Our phone is practically ringing off the hook right now – and a lot of the calls are coming from investment bankers and hedge fund operators. It’s no surprise once you look at the pieces.

If you have met one investment banker – you have met them all – they are usually incredibly well educated, well dressed, drive fast cars, and have incredible rolodexes because they are machines when it comes to making money.

And if you ever saw Pixar’s Finding Nemo – you may remember the friendly shark Bruce who is fine until he gets a whiff of blood and then like a light switch he turns into a killing machine in a way that only a shark can.

That’s pretty much where investment bankers are with the current ICO market. They smell the money.

If you are not aware if the current ICO craze, there are hundreds of millions of dollars being almost literally thrown at these companies trying to get into the explosive growth related to blockchain and cryptocurrencies. There’s a much longer story there that has been covered in these pages before, but the short of it is that people who get blockchain understand that it’s likely to be bigger than the internet in terms of its impact.

But there are some peculiarities in the current ICO market that complicate things a bit.

  1. Scams. A lot of web sites have been set up that have turned out to be scams.   It’s currently strangely hard to put money into some of these cryptocurrency markets and also can be hard to get it out, and because there is such a frenzy around ICOs right now – scammers see the opportunity and people have lost a lot of money to scams. That’s why China doesn’t even allow them there anymore.
  2. Kids. Some of the companies that are in ICOs are being run by people with no business experience. Ask any venture capitalist and they invest in teams more than ideas and if the team is a bunch of people who have never done anything, that’s a bad idea for an investment.
  3. Regulations. Financial services usually have a lot of rules and regulations designed to protect investors and increase trading activities.   The SEC recently issued a statement that they will apply ICOs to the Howey Test, which is a time tested measure of whether a financial instrument is, or is not, a security. That has not only had a chilling effect on some ICOs in the US – it has sent a clear signal to licensed people in financial services that they need to pay close attention to rules here. Investment bankers have to have a broker/dealer license and that means they can’t touch a lot of the ICOs.

So that’s part of why investment bankers are so in a froth about the ICOs – they can’t participate in these massive amounts of money that are flowing. And they aren’t used to that.  It’s rumored that Goldman Sachs couldn’t help themselves and that they have a desk out of a company in the Boston area that allows them to participate in the feeding frenzy.

So why are they calling us?

That part is pretty simple when you look at the pieces of the puzzle and add one more piece. The customers of the investment bankers are begging to get a piece of these ICOs.  These are high net worth investors who, like investment bankers, aren’t used to being told “no” when it comes to making an investment.

So the investment bankers have to do something and here’s what that is:

  1. Filter the noise. Investors know that with all of the nonsense out there – there have to be some good bets. They want the investment bankers to find them.
  2. Find a real company. Most of the ICOs are for companies that are being created for the ICO only. Investors also went the Investment bankers to find existing businesses that are doing an ICO as a way to add blockchain as a new line of business.
  3. Explain the risk. High net worth individuals can handle losing everything in an investment – and they will be willing to take that risk if they think the first two tests above have been passed and they believe in their Investment Banker. They want to be at the country club and tell their friends they are in the hot ICO market and have a chance at making a (or another) ridiculous amount of money. This is a sport for them.

So that’s why they are calling us. We pass all of those tests, and other ICOs like Snip are already starting to use us as part of their registration process to add credibility to their offering and people are taking notice.

It will be really interesting to see what happens in the next 90 days of this market.


We Are Trust.

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