Cryptocurrency Exchange Coinbase to Launch an Initial Exchange Offering Platform

September 13, 2019 / by Crypto.IQ

According to Coinbase head of institutional sales, Kayvon Pirestani, the crypto exchange is planning to launch an initial exchange offering (IEO). Pirestani revealed on September 11th during the Invest: Asia conference.

Coinbase to announce IEO soon

Pirestani indicated that an IEO platform was among the numerous capital formation tools that Coinbase was exploring. He added that the crypto exchange was of the view that there was an interesting opportunity in an IEO platform. Besides the IEO, the San Francisco based exchange is also considering security token offerings (STOs). However, there is no official communication regarding the same so far.

The so-called IEOs are increasingly becoming popular as a crowdfunding alternative similar to the ICO. The centralized crypto exchange, in this case, acts as an underwriter. The exchange will operate sales and seemingly vet both prospective investors and the projects.

The IEO model involves the issuing of proprietary exchange tokens used for token sales and other purposes. Take, for instance, Binance’s digital asset Binance Coin (BNB) used on the crypto exchange’s Launchpad token offering platform. Other platforms offering token sales include Bitfinex, OKcoin, and Kucoin.

When carrying out an IEO, the crypto exchange will take care of the AML and KYC procedures. About timelines, Pirestani indicated that they plan to announce their IEO in the next few months. However, Coinbase’s pursuit of regulated securities offerings is still at infancy stages. 

Prospects of security token offering

In the summer of 2018, the crypto exchanges acquired some securities dealers such as Keystone Capital Corp, Digital Wealth, and Venovate Marketplace. When the firm announced the acquisitions, it was at the initial stages of becoming a fully regulated broker-dealer under the SEC. The exchange indicated that were to get approval for a broker-dealer license then they could start offering blockchain-based securities.

Within days Coinbase withdrew its claim that the acquisitions involved the SEC and the Financial Industry Regulatory Authority. The SEC indicated that it had not given explicit approval for the deal and that communication had been informal.

Pirestani affirmed that Coinbase had obtained the broker-dealer licenses and they are working to repurpose them. He stated that there is a lot of hype around security tokens, but there is less trading experience. Coinbase could wait before rolling out the offerings.