Justin Bones, Founder and CEO of Cyber Capital Europe, has sharply criticized the current financial model in the cryptocurrency market, stating that it is overly dominated by venture capitalists (VCs).
Bones argues that regulatory measures have effectively made Initial Coin Offerings (ICOs) illegal, thereby concentrating early investment opportunities in the hands of venture capitalists and squeezing out retail investors.
He likened this situation to a “Boys’ VC Club,” where stringent regulatory requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML) processes create barriers for small investors.
“We need ICOs to return! Cryptocurrency fundraising used to be democratized; anyone could participate equally. Now, the market is dominated by predatory VCs! The culprit: regulatory agencies deeming ICOs illegal, handing the entire early market to venture capitalists,” tweeted Justin Bons (@Justin_Bons) on June 27, 2024.
He points out that these regulations mandate higher minimum investment amounts and legal services costs that most retail investors cannot afford. This has transformed the cryptocurrency market from a democratized investment space into one where venture capitalists gain early access at preferential prices and then sell at higher prices to retail investors.
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Bones advocates for a return to ICOs aimed at a broader audience to ensure a fair competitive investment environment.
Despite these criticisms, the latest data from CryptoRank shows a slight recovery in cryptocurrency funding, averaging $20.21 billion raised per month since January 2024. However, this remains below the levels seen during the boom years of venture capital in 2022.
Bons also argues for a return to a more open and transparent investment model, focusing on equal access rather than providing preferential opportunities for venture capitalists. He believes that reintegrating retail investors into the early stages of cryptocurrency investment is crucial for a healthy market.
