Running a major cryptocurrency exchange is a lucrative business. Coinbase is reported to have made over $1 billion last year, and Binance is on course to pull in $850 million annually. While the bulk of these profits come from trading fees, they’re not the only revenue stream: exchanges are also pocketing millions from the fees ICOs and altcoin developers must pay to have their token listed.
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Exchanges Are Making a Pretty Penny
Most cryptocurrency exchanges don’t publicly advertise their listing fees, though these are known to run into the hundreds of thousands of dollars, and the millions in some cases. The bigger the exchange, the higher the price that must be paid for tapping into its liquidity pool and army of existing users. Business Insider reports on ICO founders who claim to have been asked for between $50,000 and $1 million for having their token listed. Binance CEO Changpeng Zhao questioned these numbers, and also defended listing fees, tweeting “most investment banks charge 7% for just underwriting an IPO deal”, by way of comparison.
It’s not just centralized exchanges that can hold ICOs hostage with hefty listing fees: the same is true of major cryptocurrency mobile wallets too. One altcoin developer told news.Bitcoin.com that they were quoted a fee of $3.5 million for being integrated with a popular mobile wallet. They declined. Exchanges such as Bittrex and Bitfinex assert that they do not charge a listing fee, though some people question this. With exchanges requiring ICOs to sign highly restrictive NDAs before token listing can even be discussed, firm figures are hard to come by.
A License to Print Money
It is rumored to cost up to $1 million for a listing on Binance, with the only exception being the community coin of the month that’s voted in by platform users. (One source has placed Binance’s listing fee at closer to $350,000, but expresses uncertainty over whether this is a one-off or annual fee.) For many altcoins and ICOs, the cost of a ticket to the high liquidity league is simply too much, limiting these projects to smaller exchanges such as Gate.io and Tradesatoshi. Viacoin developer Romano wouldn’t confirm how much he paid to get VIA on Binance, but conceded that had it not been for a successful crypto trading career, he would have been unable to afford it.
For all their associations with decentralization, cryptocurrencies are still heavily reliant on centralized platforms. Securing support from big exchanges and major hardware and software wallets isn’t essential, but without such adoption, altcoins risk being marginalized and inaccessible to the masses. It’s one of many paradoxes within the crypto space: for crypto to go mainstream, it needs to be on mainstream platforms. Exchanges like Binance and Coinbase are the Facebooks of the cryptoverse; virtual monopolies with the power to make or break projects.
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