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Author: Matt Hougan, Chief Investment Officer of Bitwise; Compiled by: BitChain Vision
A fundamental argument for investing in cryptocurrencies is that it will reshape the fundamentals of finance.
So far, we can point to three examples of things that really paid off:
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Bitcoin >> Reinventing Gold
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Stablecoins >> Reshaping the US Dollar
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Tokenization >> Reinventing Trading and Settlement
We are still in the early stages of these changes, but the trends are already starting to emerge.I predict that eventually most assets will be tokenized, most dollars will be circulated through stablecoins, and Bitcoin will be on par with gold in popularity.
These are trillion-dollar opportunities that could fuel a cryptocurrency bull market for a generation.But this week—Monday to be exact—We’ve added a fourth category: capital formation.I think this will be a defining theme in the development of cryptocurrencies in 2026.
In this article, I’ll explain what happened, why it’s so important, and how to invest if I’m right.
First, a brief look at the history
Capital formation is one of the most important activities in the financial sector.It is the process by which entrepreneurs raise capital, launch new businesses, develop products and create jobs.
Unfortunately, the current system is both rigid and severely disadvantages individual investors.
Institutional investors fund the largest venture capital firms, which in turn invest in the best startups.These startups often remain private for many years, building value for early shareholders.When they eventually go public, they sell their shares to other institutional investors.Retail investors can only participate in the final stages.This system is costly and subject to seemingly endless regulatory burdens, which is why the number of IPOs has dropped significantly compared with the past.
During the initial coin offering (ICO) boom of 2017/2018, cryptocurrencies sought to reshape capital formation models.ICOs allow individual investors to invest in new cryptocurrency projects before they are publicly launched, directly connecting entrepreneurs with retail investors.
To be honest,It was a complete disaster.
Due to a lack of regulation, the vast majority of ICOs turn out to be scams.Scammers raise billions of dollars from the unsuspecting public and then abscond with the money.The situation got so bad that the U.S. Securities and Exchange Commission (SEC) had to step in, threatening to bring the promoters to justice.A massive crackdown by the U.S. SEC in 2018 devastated the ICO boom and pushed cryptocurrencies into a deep bear market.
So, what exactly has changed now?
Most people who followed the 2017-2018 ICO craze considered it a failure—a prime example of all the evils of cryptocurrencies.But a few saw opportunity in the same events.
Despite all the drawbacks of ICOs, it did prove something interesting: cryptocurrencies can be used to quickly raise funds for new projects.The traditional IPO method has high handling fees, cumbersome procedures, and often distributes profits to the richest people, while ICO is cheaper, faster, and fairer.
One of the people who foresaw this possibility was Paul Atkins, the current chairman of the U.S. Securities and Exchange Commission (SEC).Atkins’ penchant for ICO-like projects is not surprising: Before joining the U.S. SEC, he served as co-chair of Token Alliance, a cryptocurrency advocacy group dedicated to reimagining ICO-like tokens.He also served as a director of Securitize, a company focused on tokenization.
In July, Atkins gave a speech calling for the development of new regulations and safe harbor mechanisms to promote the development of high-quality ICOs.Atkins believes that if we can correct the problems that occurred during the ICO 1.0 phase, we could see a boom in new capital formation—and it will all be led by cryptocurrencies.
On Monday, Coinbase took a major step toward achieving this goal, announcing the launch of a new ICO platform.Going forward, Coinbase will launch one fully vetted crypto project on its ICO platform every month.This will give investors the opportunity to invest before the project is officially launched, while also opening up new investment channels for project parties.Coinbase will strictly enforce various key requirements, including auditing the project team, requiring information disclosure, and ensuring that project insiders are not allowed to sell tokens within six months after the project goes online.
In short, through self-regulation, it aims to solve many of the problems that existed in the 2017-2018 ICO era.
A prediction and its implications
My bet is that by 2026 we will see at least six billion dollar ICO projects through platforms like Coinbase.This is just a fraction of the money raised through the traditional IPO market; for reference, there were 176 U.S. IPOs in 2024, raising a total of $33 billion.
But I think that many new ICO projects will be successful and prove that entrepreneurs can raise funds directly from investors, often on more favorable terms than in the traditional IPO market.As time goes by, I expect more and more projects will favor the direct ICO model instead of the traditional IPO model.
As for how to invest in the subject… here are some simple thoughts.
If I’m right and this is indeed a big deal, thenThe most obvious investment target is Coinbase, which is leveraging its dominance of U.S. cryptocurrency trading to expand into new markets.It’s not just the Charles Schwab of crypto, it’s Schwab + Goldman Sachs + NYSE +…
I also expected thatA healthy ICO market will benefit the largest programmable blockchains like Ethereum and Solana, as many ICOs are likely to be launched for applications built on these blockchains.
But more broadly, I think the resurgence of ICOs is another important testament to the overall growth of cryptocurrencies.Cryptocurrencies today are more attractive than they were a few years ago, as stablecoins and tokenization add new elements to them.If we see billions of dollars raised through quick ICOs, cryptocurrencies will only gain momentum.This dynamic requires broader exposure to the market; for example, consider a diversified index fund that holds multiple cryptoassets or crypto stocks.In other words, don’t try to pick which horse, but bet on the entire market.
If the past week has taught me anything, it’s that this rivalry is only getting more exciting.
