for you not to vend on Monopoly,” the marketplace called Monopoly says on its support page, after explaining the steps it has taken to avoid the fate of previous markets.

The Bank of England will examine how Britain could adopt a bitcoin-style digital currency as part of a global group of central banks that have joined together to examine the possible pitfalls of relying on electronic money.

Bank officials will meet with the Bank of Japan, the European Central Bank (ECB), the Sveriges Riksbank, the Bank of Canada, the Swiss National Bank and the Bank for International Settlements (BIS) to pool research and experiences of the potential for a central bank digital currency (CBDC).

The BoE deputy governor Sir Jon Cunliffe will co-chair the group with Benoît Cœuré, a former ECB board member and head of the BIS innovation hub.The move comes amid the emergence of private sector digital currencies, such as bitcoin and Facebook’s libra, which is due to be launched this year.

Facebook’s plans for its libra coin and a digital wallet have caught the attention of regulators and central banks worldwide, with Threadneedle Street being among those vowing tough new rules.

The BoE was among several central banks to warn that libra would need to be regulated, leading many supporters to end their relationship with the digital currency.

The idea of a central bank digital currency has been increasingly mooted worldwide to help improve payment systems and cross-border transactions.

The Bank said the new working group would look at “CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies”.

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It will also work closely with other global forums and groups, such as the Financial Stability Board and the committee on payments and market infrastructures (CPMI), which is also chaired by Cunliffe.

Just last month, Sweden’s central bank said it would sign a deal with the consultancy firm Accenture to create a pilot platform for a digital currency, known as the e-krona.

The Riksbank has been exploring the idea of its own digital currency for some time, especially given the rapid decline in the use of cash in Sweden.The European Central Bank has also been investigating the possible benefits of CBDC since last year.

Fran Boait, executive director of Positive Money, said policymakers had been slow to realise how much enthusiasm there was for digital money.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk“They have been asleep at the wheel over the future of our money system being determined by a small number of banks, payment companies and now tech giants.

“The rapid decline of cash and threat of private digital currencies like Facebook’s libra have served as a much-needed wake-up call, but central bankers have a lot of catching up to do.

“Central banks need to accelerate plans for a central bank digital currency, which would both ensure that people have the choice of a safe public banking option and prevent our monetary system being completely surrendered to unaccountable private interests.

This new group must serve as a vehicle for doing so.”

Dutch fintech company BUX has bought Amsterdam-based social cryptocurrency exchange Blockport for an undisclosed amount in a bid to spark interest from young European investors.

BUX says the move will help address “the investing needs of European millennials.

”The fintech firm plans to rename the platform BUX Crypto, and wants to make it available to users in the nine European countries where BUX is currently active.

Blockport last year announced that it was temporarily closing down, citing a lack of funding, following a failed security token offering.

The revamped platform is currently undergoing beta tests with a group of clients, and will launch in the first quarter of 2020, BUX said in a statement.

The company will also register the platform with the Dutch central bank, and will seek to retain key Blockport employees.

BUX, which launched in 2014, claims to have over two million users across Europe, and offers short-term, leveraged trading via its BUX X app. Its BUX Zero app, meanwhile, allows customers to make commission-free investing.

The company has raised USD 35 million from the likes of Holtzbrinck Ventures, Velocity Capital, Orange Growth Capital and Initial Capital.

Nick Bortot, the BUX CEO and founder, said that his company’s customers “have long expressed interest in investing in cryptocurrency.”Watch the latest reports by Block TV.


He added,

“We have been presented with an opportunity to bring on a committed and enthusiastic team that aligns clearly with our mission at BUX. This mission is to help young Europeans do more with their money.”

Blockport said,

“We have found a great partner to launch our platform with and that the outlook is very promising.”

Blockport also stated that BUX was a “bigger player,” and Blockport will extend BUX product line with their cryptocurrency investment platform.Bortot said that the deal would also allow BUX users to access a range of financial assets and markets, including Bitcoin, Ethereum and XRP.

BUX says it “welcomes new regulatory requirements in the Netherlands and across Europe,” claiming new rules will “help clear the field of those who chose not to operate with transparency and heighten the reputation, responsibility and integrity of the industry.

”As reported, major crypto derivatives exchange Deribit is moving from the Netherlands to Panama due to the regulatory pressure.

The reason behind it is that the Netherlands will most likely adopt a strict implementation of new EU regulations (5AMLD), which would mean that Deribit has to demand an extensive amount of information from the current and future customers.