Cryptocurrency Exchanges Make Windfall Gains From ICO Listings
According to Business Insider, cryptocurrency exchanges are charging between $50,000 and $1 million to list initial coin offerings. The information is based on a survey of around half a dozen market participants. Notably, it would cost less than $1 million to list on most stock exchanges.
Receiving venture capital is not easy. It is also a time consuming process. Therefore, for businesses, ICO offers an easy way to raise capital for projects. For investors, tokens offer an exciting opportunity to make money in a short period of time. However, in order to reach investors, the companies issuing tokens have to list in one or more cryptocurrency exchanges. This gives a strong bargaining power to cryptocurrency exchanges.
Oliver Bussmann, former CIO of UBS, running his own Swiss fintech advisory firm, said
“At the lower end, it’s $50,000, up to $1 million — I’ve heard that. It’s depending on the size of the exchange.”
The rate for listing a token varies greatly, depending on the trading volume of the exchanges. While the 24-hour trading volume of Binance is $1.70 billion, Bitstamp has a daily trading volume of $334 million. Therefore, cryptocurrency exchanges which offer access to larger liquidity charges higher listing fees. Developers are also willing to shell out the listing fees as the success of a project is also dependent (to a certain extent) on the traded price of the token.
When Business Insider got in touch with Kraken regarding the fees charged, the spokesperson of the exchange stated “We do not release this kind of information to the public.”
However, Korean exchange Huobi allows listing without any charges, but the coins are selected based on voting. Coinbase, which owns the GDAX exchange stated that its platform does not support ICO tokens.
Mandy Lau, a PR manager for OKEx, told
“There will be no listing fees for any tokens to be listed on OKEx. However, we would require the token to commit on a marketing budget to promote their companies, their business models/ideas, missions & visions etc. in order to drive awareness, as well as efficiency.”
Bittrex has published a guidance regarding token listing. It says “Bittrex does not currently charge a fee for listing a token on our Exchange. We believe in promoting the blockchain industry, and we have spent, and will continue to invest, significant resources to review tokens for listing on our Exchange.”
Bittrex spokesperson also clarified to Business Insider that the company has a two-step review process that involves a quality review and an internal compliance review.
However, regulators across the globe are quickly sprung into action. Recently, the US SEC has demanded cryptocurrency exchanges to register with them. Bussman believes that such moves will bring down fees and improve transparency in the market.
Michael Jackson, a partner at venture capital firm Mangrove Partners, told
“Basically, there are a lot of people who want their coins listed. The exchanges are where the liquidity is — it’s where the money is — so that’s where the power is just at the moment. There’s always going to be a premium for listing on good exchanges but I think in the end it will get more rational when things become more rational. I think it will calm down a bit.”