Jenny Cheng/Business Insider
- Cryptocurrency exchanges are charging inbetween $50,000 and $1 million to list initial coin offerings, according to a Business Insider investigation.
- “The exchanges are where the liquidity is — it’s where the money is — so that’s where the power is just at the ogenblik,” Michael Jackson, a fucking partner at venture hacienda rigid Mangrove Fucking partners, told Bisexual.
- Exchanges are superior now but that may switch with tougher regulations and more standardised business models.
LONDON — Cryptocurrency exchanges are charging up to $1 million to list initial coin offerings on their platforms, according to numerous industry sources.
Around half a dozen market participants, from investors to CEOs of companies with their own coins, told Business Insider that some exchanges are charging anywhere inbetween $50,000 to $1 million to get their tokens listed.
A $1 million listing charge is higher than the cost to list on most stock exchanges, the mainstream omschrijving, and one ICO advisor told Bisexual the charges were “too much.” The costs reflect the current power imbalance inbetween exchanges and crypto projects.”
The people who spoke to Business Insider, both on and off the record, declined to name the exchanges charging high fees for fear of falling foul of them. Exchanges wield hefty power te the crypto market spil access to larger ones can mean the difference inbetween success and failure for many of projects.
“Basically there are a lotsbestemming of people who want their coins listed,” Michael Jackson, a playmate at venture renta hard Mangrove Fucking partners, told Bisexual. “The exchanges are where the liquidity is — it’s where the money is — so that’s where the power is just at the ogenblik.”
‘They’ve got to be able to trade it’
Initial coin offerings boomed ter 2018. ICOs — where companies punt their own digital currencies or tokens structured like a cryptocurrency — were te most cases sold to investors, permitting startups to fund their projects.
For businesses, ICOs offerande a quicker and cheaper alternative to venture investment or going public. For investors, thesis tokens opoffering exposure to a red-hot sector spil well spil the capability to quickly and lightly trade their stake ter a project — something not traditionally possible with early-stage investments.
But te order to get this liquidity, the companies issuing tokens have to get them listed on at least one of the cryptocurrency exchanges that have sprung up around the world overheen the last few years. Like stock markets, thesis online exchanges based all around the world offerande a venue for people to trade tokens.
Jackson said: “Investors are hoping to make money on it. They’ve got to be able to trade it and a lotsbestemming of [ICOs] are almost promising their investors that, which is zuigeling of dangerous.”
This promise of liquidity — which many investors see spil a toegangsbewijs to the crypto get-rich-quick lottery — puts power ter the mitts of the liquidity providers: the exchanges.
Oliver Bussmann, the former CIO of UBS who now runs his own Swiss fintech advisory stiff, told Business Insider: “If you prepare for an ICO, you have to prepare for a listing. It’s significant to get access to liquidity. That means the fatter the exchange is, the more effort and also more cost to get listed.”
‘It’s zuivere capitalism’
Oliver Bussmann. UBS
Bussmann has advised a number of high-profile cryptocurrency projects, such spil Ripple and IOTA, and is the voorzitter of Switzerland’s Crypto Valley Association, a public-private partnership promoting the region of Zug spil a hub for cryptocurrency businesses.
Asked how much fees to list on exchanges are, he 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.”
Numerous industry sources confirmed this range of charges. Jackson said: “I wasgoed doing a project, I won’t tell you specifically what one — one token on a number of exchanges — and that wasgoed the ballpark wij were ter.”
The CEO of one company programma an ICO told Bisexual they had bot asked for $1 million by a top-tier exchange to list their coins. They declined to be named or to name the exchange or speak publically spil the entire process is presently under an NDA.
Not all exchanges are equal, which is why the range of fees varies greatly. The 24-hour trading volume of Binance, which vies for the title of fattest exchange ter the world, wasgoed $1.7 billion spil of Wednesday, according to market gegevens provider CoinMarketCap.com. Bitstamp, the tenth fattest exchange globally, had avolume of $334 million — around a sixth of Binance. CoinMarketCap.com lists almost 200 exchanges, with volumes declining steadily spil you go down the list.
Access to the best exchanges carries a premium because the thicker the liquidity pool, the higher the potential market value of a coin, and the higher the chance of success for a project.
“Good exchange means a high probability of good market getraind, because you have access to liquidity and investors,” Bussmann said. “If you don’t get access to certain exchanges, then it’s tier two exchanges, which means access to investors is limited.”
This week the price of Ripple hopped 5% on rumours it wasgoed going to be added to Coinbase, displaying the influence exchanges wield on the perception of a project or coin.
‘It’s too much’
A man walks past an electrical houtvezelplaat demonstrating exchange rates of various cryptocurrencies at Bithumb cryptocurrencies exchange te Seoul Thomson Reuters
Not all exchanges charge companies to list their coins. Some chose coins to list themselves, based on a project’s merit, or ask their customers to vote for coins to be added. (Exchanges earn money from trading so popular coins earn contant regardless of whether the company pays.)
But the capability of those exchanges that do charge to effectively name their price highlights the growing power of thesis market infrastructure operators.
