The cryptocurrency economy is growing every day with over 1,500 total digital coins and tokens at press time. While most of these tokens are already on exchanges, some of them have yet to be listed. But how much does it cost for a new token to get listed on an exchange?
Money Making Machines
According to a Business Insider report, cryptocurrency exchanges currently charge from $50,000 up to $1 million to list ICO tokens, coins, and crypto assets on their platforms.
“The exchanges are where the liquidity is – it’s where the money is – so that’s where the power is just at the moment,” said Michael Jackson, a partner at a VC firm named Mangrove Partners.
Naturally, many stakeholders are of the opinion that a $1 million listing fee is quite exorbitant and unreasonable, considering the fact that a crypto listing charge is far higher than listing on traditional stock exchanges.
Even for ICO projects that have real utilities, a $1 million charge is simply “Too much. The fees reflect the current power imbalance between exchanges and crypto projects,” opined an advisor of a popular ICO project.
Many respondents in the report declined to name the exchanges charging crazy fees while also pleading anonymity for fear of earning a place in the black book of these powerful exchanges.
Crypto exchanges are like the alpha and Omega of ICO world as the survival of some ICO projects largely depends on being able to get onto a good exchange.
If it Can’t Be Traded, It Won’t Be Bought
Since the price of bitcoin skyrocketed in 2017, many startups started leveraging initial coin offerings (ICOs) as a more accessible alternative to raising capital for their business than initial public offers (IPOs). Further, investors see contributing to these ICO projects as a viable means of getting rich within a relatively short period. Jackson iterated these sentiments:
“Investors are hoping to make money on it. They’ve got to be able to trade it and a lot of [ICOs] are almost promising their investors that, which is kind of dangerous.”
For some contributors, there’s no other way to get rich quick than latching onto a credible ICO scheme and pouring in thousands of dollars into the project and just watch their money grow. But, without the exchanges, this dream can never come to pass.
“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 is, the more effort and also more cost to get listed,” said Oliver Bussmann, the erstwhile CIO of UBS which now has a Fintech advisory firm.
When asked how much is required to get new tokens listed on an exchange, Bussmann who’s also the president of Switzerland’s Crypto Valley Association, stated that:
“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.”
ICO organizers scamper to get on the best exchanges because the more significant the liquidity pool, the higher the potential market value of a token, and this invariably increases the chance of success for an ICO project.
“[A good exchange listing] means a high probability of good market fit because you have access to liquidity and investors. If you don’t get access to certain exchanges, then it’s tier two exchanges, which means access to investors is limited,” Bussmann declared.
Free of Charge
While some exchanges are literally using fees to scare lightweight ICO projects away, there are still some that don’t charge a dime for listing new tokens. These exchanges list coins based on the legitimacy of the project and following clients’ requests.
The PR manager of OKEx, Mandy Lau said:
“There will be no listing fees for any tokens to be listed on OKEx. However, we would require the token to commit on a marketing budget to promote their companies, their business models/ideas, missions, and visions etc. in order to drive awareness, as well as efficiency.”
Likewise, Bittrex explained that it too does not charge fees for listing tokens along with Bitfinex. A representative of Bitfinex said:
“We do not charge a fee for projects to be listed on Bitfinex. We are excited to support the development of the digital token ecosystem by providing quality projects, of all sizes, with a platform through which they can build a community of supporters.”
Other exchanges including Binance, Upbit, and bithumb refused to comment on the subject. In the end, however, there are no universal rules and regulations for the crypto industry yet. Therefore one can’t blame these exchanges for charging crazy fees for listing new tokens. Hopefully, as the market matures, the power in the hands of exchanges will also dissolve.