Coinbase opens bets on new tokens
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Coinbase International is offering futures markets on tokens that haven't launched.
Why it matters: For retail investors, these kinds of markets can aid in price discovery as they consider whether or not they want to buy a token when it starts trading.
- It also shows Coinbase getting competitive in an area adjacent to one that Binance has led internationally.
How it works: The pre-launch futures market will work like any other futures market. Investors will be buying or selling based on what they believe a given token will be worth at launch, based on all the publicly available information about it.
- When the token launches, it will convert to a regular futures market. In other words, this isn't a spot market. To get the actual token, investors would have to cash out and go buy it.
- This offering will be open to institutional investors and approved retail traders. It's not available in the U.S., the United Kingdom or Canada.
Between the lines: Now that Coinbase has shown up on the international stage, it's moving quickly to establish itself on all fronts of the global cryptocurrency trade.
Zoom out: A hot product for international exchanges has been what's known as the initial exchange offering (IEO), where startups run pre-sales on an exchange for the actual token. IEOs offer investors ways to buy a token pre-launch, sometimes using different arrangements to help crypto teams maximize their take on a launch or aid in price discovery.
- Exchanges vet projects before allowing them to run an IEO, which gives buyers a bit more confidence that they aren't throwing their money away.
What we're watching: When and if Coinbase offers IEOs.
