The global initial coin offering (ICO) market has recently breached USD 6 billion and this has consequently prompted the ‘Big Four’ consulting firms of Deloitte, KPMG, PwC, and EY to respond to the daily inquiries from clients regarding the blockchain crowdfunding method.
Risky business
As the highly speculative market for cryptocurrencies has grown, ICOs have presented themselves as a viral and lucrative vehicle for investors seeking to indulge in cryptocurrency markets.
Due to the lack of regulatory oversight, there have been plenty of bad actors in the history of ICOs; fraudulent scams caused knee-jerk responses from countries such as China and South Korea who issued bans on ICOs. Most recently, Russia made moves against Bitcoin websites and ICOs as they present security risks for investors and undermine the country’s fiat currency.
Four big stances
This hasn’t deterred western investors all too much. In September 2017, Consultancy.uk reported that blockchain technologies are breaking into the mainstream and after the Bitcoin fork that created Bitcoin Cash, the Big Four were receiving numerous ICO-related inquiries from their existing and prospective clients.
Eric Piscini, blockchain leader for the financial services group at Deloitte Consulting, said:
“What we’ve been doing is advising some investors and some clients on what to do with an ICO – whether they should do one, whether they shouldn’t.”
He continued, “Our stance is very – I don’t want to say risk averse, but it’s very wait-and-see for now on ICOs, because the regulatory environment is changing really fast.”
Deloitte has provided legal advice to the founder of Playkey, Egor Gurjev, who utilized an ICO to raise funds for the cloud-gaming startup; the ICO raised more than USD 10 million which has put Deloitte in excellent stead with the blockchain community.
KPMG and PwC both have established specialist blockchain departments with consultants spending a number of years analyzing the ICO craze. However, PwC won’t be making any significant moves with any ICO business until it develops a “comprehensive framework” for its clients, which might appear odd, considering that PwC Hong Kong reportedly accepted a Bitcoin payment for its advisory services in November. In contrast, KMPG has been taking US clients since late 2017.
Jeffrey Grabow, the US venture capital lead at EY, said:
“We are selectively working around the firm to help companies do ICOs, both domestically and internationally… We’ve been watching it evolve over time and are constantly figuring out what role we can and should play.”
With the increase in demand, EY has confirmed that it is in discussions with “wealth and asset managers” on how to begin managing ICOs and cryptocurrencies. Due to the lack of regulatory clarity, the Big Four have been cautious in their approach and have now begun to make inroads that could lead to the creation of well-researched and authentic regulations for the blockchain industry.
