A new report has found that the cost of listing new tokens on cryptocurrency trading platforms comes with a hefty price tag compared to what traditional exchanges charge.
The report from Autonomous Research found that digital currency exchanges can often charge up to 10 times that of venture capital avenues, according to a report from Bloomberg. Autonomous Research wrote that the cost of listing a token can range from $1 million ‘for a reasonably regarded token, to $3 million for an opportunity to get quick liquidity.’
While the company states that these figures aren’t exact, it compares with the roughly $125,000 to $300,000, in addition to the $100,000 to $500,000 of annual fees, that exchanges charge to list fully registered equities, the firm added.
Unlike traditional venture capital funding raising measures, the use of initial coin offerings (ICOs) provide young businesses with the means of raising money quickly. However, as can be seen generating funds in a fast turnaround time means paying a significant price for the privilege.
According to the report, though, it seems that companies are getting around this by overfunding their projects through their ICOs. It adds that ICOs have enabled them to raise five to 10 times more funding than what they would receive via other financial channels.
Data suggests that in December, monthly funding with ICOs amounted to over $1.4 million. In January, this figure rose to nearly $1.6 million. Yet, while token sales are an attraction for many investors what they are offering doesn’t always come to fruition.
According to a report from Bloomberg earlier this month, it suggests the bubble for cryptocurrency hedge funds are slowing starting to deflate. It states that demand and profits are shrinking for over 150 funds that popped during the rising value in bitcoin last year. As a result of the declining value in the price of countless digital currencies, most notably bitcoin, many investors are thinking twice before putting their money into a project.
Additionally, at least nine funds have ceased operating, whereas in December billionaire and bitcoin bull Mike Novogratz shelved plans to launch a cryptocurrency fund, claiming that market conditions weren’t right and that the company was re-evaluating its plans. He also claimed that he thought the price of bitcoin would drop to $8,000. However, he remains confident in where the digital currency and the market is heading. In November, Novogratz projected that bitcoin could reach $40,000 by the end of 2018.
At the time of publishing, bitcoin is valued at $7,360, according to CoinMarketCap.
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