O’Shares ETFs Chairman and Shark Tank personality Kevin O’Leary has announced that he is prepping the launch of a crypto coin offering in the New York City.
O’Leary, who shot into the limelight after selling off SoftKey International for $4 Billion, revealed to CNBC on March 19 that NYC-based “very prestigious brand hotel” will sell ownership through an initial coin offering (ICO) instead of taking the traditional stock IPO route.
“There’s a big deal coming in New York in the next three weeks,” O’Leary said while adding that it’s going to be a $400 million coin issuance for the well-known real estate. However, he refrained from disclosing the name of the hotel citing a nondisclosure agreement.
“Instead of a stock, a share, it’s a coin. With a smart contract approved by the SEC,” said the Shark Tank Investor. “You will be an owner of a third of this hotel. If it works, it will be the first of its kind.”
Unlike stocks, in a typical ICO, digital tokens are issued without any ownership stakes. However, the ICO O’Leary is referring to is an exception to that norm. This is a key difference that’s likely to help the proposed to ICO not to venture into the shady side of the ICO industry that regulators frown upon.
O’Leary underlined that difference by saying that the hotel asset-backed ICO intends to comply with all the securities laws in place to protect investors from fraudulent activities. He added that investors who back the ICO will receive similar marketing materials they get with stock IPOs.
“The key is to go to the regulator and say, ‘I want to work with you. I don’t want to tear the world apart. I want to be regulated. I want to do this by the rules. I don’t want to destroy the government. I want to make money. I’m a believer that asset-based coins will replace small-cap stocks,” said O’Leary.
His full declaration is available here as a video.
It is worth mentioning here that asset-backed coins already have the approval of the U.S. Securities and Exchange Commission (SEC) so long as they are issued by qualified brokers under existing regulations.
As for the hotel O’Leary is referring to, the operators are offering a “completely liquid, completely transparent” asset. The ownership of investors is registered in a smart contract on the blockchain, making the whole process efficient, reliable, and free of unwarranted intermediaries. Any changes made in the ownership are logged by the blockchain without fail.
Because the hotel operator is dealing directly with the investor-community, they won’t have to worry about any dilution in between. In other words, the operator won’t require paying investment bankers the standard five to seven percent commission that they would otherwise need to had they opted for an equity offer.
Under the proposed arrangement, the ICO will see (possibly) millions of investors paying $20 each or more to buy the newly issued coins.
Featured image copyright: Daniel Haire