Article by: Matt Hougan, Bitwise CIO
Translation by: AididioJP, Foresight News
One core idea of investing in cryptocurrencies is that it will reshape the infrastructure of the financial industry.
So far, we can point to three areas that have made tangible progress:
Bitcoin is reshaping gold’s inflation hedge properties
Stablecoins are reshaping the US dollar
Tokenization is reshaping trading and settlement
Although these changes are still in early stages, the trend is very clear. I believe that ultimately most assets will be tokenized, most US dollars will circulate through stablecoins, and Bitcoin will be widely accepted like gold.
These are opportunities worth trillions of dollars, enough to drive a multi-decade bull market in the crypto space. But just this Monday, we saw the emergence of a fourth key area: capital formation. I believe this will become a central theme in the cryptocurrency industry by 2026.
Next, I will explain what exactly is happening, why it’s so important, and how to seize this investment opportunity if my judgment is correct.
First, let’s review some background
Capital formation is one of the most important functions in finance. Through this process, entrepreneurs can raise funds, start new companies, develop products, and create jobs.
Unfortunately, the current system is not only rigid and inefficient but also unfriendly to individual investors.
Institutional funds flow to top-tier venture capital firms, which then reinvest in the most promising startups. These companies remain private for a long time, continuously building value for early shareholders. When they finally go public, their shares are mainly sold to other institutional investors. Ordinary investors can only participate at the later stages. This system is costly, heavily regulated, and has led to a decline in IPOs.
Cryptocurrencies attempted to change this situation in 2017 and 2018 with the initial coin offering (ICO) boom. ICOs allowed ordinary people to invest before projects went public, directly connecting entrepreneurs and retail investors.
But honestly, the results were disastrous.
Due to lack of regulation, most ICOs turned out to be scams. Fraudsters raised billions from unsuspecting public and then ran off with the funds. The situation worsened to the point where the U.S. Securities and Exchange Commission (SEC) had to intervene, even threatening criminal charges against promoters. The crackdown in 2018 ended the ICO craze and plunged the crypto market into a long winter.
So what’s different now?
Most people who experienced the 2017-2018 ICO boom see it as a complete failure, exposing the black box issues in crypto. But a small minority saw potential in it.
Despite the problems, ICOs proved one thing: cryptocurrencies can raise funds quickly for new projects. Compared to traditional IPOs, which are costly, cumbersome, and favor the wealthy, ICOs are cheaper, faster, and more equitable.
Current SEC Chairman Gary Gensler is one of those who see this potential. His support for ICO-like projects is not surprising: before joining the SEC, he was co-chair of Token Alliance, an organization dedicated to promoting innovation in ICO-like tokens. He also served on the board of Securitize, a company focused on tokenization.
In July this year, Gensler publicly called for a new regulatory framework and risk prevention system to create conditions for high-quality ICOs. He advocates that as long as the issues from ICO 1.0 are addressed, we could see a crypto-led wave of capital formation.
This Monday, Coinbase took a significant step in this direction by announcing the launch of its ICO platform. From now on, Coinbase will introduce a carefully vetted crypto project each month. This allows investors to participate before the project launches and enables project teams to access new funding channels. Coinbase will enforce strict standards, including background checks on teams, disclosure requirements, and a six-month token lock-up for insiders.
In short, through self-regulation, they aim to address many of the issues from the 2017-2018 ICO era.
My predictions and outlook
I expect that by 2026, at least six ICOs worth billions of dollars will emerge via platforms like Coinbase. While still smaller than the traditional IPO market—where the U.S. had 176 IPOs raising $33 billion in 2024—success stories will demonstrate that entrepreneurs can raise funds directly from investors and often under better terms than traditional IPOs.
Over time, I believe more projects will opt for direct ICOs rather than traditional financing routes.
Regarding how to invest in this theme, I have a few thoughts:
If my predictions are correct, the most direct investment would be Coinbase itself. The company is leveraging its dominant position in crypto trading to expand into new markets. It’s not just a crypto brokerage like Charles Schwab; it’s a combination of Charles Schwab, Goldman Sachs, and the NYSE.
Meanwhile, a healthy ICO market will also benefit major programmable blockchains like Ethereum and Solana, as many ICO projects will be built on these platforms.
On a broader level, the revival of ICOs will be another milestone in the crypto industry. Today’s cryptocurrencies are more promising than a few years ago because we have stablecoins and tokenization stories. Add in billions of dollars raised through ICOs, and this narrative becomes even more compelling. This trend suggests we should adopt a broader market approach: for example, investing in an index fund that includes a basket of crypto assets or crypto stocks. In other words, don’t focus on picking a single horse but bet on the whole race getting better and better.
This race is becoming more exciting every day.
