The Shifting Tides of Crypto Fundraising: From Open ICOs to Institutional-Grade Token Sales

The crypto fundraising landscape has undergone a seismic shift in the 2023–2025 period, marked by the decline of open initial coin offerings (ICOs) and the ascendance of private token sales. This transformation is driven by evolving regulatory frameworks, such as the EU's Markets in Crypto-Assets (MiCA) and the U.S. GENIUS Act, which prioritize investor protection and capital efficiency. As institutional-grade blockchain fundraising models gain traction, the industry is recalibrating to balance innovation with compliance, reshaping the risk-return profiles of crypto-native capital formation.

The Decline of Open ICOs: A Cautionary Tale of Volatility and Regulation

Open ICOs, once the cornerstone of decentralized fundraising, have faced mounting challenges. While global ICO fundraising reached $79 billion by 2023, historical data reveals a stark reality: over 90% of ICOs fail within a year, often due to speculative hype, lack of governance, and regulatory ambiguity. The introduction of MiCA and the GENIUS Act has further tightened compliance requirements, mandating auditability, reserve transparency, and anti-money laundering (AML) protocols for stablecoin issuers and tokenized assets. These frameworks, while enhancing investor safeguards, have also raised operational costs and complexity for open ICOs, deterring retail participation and favoring projects with robust compliance infrastructure.

The U.S. repeal of SAB 121 in 2025 and its replacement with SAB 122 exemplify this trend. By simplifying crypto asset accounting, the new standard has encouraged institutional participation in digital asset custody services but has not reversed the broader decline of open ICOs. Instead, it has accelerated the migration of capital toward private sales, where accredited investors demand structured governance and liquidity mechanisms.

The Rise of Private Token Sales: Institutionalization and Tokenized Real-World Assets

Private token sales have emerged as a preferred alternative, particularly for institutional investors seeking controlled access to high-growth opportunities. These sales are characterized by rigorous due diligence, tokenized real-world assets (RWAs), and AI-driven price discovery tools that reduce speculative risk. For instance, tokenized real estate and commodities have expanded fractional ownership models, offering liquidity and cost efficiency previously unattainable in traditional markets.

The regulatory tailwinds for private sales are equally significant. The GENIUS Act's requirement that stablecoins be issued by regulated entities-such as subsidiaries of insured depository institutions-has created a "credibility premium" for U.S. stablecoins, fostering institutional trust. Similarly, MiCA's classification of asset-referenced tokens (ARTs) under a harmonized EU framework has streamlined cross-border compliance for private sales targeting European investors. These developments align with the growing tokenization of carbon credits, intellectual property, and luxury goods, which are attracting capital from both venture capital firms and family offices.

Investor Protection and Capital Efficiency: A Regulatory Divergence

The regulatory approaches of the U.S. and EU highlight divergent philosophies in balancing innovation and stability. The GENIUS Act's modular framework, which embeds stablecoins within the traditional banking system, prioritizes flexibility and rapid adoption. However, this approach introduces fragility, as stress tests indicate failure probabilities exceeding 8% under redemption shocks. In contrast, MiCA's ex ante rules emphasize structural resilience through standardized white papers and reserve requirements, albeit at the cost of slower market entry for non-EU issuers.

For private token sales, these frameworks enhance capital efficiency by aligning with institutional-grade risk management. Venture capital-backed projects, for example, benefit from long-term capital and strategic guidance, reducing the volatility inherent in open ICOs. Conversely, open ICOs remain high-risk, high-reward propositions, with historical returns averaging 179% within two weeks of listing but failing to sustain gains.

Challenges and the Road Ahead

Despite the momentum behind private sales, challenges persist. Regulatory uncertainty, particularly in cross-border jurisdictions, and the lack of standardization for tokenized assets remain barriers to mass adoption. Additionally, the integration of AI agents and multi-chain technology in tokenized asset management is still nascent, requiring further development to address security risks and interoperability issues.

Looking ahead, the industry's trajectory will hinge on global regulatory coordination. The U.S. and EU must harmonize reserve standards, liquidity backstops, and oversight mechanisms for decentralized finance (DeFi) markets to foster a resilient ecosystem. For investors, the shift toward private token sales and institutional-grade blockchain fundraising signals a maturing market-one where capital efficiency and investor protection are no longer mutually exclusive but foundational to sustainable growth.