Coinbase Launches PreIPO Market Offering Standard Contract Trading for Tokens to be Listed up to Double the Amount
According to the latest announcement from the American exchange Coinbase, a new “pre-launch market” feature will be opened to users in certain regions, allowing users to trade standard contracts for tokens that are about to be listed on the exchange. The Block revealed that this service may go live next Monday.
Following the footsteps of other offshore centralized exchanges (CEX), Coinbase recently announced that it will launch a “pre-launch market” for regions outside the United States, the United Kingdom, and Canada, providing standard contract trading services for tokens that are about to be listed:
The pre-launch market on Coinbase will allow users to participate in the price performance of upcoming projects on a reliable and secure platform.
In terms of trading restrictions, the initial margin limit for pre-launch market assets is 50% and 2x leverage, with a position value limit of $50,000 per token.
At the same time, once the related tokens are listed on the spot exchange, the standard contracts on this pre-launch market will seamlessly convert to perpetual contracts.
Qualified institutional investors can trade through Coinbase International, while retail traders can trade through Coinbase Advanced.
Coinbase also clarified its price mechanism, stating that unlike standard contracts, the market tokens will use a 4-hour Exponential Moving Average (EMA) as the pre-launch index price.
Regarding the risks of the pre-launch market, Coinbase stated:
Due to the high-risk nature of the pre-launch market, lower liquidity, higher volatility, and higher liquidation risks are more likely to occur in this market.
Additionally, “Therefore, the pre-launch market is not protected by Coinbase’s Liquidity Support Program (LSP).”
LSP is part of Coinbase’s liquidation process, where selected trading firms execute liquidation procedurally in real-time, and LSP participants must provide a minimum capital amount to receive allocated liquidation positions in another segregated account.
The announcement also mentioned that tokens on the pre-launch market may ultimately not be able to trade on spot or perpetual contract exchanges. If a token fails to complete the relevant process, the pre-launch token may be temporarily suspended or forced to delist.
Currently, Coinbase’s legal battle with the SEC is ongoing, and the recent bipartisan passage of the “Financial Innovation and Technology Act of the 21st Century (FIT21)” by the U.S. House of Representatives may bring dramatic changes to the case, altering the SEC’s broad jurisdiction in the cryptocurrency field.
Meanwhile, the years-long litigation between the listing exchanges and law enforcement agencies will play a key role in the future of U.S. cryptocurrency regulation and have a significant impact.
