According to unnamed sources in the industry, cryptocurrency exchanges are charging between $50,000 to $1 million to list initial coin offerings (ICOs) on their platforms — as reported by Business Insider. As one might expect, many of those who spoke to BI were unable to name the specific exchanges they have dealt with.
Exchanges wield a lot of power in the crypto markets and access to more prominent ones can mean the difference between success and failure for new projects. In the eyes of many, these seemingly high rates reflect a large power imbalance between exchanges and crypto projects. Michael Jackson, a partner at venture capital firm Mangrove Partners said;
“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.”
For startups, ICOs offer a quicker and potentially more lucrative alternative to traditional growth methods like venture investment or going public. For investors, these tokens provide exposure to red-hot sectors and provide the ability to quickly and easily trade their stake in a project — something not traditionally possible with early-stage investments.
The problem is that in order to access this liquidity, companies issuing tokens have to get listed on at least one of the many cryptocurrency exchanges. Like stock markets, these online exchanges — based across the globe — offer a venue for people to trade tokens.
Take Oliver Bussmann. Bussmann has advised a number of high-profile cryptocurrency projects — like Ripple and IOTA — and is the president of Switzerland’s Crypto Valley Association, a public-private partnership promoting the region of Zug as a hub for cryptocurrency businesses. The former CIO of UBS, who now runs his own Swiss fintech advisory firm, told BI:
“If you prepare for an ICO, you have to prepare for a listing. It’s important to get access to liquidity. That means the bigger the exchange