Kraken has added a new token sale platform to its arsenal of products called Kraken Launch. The well-established crypto exchange partnered with Legion, a European entity focused on initial coin offerings (ICOs), to create Kraken Launch.
The partnership allows Legion to distribute selected token sales directly to Kraken’s global user base. Kraken will ensure that those tokens are listed for trading on the exchange shortly after each sale concludes.
The companies stated that they will focus on “highest-profile” sales, which are defined as projects with major fundraising milestones.
Kraken runs token sales with a dual system
Kraken Launch will run sales under a dual system. Around 20% of tokens in each offering will be reserved for users holding a Legion Score. The score measures community loyalty and harmony with project goals.
The remainder of the tokens will be available on both Kraken and Legion on a first-come, first-served basis. Each sale will require users to complete Kraken’s intermediate-level KYC verification. And a 0.5% fee will apply to purchases.
Kraken Launch will earn revenue through transaction fees collected on token sales. It will also earn revenue from trading fees once new tokens begin trading on the exchange. Kraken and Legion will share this revenue.
Brett McLain, Head of Payments and Blockchain at Kraken, said, “Kraken is building the foundation of tomorrow’s financial infrastructure with crypto at its core.”
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Legion clarified that its token sales are compliant with the European Union’s MiCA framework. The EU requires token issuers to publish a white paper and subjects listed tokens to market-abuse rules.
Token sales are inaccessible to users located in the United States, Canada, or Australia. However, Legion has indicated that it is exploring ways to open access in the US by working with the SEC’s crypto task force.
Legion builds an ICO underwriting model
Legion presents itself as the world’s first ICO underwriter. According to co-founder Matt O’Connor, the model resembles the role underwriters play in traditional IPOs. This includes handling pricing, distribution, compliance, research, and even post-launch support, such as liquidity and market stability.
Legion wants to automate regulatory compliance, integrate sell-side research, and provide smoother token distribution. This will create a framework that moves closer to traditional capital markets.
Kraken will continue to conduct its own compliance and due diligence reviews before listing tokens.
O’Connor stated that, “The next Figma or Reddit won’t IPO. It’ll launch to its community onchain. This partnership is another step toward making that possible.”
Kraken has been expanding its product line rapidly during what analysts describe as a more permissive US regulatory climate. Recent expansions include the launch of tokenized stock products in the EU, new perpetuals for retail traders, and the acquisition of trading platform Breakout.
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Cryptopolitan reported that Kraken is preparing for a public listing by the first quarter of next year. The exchange is working with Goldman Sachs and JPMorgan to raise up to $1 billion.
Kraken Launch is just another milestone for the established exchange as it continues to broaden its business model and reinforce its competitiveness.
