According to a report released yesterday (Tuesday) by Autonomous Research, cryptocurrency trading platforms may be charging 10 times more to list tokens than the fees traditional exchanges demand for securities.
Digital token sales are letting startups raise funds quickly, but choosing the ICO alternative to traditional financing versus the traditional path of venture capital and Wall Street’s can be costly in other ways.
Autonomous Research wrote that costs for a crypto listing range from $1 million:
“for a reasonably regarded token, to $3 million for an opportunity to get quick liquidity,”
The report goes on to qualify that the figures are based on conversations among market participants and aren’t exact. The million plus fees compare with the roughly $125,000 to $300,000, plus $100,000 to $500,000 of annual fees, that exchanges charge to list fully registered equities.
The report said a digital token sale offers a:
“known path to liquidity, [yet is] in many ways expensive, and benefits the Wild West of crypto capital markets infrastructure providers,”
These high fees are causing startups to deliberately overfund their projects when conducting their ICO. Some companies have used ICOs to amass five to ten times more than the typical fintech companies typically raise using other channels, according to the report. Blockchain startups have raised more than $3 billion in ICOs this year, compared with about $270 million in venture capital rounds.