Bitpanda, a Euro exchange for cryptocurrencies, raised a record €43.6 million in their first-ever IEO in August 2019. With this milestone, Bitpanda is now home to the top-earning IEO to date in the Eurozone. The Initial Exchange Offering was for launching their own cryptocurrency, the Bitpanda Ecosystem Token (BEST). Proceeds of the offering are set to fuel growth and expansion.
What is Bitpanda?
Bitpanda is based in Vienna and began operations in 2014 led by Eric Demuth, Paul Klanschek and Christian Trummer. Their mission is to break down the barriers to investing so that it’s open to more than just the wealthy. At the same time, they seek to help to modernize financial products for today’s crypto market.
With over 1 million users and a team of 120+, Bitpanda strives to provide a user-friendly trading platform. Their goal is to attract experienced traders as well as newbies. Currently, the cryptocurrency trading platform enables investors to trade over twenty digital assets including bitcoin and Ethereum. They also offer precious metals investment options such as gold, plus functionality for fiat conversions for USD, EUR, GBP, and CHF.
The IEO for Bitpanda’s BEST token also marks the launch of their Global Exchange. According to the press release, the exchange is their first globally offered product. It’s designed specifically for institutional investors and professional traders from over 54 countries.
In an industry where cryptocurrency exchanges often face criticism, Bitpanda has a solid reputation. Exchange review sites, in fact, show 4+ star reviews on average across the board. Additionally, most of the negative reviews pertain to the verification process. Historically, this dilemma has plagued many exchanges in the haphazardly regulated crypto markets.
According to multiple reviews, Bitpanda offers a user-friendly interface that those new to crypto can navigate with ease. They also provide an intuitive helpdesk that gives relevant support when searching for topics and a very clear and easy way to submit a request for help.
“Our goal is to establish the Bitpanda Global Exchange as the largest Euro exchange with the lowest fees for fiat-to-crypto trading in the industry. Bitpanda has been around since 2014 and holds an excellent reputation. We can build on a lot of synergies and experience.”Bitpanda CEO Eric Demuth
IEOs vs ICOs
Initial Exchange Offerings (IEOs) as a whole have received mixed reviews. Initially, many crypto professionals viewed them as even more scammier than ICOs. In reality, ICOs became a problem due to lack of regulation mixed with an uneducated segment of crypto investors, paving the way for unsavory actors.
They also got a bad rap due to so many of them failing on their promises. But in traditional finance, very few new businesses make the grade, so to speak. The percentages of success by new startups holding an IPO are not that far off from what we’ve seen with ICOs.
Initial Coin offerings are essentially the crypto version of the IPO, but with varying levels of ICO regulation due to the newness of the blockchain industry. During 2017 and 2018, crypto startup teams were holding ICOs on their own to issue their token, hoping to build a community, get funding, and in many cases line their own pockets.
Those that were in the business for legitimate reasons found it very difficult to get their token listed on exchanges. This was due to exorbitant fees and requirements to have previous listings. They also had to contend with the deteriorating reputation of ICOs as more and more scams came to light. Not only that, but each team had to deal with differing levels of clarity regarding compliance in their region.
Problems an IEOs can solve
The Initial Exchange Offering provided a solution to many of these problems. By holding the initial token offering directly on the exchange, startups would now have immediate liquidity. By having the offering on the exchange, the exchange would then enjoy transaction fees and more options for their users.
Additionally, exchanges such as Binance committed themselves to vet the ICO projects before the offering, giving some investors a little more confidence. The exchanges offering IEO’s on their platform also provide compliance support for the startup teams, as well as help with marketing.
Bitpanda’s entrance into the IEO process adds another layer to what is a growing trend in cryptocurrency startup funding. We’ll look ahead to see what other projects end up holding their IEO through this Euro exchange and how they all end up performing.