Coinbase launches new platform for early access to digital tokens

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(Reuters) -Coinbase Global said it will launch a new platform that will allow individual investors buy digital tokens before they are listed on the cryptocurrency exchange, sending its shares up 4% in morning trading.

Growing interest from retail and institutional investors have boosted trading in digital assets, resulting in established players in the sector looking to expand their services to tap the multi-trillion dollar market.

Coinbase will host about one token sale a month on its new platform using an algorithm to determine how tokens are allocated to investors. Investors will be able to submit purchase requests during a one-week window.     

“Token issuers coming to market today struggle to get their tokens into the hands of real users while building deep exchange liquidity. Coinbase is changing that,” the crypto exchange said in a blogpost.

The platform launch will mark the first broad opportunity since 2018 for U.S. users to take part in public token sales, Coinbase said.

Initial coin offerings were a popular fundraising method during the 2017 crypto boom, allowing companies to sell new tokens to investors, but the trend slowed after regulators raised concerns about investor protection and disclosure.

Coinbase is planning to add features to the token sales platform in the coming months, including limit orders and higher allocations for issuers’ target user bases.

Investor purchases of tokens will be paid in USD Coin, a dollar pegged stablecoin issued by Circle Internet Group, according to the Wall Street Journal, which first reported the launch.

Blockchain startup Monad will be the first project to offer its token through the platform next week, the WSJ report said.

(Reporting by Anuj T in Bengaluru; Editing by Arun Koyyur)