In the public equities market, it’s standard for companies to pay annual six-figure listing fees to major stock exchanges.
So it’s not overly surprising to read the news yesterday about Ripple’s attempts to pay XRP’s way
on to Gemini and Coinbase.
According to Bloomberg, the company was rebuffed in a seven figure offer it made to Gemini to list XRP on its exchanges.
Its bid to Coinbase was even more aggressive: we’ll lend you $100mm in XRP to let users trade the asset, and you can pay us back in dollars or crypto. The insinuation being: "if this piggy doubles after listing, you could pocket a cool $100mm in the trade."
Less standard by public equities standards, but this dynamic isn’t unique in crypto.
Earlier this week, Autonomous Research published a report
that claimed the average listing fee charged by top crypto exchanges stretched up to $3mm, 10x what you’d expect in the public markets.
The problem is crypto companies tend to want things both ways.
Act like a securities offerer when it’s convenient from a capital formation perspective or when you're doling out "founders' rewards". Pretend you’re actually selling a currency or commodity when it becomes markedly less convenient from an investor disclosures standpoint.
There’s a reason for public equities listing fees, by the way. They usually carry with them the expectation that listees will be regulated and subject to some level of standardized reporting. They only get to list in the first place if they’ve abided by widely accepted rules.
In that case, I suppose we should welcome this week’s news!
I look forward to working with Ripple on standardizing disclosures around how they (and other token teams) manage their treasuries.
I’m sure board members like Gene Sperling (former Economic Advisor to Presidents Clinton and Obama) and Ben Lawsky (creator of the infamous NYS BitLicense) would push fervently for better disclosures around XRP’s treasury management and distribution.
Especially given Lawsky’s mandate at the company:
Here’s a starting point for disclosures:
+ How is Ripple paying its strategic partners? What are the terms with respect to discounts, lock-ups, etc? How do the rebate programs work for companies testing XRP? Are they like Coinbase offers...free money “loans"?
+ Why did the company implement a programmatic selling program where they aimed to sell 25 bps of global XRP volume per quarter only to ratchet that back in Q4? Did the $91.5mm in XRP sales look like it might set off alarms, so they stopped short of selling $300mm?
+ Why does the company write about XRP price appreciation as if it’s a milestone
? Why do they do little to tamp down speculation around XRP enterprise adoption? No, why do they actively insinuate big news is coming by writing things like “XRP markets began to connect the dots once again?"
+ What are Ripple's insider trading policies with respect to XRP? Are any employees or advisors paid in XRP? If so, what are the terms?
It might seem annoying to pester the company like this, and indeed it would be more convenient to approach their marketing team - who is doubling as investor relations, but we can’t call it that - to answer these questions in private.
But the company is managing a "bridge currency" that they package to retail investors, who buy on the assumption that they are front-running big bank purchasers.
That makes this a public conversation. How about an analyst call, Brad?
*Note: I hope they will sit down with a real journalist soon and answer macro questions about their policies. A good interviewer wouldn't let them off the hook because "confidentiality agreements." NDAs prevent a company from discussing specific deals. They do not preclude you from discussing general distribution strategy. That cop out should be called out.
*Speaking of disclosures, I wanted to write more about an A+ post from Meltem Demirors re investor disclosures
in crypto, but I got carried away with the XRP stuff. When angel investors have better transparency standards than $25bn token projects, there are some, umm, problems in the space.
*My outstanding piece
from January on XRP for your reference. Truly exceptional analysis.