What's in a name? Is a listing fee by any other name still a listing fee?
Maybe not, according to two cryptocurrency companies.
As per a recent filing, Blockstack paid cryptocurrency exchange Binance 833,333 STX tokens (~$250,000) to list its Stacks token on the venue. Binance is the first marketplace to support trading of Stacks. Blockstack raised $23 million in a RegA+ and RegS.
Binance, however, announced last week that it wouldn't charge Blockstack a listing fee. A Binance spokeswoman told The Block that listing fees only refer to the fees associated with the technical costs of getting tokens listed on the platform — a fact that Binance excludes from its original press release. As for the $250,000 sum, Blockstack CEO Muneeb Ali described it as a "long-term payment."
"This long-term payment is meant to watch out for the Blockstack ecosystem by incentivizing Binance to list Stacks over many years and aligns well with our long-term focus," he said in an email. "The marketing fee is a joint marketing campaign that we plan to run later on, again that is not a 'listing fee' but a marketing campaign that we plan to launch in the near future."
The additional marketing fee totaled $100,000, according to a filing.
"If it walks like a duck, talks like a duck, then it's a listing fee."
But these don't qualify as listing fees, according to Ali. As a former member of Nasdaq's marketing department, I worked directly with the team that marketed initial public offerings and worked to list new companies on the exchange. With that background, Binance and Blockstack's explanation makes little sense to me.
When a company goes public, an exchange like Nasdaq or NYSE will charge a lump sum that includes a wide range of services — spanning initial public offering, marketing and investor relations services, and indexes. Binance and Blockstack can call the $250,000 charge whatever they want, but several 20-year-plus financial executives I spoke to reached the same conclusion as me: it is a listing fee by another name.
"They aren't using financial engineering, but word engineering," said an executive at a U.S.-based stock exchange. "If it walks like a duck, talks like a duck, then it's a listing fee."
"The description of the long term fee is akin to what would be in a listing deal," the person added.
Indeed, marketing is becoming an increasingly important aspect of a listing venue's value proposition. NYSE and Nasdaq compete fiercely for firms to trade on their venues and, as recently reported by the Wall Street Journal, Nasdaq went as far as to offer WeWork its own sustainability index. NYSE, on the other hand, pledged to get rid of disposable plastics from its cafeterias.
"If you look at the listing agreements at Nasdaq and NYSE — a lot of that is simply marketing," said 30-year financial service researcher Larry Tabb.
So why are Blockstack and Binance so reticent to describe this as a listing fee?
One exchange executive said that it might have to do with that fact that "listing fee" is a regulated term. Despite listing fees being standard in U.S. equities, they've long been criticized in the nascent crypto space. So, fear of reputation reprisal might be a factor as well.
A year ago, Binance announced that it would donate 100% of listing fees through an in-house charity called the Blockchain Charity Foundation. Projects would be required to propose their own figure for a “listing fee,” which Binance would donate upon acceptance.
When asked if Blockstack’s long-term payment would be donated to charity, the spokesperson replied, “No they won’t be, as this is not a listing fee.”
This story has been updated to include commentary from several Wall Street executives. Contributions from Matt Yamamoto. This story was corrected to clarify that the "marketing fee" is distinct from the "long term payment."
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