Coinbase is launching a new platform for primary token offerings, giving retail investors in the United States access to regulated cryptocurrency initial sales for the first time since 2018.
The exchange plans to host about one token sale per month on its new platform, starting with blockchain protocol Monad, which will launch its native token for sale Nov. 17–22.
Token sales will run for one week, during which time users can submit purchase requests. After the window closes, an allocation algorithm will favor smaller buyers first, gradually filling larger orders to ensure broad participation.
The platform will reduce future allocations for users who quickly sell their newly acquired tokens, the company said on Monday.
The platform’s algorithm is designed to facilitate fairer distribution and reduce speculative dumping, according to Coinbase.
To participate, investors must hold verified Coinbase accounts and meet the platform’s compliance requirements. Token purchases will be settled in USDC (USDC), the dollar-backed stablecoin issued by Circle.
Projects launching through Coinbase will face a six-month lockup period, preventing founders and affiliates from selling tokens on secondary markets or over-the-counter (OTC) without Coinbase’s approval and public disclosure.
Participation is free for buyers, while issuers pay a fee based on the amount of USDC raised, in addition to any listing costs.
The launch marks one of the first broad opportunities for US retail investors to participate in public token sales over the past few years.
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The 2017–18 ICO boom
An initial coin offering (ICO) is a fundraising method where a blockchain project sells newly created tokens directly to the public to finance its development.
The funding vehicle took off in 2017 and peaked the following year, with token sales raising $13.7 billion by the first half of 2018, more than twice the amount collected during the previous year.
Crypto offerings rapidly caught the attention of regulators. In 2017, the US Securities and Exchange Commission (SEC) suggested that certain tokens could be subject to US securities regulation if they meet the requirements for an “investment contract” under the Howey test.
In 2018, auditing firm Ernst & Young analyzed more than 140 major ICOs from the previous year and found that 86% of their tokens were trading below launch prices, while nearly a third had lost almost all their value.
The ICO boom faded after 2018 due to mounting regulatory scrutiny, widespread investor losses, and a severe bear market.
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