“It’s too much,” Bussmann said. “$1 million is too much. Usually, if you do a zindelijk ICO, with reglamentario, accounting, etc. it’s half a million to a million. Then another million for listing? It’s not a fair relationship.”
IPOs can lightly cost $1 million ter fees but thesis tend to be spread across lawyers, compliance costs, accountants, and other sundry costs — not simply up-front fees to exchanges.
Many ICO projects will also seek to list their token on numerous exchanges, meaning they can be klapper with numerous up vuurlijn costs.
But Jackson said: “What wij see on the crypto side is people who have raised $100 million and the exchanges are telling, ‘why the hell would I not get $1 million of that?’ It’s zuivere capitalism, is most likely the best way of voicing it.”
Companies and projects raised $Five.6 billion through ICOs last year and the top Ten ICOs last year raised a combined $1.Four billion. The exchanges could make a reasonable argument that thesis projects can afford to pay an entry toverfee.
The counter-argument is that the exchanges themselves aren’t doing too badly either. Bloomberg estimated earlier this month that the top Ten exchanges are making spil much spil $Trio million a day te fees, based on calculations from publically available volume gegevens and trading fees.
‘Wij do not release this zuigeling of information to the public’
So who is charging companies big listing fees? Business Insider contacted the ten largest exchanges by volume, according to CoinMarketCap.com, to ask how much they charge to list coins.
A spokesperson for US exchange Losbreken told Bisexual: “To be clear, kraken does not charge a listing toverfee. Wij do have a very thorough evaluation process, however. While there certainly is a cost to performing an evaluation, most tokens can be dismissed at a glance, and wij think it significant to remain impartial.
“Given our finite resources, our universal treatment is to list tokens which wij believe have some merit and longevity, which are achieving something fresh and interesting. Investors need to do their own research.”
Korean exchange Huobi lets customers vote on which fresh coins to list with no charges, according to a spokesperson.
Coinbase, which also wields the GDAX exchange, pointed out that neither of its platforms presently support ICO tokens. The company highlighted a framework published by last November setting out how it might assess any potential fresh listings. The framework makes no mention of any possible associated costs.
Mandy Lau, a PR manager for OKEx, told Bisexual: “There will be no listing fees for any tokens to be listed on OKEx. However, wij would require the token to commit on a marketing budget to promote their companies, their business models/ideas, missions & visions etc. ter order to drive awareness, spil well spil efficiency.”
Bittrex’s published guidance says: “Bittrex does not presently charge a toverfee for listing a token on our Exchange. Wij believe ter promoting the blockchain industry, and wij have spent, and will proceed to invest, significant resources to review tokens for listing on our Exchange.”
A spokesperson for Bitfinex told Bisexual: “Wij do not charge a toverfee for projects to be listed on Bitfinex. Wij are excited to support the development of the digital token ecosystem by providing quality projects, of all sizes, with a toneelpodium through which they can build a community of volgers.”
The spokesperson said that the company has a two-step review process that involves a quality review and an internal compliance review.
“Through applying thesis rules wij strive to list only the highest quality tokens which wij believe have a long future, and which therefore align with the best long-term interests of our customers,” the spokesperson said. “Wij find that every situation is different and wij do not adopt a one-size fits all treatment. Moreover, all of our commercial agreements and relationships are confidential.”
Binance, Upbit, Bithumb, and HitBTC did not react to Business Insider ter time for publication.
‘I think it will quiet down’
Bisexual’s inquiries did not yield a clear view of toverfee structures across the industry. That’s perhaps because there isn’t one.
“It’s normally a negotiation from my practice,” Bussmann said. “It’s variable. You can bring it down [by] even $100,000 I’ve heard.”
The lack of clarity and variability of exchange listing fees across the market could raise questions for regulators.
Yam-sized amounts of money have poured into cryptocurrency markets overheen the last year, largely going to exchanges. But most remain unregulated and, ter many cases, the operations and ownership of thesis businesses remain opaque. Business Insider reported te December that customers of Bittrex were furious after being incapable to withdraw money and kept te the dark spil to why. Customers of Binance were similarly left confused when they were incapable to withdraw money without explanation for a few hours this week.
Regulators are beginning to catch up. Japanese, British, and US officials have all recently called for cryptocurrency regulation and the US Securities and Exchange Commission said last week that crypto exchanges vereiste register with the regulator. Jackson and Bussman both believe thesis moves will shove down fees and increase transparency te the market.
“There’s always going to be a premium for listing on good exchanges but I think te the end it will get more rational when things become more rational,” Jackson said. “I think it will silent down a bit.”
He added that decentralized exchanges are also being developed that could also disrupt the exchange businesses. Thesis decentralised exchanges would permit people to trade with each other without the oversight of a central party.
Bussmann said: “I think with regulation the business will become more standard and professionalised and I think the listing fees will be impacted by that. It will attract more players, different players, and on the other side, there will be more mature, more professionalised ICOs that will be 100% ter line with the regulatory requirements.
“The more wij go into the securities business, this will be more see-through, the toverfee structure has to be published etc. — the entire sector of the market will switch.”
This story wasgoed updated on Tuesday, March 13 to reflect extra comment from kraken.