Alternative Trading Systems and the Future of ICOs

The funding process of ICOs will change forever with the advent of Alternative Trading Systems (ATS) as a staking mechanism.

Overstock.com’s tZero may be the biggest example of the exhuberance of exclusivity that perhaps all ICOs will inevitably inherit.

But what makes these ICOs so inaccessible?

You can access tZero’s ICO funding right now via StartEnginge on one condition. You have to be an accredited investor. It’s selective. It’s like the lunch table in the movie Mean Girls. Invite only ICOs for people who look good on paper. Gab knows what I’m talking about.

Overstock.com seems like a credible gamble to what may seem like a sea of unfamilar names in the cryptoworld, especailly if you are a new investor.

You may want to invest in it because of the familiarity of the name Overstock.com. However, you probably can’t.

To become an accredited investor, you must meet one of two qualifications. This leaves out many of the smaller investors besides millionaires.

Meanwhile, venture capitalists and banks are developing ATS platforms.

These platforms serve nearly all of the same purposes as that of an exchange, however, due to an SEC loophole, the ATS platforms do not have to file as a national exchange. In the process, these companies save themselves millions of dollars and years of grueling paper work.

Many popular banks are taking advantage of ATS platforms, such as Goldman Sachs, JP Morgan, and Deutsch Bank.

Some of these banks conduct operations under their name or a similar name, such as JP Morgan’s JPB-X. Other outfits operate under a different name compared to their parent institution, which may cause confusion amongst investors.

The reason for the exclusive new face of ICOs is in part due to what experts consider market stability. The mindset is that with fewer, more high stakes accredited investments, there may be a lower trade volume delivering less market volatility in the fragile, initial stages of the startup or token launch.

ICOs may continue to choose the ATS funding because the market stability within the coming age of ATS. An ICO may see that with only accredited investors on their roster, they will see more market stability. However, this market stabiliy may be false attributed to accredited investors and instead, it may be market regulation and oversight that will make the crypto market more credible in the coming years, not creating exclusive funding clubs for accredited investors.

tZero uses the ATS model for their ICO

Market stability may not only come just because of the accredited investor model but rather due to an interaction from market stability in the aftermath of stricter SEC oversight.

We may see a continued reliance on using accredited investor only models (AIOM), hence, early round investing may be a club only for accredited investors. Where does that leave the rest of us? Are there any options for groups of smaller investors to pool together and as a whole, act as an accredited investor? I don’t think so, but I hope I’m wrong.

Lets face it, development teams want to see stability.

AIOM may be especially prevalent as we see these other key institutions like Overstock.com and Amazon develop blockchain.

If growth is consolidated into Wall-Street does-blockchain investment vehicles, then many investors are going to be left out of the process for the sake of a quicker, fake exchange.

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Like what you read? Check out my other posts about Alternative Trading Systems on Medium.