September 17, 2019 – Initial Exchange Offering is a fundraising event that is administered by an exchange. It means that fundraising will be conducted on a well-known exchange’s fundraising platform, such as Binance (BNB) Launchpad, where users can purchase tokens with funds directly from their exchange wallet.
Coinbase a San Francisco-based cryptocurrency exchange that will soon issue a proprietary exchange token, according to Coinbase’s Head of Institutional Sales in Asia, Kyvon Pirestani. He said the IEO platform may emerge in the “next few months,” while the plan for regulated securities offering in the U.S are less far along. He affirmed that broker-declare licenses have been obtained by Coinbase, but they’re still digesting” the acquisition and “repurposing” of the respective licenses.
During the panel discussion about the “Evolution of Cryptocurrency Capital Formation” on September 11, 2019, at CoinDesk’s Invest: Asia conference. He mentions that initial exchange offering (IEO) is one of the several capital-formation tools currently being explored by Coinbase.
“We think there’s a really interesting opportunity there for Coinbase. In Nutshell, Coinbase is carefully exploring not only the IEO space but also STOs (Security token offerings]. But I can’t make any formal announcements right now.”
Coinbase received regulatory approval to acquire several securities firms with broker-dealer licenses including Keystone Capital Corp., Venovate Marketplace and Digital Wealth LLC.
IEOs have already been supported by most other major exchanges including Bitfinex, Binance, OKEx, and KuCoin. Compared with Initial Coin Offerings (ICOs), initial Exchange Offering (IEOs) usually requires a commitment from the exchange to handle know your customer (KYC) and anti-money laundering (AML) checks on startup’s behalf.
To participate in an IEO, a user needs the following;
- An account on the exchange and some funds in their account with the ability to participate completely through the trusted website’s interface;
- Exchange is staking its reputation behind the projects of its platform, offering a higher degree of trust behind the project.
- In the lens of the project raising funds, an IEO offers a promise of an immediate user base that can see their product;
- Depending on the size of the exchange’s audience, it could mean that the project can reduce their outside marketing funnels for fundraising;
- It allows them to focus only on the development of their product.
He concluded that security tokens are “talked about a lot but traded much less” and Coinbase would wait for more market demand to roll out an STO product.
This article is first published by BitPinas: Coinbase Might launch an Initial Exchange Offering Platform