The Funding: Why Coinbase launched an ICO platform — and how its rivals are reacting
Last month, Coinbase bought Echo, an angel investing platform founded by popular crypto trader Jordan "Cobie" Fish, for around $375 million. Then, last week, it launched its own public token sales platform, with a main focus on letting U.S. retail users participate. The back-to-back moves signal a clear shift in Coinbase’s business strategy. I spoke with Coinbase, rival platforms, VCs, and founders to break down what’s driving the shift and what comes next.Coinbase's maneuvers raise an obvious question: why now? The company recently told me it sees the current Trump administration as the most pro-crypto the U.S. has had — suggesting a reopening of the ICO door that’s effectively been shut since the 2017–18 crackdown. The regulatory backdrop has indeed changed. In July, SEC Chair Paul Atkins said he had asked staff to propose “purpose-fit disclosures, exemptions, and safe harbors” for ICOs, airdrops, and network rewards — a sharp break from the post-2017 era when the SEC treated most ICOs as unregistered securities and pushed many projects into shutdowns or settlements.Other signals also point towards improving regulatory clarity. CoinList president Scott Keto highlighted the recent SEC no-action letter for DoubleZero, which suggested its 2Z token was not a security — something he said he had never seen before. DoubleZero recently conducted a public sale on CoinList, marking the platform’s first sale to accredited U.S. users since 2019. Keto added that new legislation moving through Congress, including the Clarity Act crypto market structure bill, now gives companies like Coinbase far more confidence to operate in this space, especially with access to U.S. retail. Echo, notably, has only served accredited U.S. investors — likely one reason Coinbase launched a separate retail-facing platform.Keto said this regulatory shift benefits all token sale platforms, not just Coinbase. When asked whether CoinList will now enable U.S. retail participation, he said that decision ultimately lies with issuers: “During the [former SEC Chair Gary] Gensler era, it’s not that we were unable to offer token sales to U.S. people (even accredited), but the projects themselves decided that it was too risky,” he said. “If projects want to offer their tokens to U.S. retail, then we can be supportive of that.”Other rival platforms see the same regulatory opening but are taking different paths. Legion co-founder Matt O’Connor said the platform plans to serve U.S. retail as well, arguing that “securities laws should not apply to most tokens” under an updated policy framework. In contrast, BuidlPad founder Erick Zhang said he still does not plan to target U.S. users.But regulation isn’t the only driver. Coinbase’s head of trading, Scott Shapiro, said the goal is to support projects “at every stage of their lifecycle” — early raises on Echo groups, crypto-native public sales through Echo Sonar, and then broad distribution to Coinbase’s global retail base. Shapiro's pitch is a full-stack, founder-friendly path from inception to liquidity, designed not just for quick sales but “the long-term health of the project.”Framework Ventures' partner Brandon Potts said Coinbase is simply trying to own more of the user journey as users increasingly want to participate earlier, and issuers want compliant, higher-trust venues. Robot Ventures’ partner Anirudh Pai called it vertical integration: if Coinbase wants to dominate both centralized trading and the onchain economy through Base, it needs a direct pipeline for token distribution.A couple of founders added a competitive lens. Superfluid co-founder and CEO Francesco Renzi said token launches remain one of the highest-volume moments for any exchange — and Coinbase’s conservative stance on day-one listings meant it “missed out” on this market. Lluis Bardet Alvarez, co-founder of idOS, said that as decentralized-exchange volumes rise and onchain fees decline, centralized exchanges face an “innovator’s dilemma.” He said, “Coinbase is exploring new crypto products that don’t cannibalize directly their core product (CEX), while still helping to capture users that are more decentralization-minded.” What Coinbase’s moves mean for rivals Most rivals saw Coinbase’s Echo acquisition and the launch of a public token sales platform as both validation and a bit of competition. CoinList’s Keto said it confirms the regulatory environment has finally shifted enough for major platforms to re-enter U.S. token launches — something many avoided for years — and added that CoinList is now preparing a more decentralized sale mechanism to give projects alternatives beyond centralized venues.“We are going in the other direction because that is what I think projects and their users will ultimately care about,” Keto said. “The projects want the users on their own chains and inside their own apps. CoinList is committed and ready to integrate those networks. We have a few deals like that coming up.”Legion’s O’Connor said Coinbase’s move increases some competition but doesn’t eliminate room for others. He said Legion is positioning itself as more of an ICO underwriter — working closely with projects on structuring, compliance and go-to-market — rather than just a distribution channel. “Tokenization is a powerful technology, and the addressable market is not a handful of altcoins — it’s bringing any and every asset and investment opportunity onchain. It’s reinventing IPOs. That’s why we call Legion the first ICO underwriter,” he said.BuidlPad’s Zhang said his platform will stay focused on non-U.S. markets and has a “highly curated and high touch” approach, spending a couple of months with projects to cultivate community and run pre-launch marketing campaigns. “This means we cannot do token launches very frequently — but that’s the path we choose,” he said.Most people I spoke to said that Coinbase might win a share of premium deals, but not all. Platforms offering more “degen” launch mechanics, less strict compliance, or more favorable founder terms will still compete for strong launches, they said. As Pai put it, “Some [platforms] might build a brand around memecoins and riskier, more speculative tokens.” Will Coinbase spark a new ICO wave? Coinbase says it aims to run one token sale per month — although Shapiro said that “isn’t a hard and fast rule” as the focus is on quality over quantity. While the pace of strong launches this year has been modest, many I spoke to said the next year could see a meaningful uptick as teams that delayed launches finally step forward.Framework’s Potts said, “There is a real pent-up supply of high-quality projects that have delayed launching, not because they lack conviction, but because the venue landscape has been limited and inconsistent.”Others expect more activity with Coinbase’s entry — though not a 2017-style flood — as teams take advantage of clearer rules and renewed access to U.S. retail. “We’ve received an increase in inbound from top-tier projects and institutional partners after Coinbase’s announcement,” Legion’s O’Connor said. “ICO season is back, but it’s evolved to be more sustainable and resilient from the 2017 era.”Vinayak Kurup, head of research and investor at EV3 Ventures, agreed: “We’ve evolved significantly as an industry since the [early] ICO days,” adding that fundamentals, not hype, will drive the next phase. With institutional capital coming onchain and crypto now treated more seriously as an asset class, “the pure days of market degeneracy, I think, are in the rear-view mirror,” he said. A Base token? Another big question is whether Coinbase will eventually use its own platform to launch a Base token. Coinbase’s Shapiro said, “Base is in the early stages of exploring a network token, but we have nothing further to share at this time.”Others I spoke to were split. Some said if Base ever launches a token, it will almost certainly happen on Coinbase’s platform. But others warned it could create conflict-of-interest issues and attract regulatory scrutiny — and Coinbase may instead opt for an airdrop-only route.“Issuing a Base token on their own high-compliance venue would create an issuer-platform conflict and draw regulatory scrutiny,” said Framework’s Potts. “A Base token becomes more plausible only once competitive pressures rise and U.S. policy becomes clearer.”Mathijs van Esch, general partner at Maven 11, said, “We would speculate they would most likely facilitate an airdrop… This way, the Base token would immediately be deemed as a commodity under current regulations.” To subscribe to the free The Funding newsletter, click here.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. 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