Coinbase, a US-based cryptocurrency exchange, is set to join the league of cryptocurrency exchanges with IEO Launchpads soon. Kayvon Pirestani, the head of Coinbase institutional sales in Asia, revealed that the exchange was currently exploring a number of capital-formation tools including an IEO Launchpad.
According to the head of sales, an Initial Exchange Offering (IEO) Platform is a great opportunity and Coinbase is carefully exploring it. Though also hinted at developing a Security Token Offering (STO) platform, the IEO platform seems to have stolen the show and it could be the first to be launched.
However, Pirestani careful to say that he could make a formal announcement on the development yet. Nevertheless, the revelation is already an indicator that the IEO platform could be coming within the next few months.
If successful, Coinbase shall join its peers, the likes of Binance, KuCoin Bitfinex, Probit and OKEx. This would greatly enhance Coibase’s revenue and reputation, which is already high at the moment following years of great cryptocurrency exchange services.
A strategic choice for the US Market
Coinbase’s move to launch an IEO Launchpad could be viewed as a strategic move considering the trouble that US investors are going through trying to invest in ICOs. In the US, ICOs are either classified as stocks or securities depending on whether the tokens meet the Howey Test or not. And being a US-based exchange, it stands to benefit the most from US clients who wish to use IEOs instead of ICOs to solicit funds for their blockchain projects.
Compared to ICOs, IEOs offer a better investment opportunity for investors since they are not very much sought after by the regulatory authorities, especially the SEC. The only hectic part is getting an exchange to allow to host the IEO. Once the token sale is allowed to be offered on the exchange platform, authorities do not come looking for the IEO. The exchange is the one responsible for scrutinizing the IEO token sale.
Exchanges scrutinize the IEO token sale issuers to ensure that they are not scams. They also evaluate the project to see whether it will be of any economic value to the exchange.
Source of revenue
In addition to creating an opportunity for investors, IEOs also come in handy in attracting users to register with crypto exchanges. For investors to cash in on any IEO, they have to first register with the exchange running the IEO.
Therefore, if a promising project chooses a certain crypto exchange to run its IEO, the exchange can be sure that new users will sign up with it for them to be able to invest in the IEO.
The new users who sign up with the exchange start trading the IEO tokens once they become tradable and in the process pay commissions as they trade, which adds up to the exchange’s source of revenue.
On the other hand, IEO issuers also pay a certain amount of fee to the exchange running their IEO so as to be allowed to issue their tokens through the exchange’s IEO Launchpad.