Coinbase launches pre-IPO market, offering standard contract trading of up to 2x for tokens to be listed

According to the latest announcement from the US exchange Coinbase, they will be opening up a new "pre-launch market" feature for users in certain regions, allowing them to trade standard contracts for tokens that are about to be listed on the exchange. The announcement indicates that this service may go live as early as next Monday. The Block first reported on this development.

Coinbase Launches Pre-Launch Market

Following the footsteps of other offshore centralized exchanges (CEX), Coinbase recently announced the launch of a "pre-launch market" for regions outside the United States, the United Kingdom, and Canada, providing standard contract trading services for tokens about to be listed:

The pre-launch market on Coinbase will allow users to participate in the price performance of upcoming projects on a trusted and secure platform.

Regarding trading restrictions, the initial margin limit for pre-launch market assets is 50%, with a leverage of up to 2x, and the maximum position value per token is $50,000.

Furthermore, once the related tokens are listed on the spot exchange, the standard contracts in the pre-launch market will seamlessly transition into perpetual contracts.

Qualified institutional investors can trade through Coinbase International, while retail traders can use Coinbase Advanced for trading.

Coinbase: High Volatility, Not Protected by LSP

Coinbase clarified its price operation mechanism for the market tokens, stating that unlike standard contracts, the tokens in this market use a 4-hour Exponential Moving Average (EMA) as the pre-launch index price.

Regarding the risks of the pre-launch market, Coinbase mentioned:

Due to the high-risk nature of the pre-launch market, it is prone to lower liquidity, higher volatility, and increased liquidation risks.

Additionally, "Therefore, the pre-launch market is not protected by Coinbase's Liquidity Support Program (LSP)."

It is noted that the LSP is part of Coinbase's liquidation process, where selected trading firms execute liquidations procedurally in real-time, and LSP participants must provide a minimum capital amount to receive the allocated liquidation positions in another segregated account.

The announcement concluded by stating that tokens in the pre-launch market may still fail to be listed on spot or perpetual contract exchanges. If a token fails to complete the necessary processes, trading of the pre-launch token may be suspended or delisted.

Ongoing Lawsuit with the SEC

The legal battle between Coinbase and the SEC is ongoing, and the recent bipartisan passing of the "Financial Innovation and Technology Act FIT21" by the U.S. House of Representatives may bring significant changes to the case, potentially altering the SEC's broad jurisdiction over the cryptocurrency domain.

Meanwhile, the years-long litigation between this exchange and regulatory authorities will play a crucial role in the future of cryptocurrency regulation in the United States and hold significant importance.

Coinbase Counters SEC with New Appeal, Citing FIT21 Passed by the House