Have you thought about what it takes to get a coin listed on an exchange? We’ve talked a lot before about how important liquidity is when it comes to investing, and in particular the key role liquidity plays in cryptocurrency investing. Essentially, if you can not sell your crypto assets, you can not exit a position, whether you are up or down. Liquidity for cryptocurrency largely comes from cryptocurrency exchanges. If a coin is not listed on a major exchange, it is relatively illiquid. This is a critical component when looking at airdrops as a result of forks as well as when looking at ICO’s.
Although not fully confirmed, some teams “do what it takes” to get their coin listed on an exchange. “doing what it takes” can mean paying off the exchange in order to list their coin. Sometimes coins that have lackluster tech, and teams that are not terribly impressive edge out other coins by being listed. In these cases you have to wonder why would a seemingly inferior coin, without much adoption can get listed on an exchange while other, better coins might not. It would make sense that some coins and tokens are paying off exchanges in order to be listed.
A great example of what appears to be a failed pay off would be Ripple’s (XRP) attempt to buy their way onto the Coinbase exchange. It is also rumored that XRP attempted to pay Gemini in order to be listed as well. Although not fully validated, Bloomberg reported that Ripple offered to lend Coinbase $100 million US dollars worth of XRP so that users on the Coinbase platform could begin accumulating and trading XRP. It is rumored that Ripple verbally indicated to Coinbase that Coinbase could pay back the loan in dollars, or in XRP. If XRP increased in value, then Coinbase would be able to pocket the difference as profit. Coinbase has not listed XRP, so it is safe to say that this potential offer did not go through. You can view Coinbase’s coin/token listing criteria here.
Some exchanges are rumored to charge $1 million US dollars to list a reputable digital asset and up to $3 million to list a less established coin. This is not completely foreign to financial markets. For example the US stock exchanges do in fact require groups to pay for listings. Nasdaq’s company rule book states that Nasdaq can charge annual listing fees ranging from $42,000 to $155,000. So it’s not illegal to charge groups for listing fees for their coins and tokens on cryptocurrency exchanges.
So what does this all mean? If you are looking for your favorite alt to get listed, or you’re curious why a project like Bitcoin Private (BTCP) isn’t listed on a major US facing exchange it could be for any number of reasons. Just bear in mind that one of those reasons could be due to stalled negotiations for the listing fee, or it could be the project is refusing to pay a listing fee.
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