The process of getting a token listed on an exchange is one of the most opaque aspects of the nascent cryptocurrency market.
But it’s a process Jonathan “JZ” Zeppettini, who leads listings for Decred, is very familiar with. He spoke with The Block in an exclusive interview to explain the cryptocurrency’s path to its latest listing on Vertbase, which will allow U.S.-based investors to purchase the crypto with fiat for the first time.
Zeppettini said the project has great relationships with the exchanges on which it is currently listed, including Vertbase. But he said not all engagements work out. “Last year I spent a lot of time with crypto-to-crypto exchanges and it was really a headache,” Zeppettini said in a phone interview.
He noted that the process of getting a token listed on a crypto exchange is much less transparent than the process for a company to list on a stock exchange. “You pretty much know what you’re going to pay,” he said, referring to U.S. equity exchanges Nasdaq and New York Stock Exchange, both of which outline their listing fee structure on their website. For reference, listings fees at New York Stock Exchange can be as high as $500,000 versus Nasdaq’s cap of $155,000.
“The biggest listing fee that I have ever been asked for was totally insane,” Zeppettini noted. “It was for an exchange that still has not launched. The exchange itself does not exist. But they asked us for $3 million to be one of the first projects listed on launch.”
Richard Johnson, a market structure specialist at Greenwich Associates, said the high price tags for crypto exchange listings illustrate exchanges’ outsized sway in the market.
“This tells us two things: firstly crypto exchanges have significant market power; and secondly, these coin issuers must expect to receive significant value to pay these fees,” Johnson said. “But we’ve seen coins’ market cap triple when a major listing was announced – so in a way it’s a rational decision for coin issuers. It’s also a sign of the ‘wild west’ nature of the market – I imagine regulators are looking into this practice.”
As reported by Bloomberg, Ripple offered to loan Coinbase $100 million worth of XRP to let users trade the crypto. In addition, a Ripple executive offered to pay Gemini $1 million to list XRP. For a project like Decred, which didn’t conduct an ICO, it’s basically impossible to pay these kind of fees, Zeppettini claims.
“What I basically say is Decred is all for fairness,” he said. “So we are willing to pay a listing fee that is reasonable and reflects the actual integration cost. If an exchange tells me look we are going to have to put a dev on this, it is going to take 20 hours of work, this is what it is going to cost, we got to mark up, we’ve got compliance costs and what not. If they were to lay out their cost structure and I think this is something to bring up to our stakeholders and then we can have a vote on it. But in most cases it is random numbers pulled out the air.”
Still, not all exchanges charge projects to list on their venue. Binance, for instance, didn’t charge Decred for its listing. An insider said the firm doesn’t charge listing fees for the projects it views as best-in-class. In addition, a spokesperson for Coinbase said it doesn’t charge listing fees. “All decisions to list are made on the merits of the asset not the expected revenue,” the spokesperson said.