ICOs will Replace Small Cap Stocks
Kevin O'Leary told CNBC on Monday he's working on a deal to allow a "very prestigious brand hotel" in New York sell ownership in the company through a $400 million cryptocurrency offering instead of a stock IPO. However, O'Leary said he could not reveal the name of the hotel yet because of a nondisclosure agreement.
"There's a big deal coming in New York in the next three weeks," said the Shark Tank investor and chairman of the ETF firm O'Shares Investments. "It's a $400 million coin issuance for a real asset you've heard of."
Typical initial coin offerings (ICOs) sell digital tokens in companies but do not imply any ownership stakes like stocks.
O'Leary said the hotel asset-backed ICO he's involved with would adhere to government securities rules and offer prospective investors the kind of marketing materials they get with stock initial public offerings.
"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,'" he said. "I don't want to destroy the government. I want to make money."
Recently, the Securities and Exchange Commission said platforms offering "trading of digital assets that are securities" must to register with the regulatory agency.
"Instead of a stock, a share, it's a coin. With a smart contract approved by the SEC," he said. "You will be an owner of a third of this hotel. If it works, it will be the first of its kind."
This would be a huge step in the right direction for cryptocurrencies and mitigate volatility related to regulatory fears.
"I'm a believer that asset-based coins will replace small-cap stocks," O'Leary said.
He added that ICOs backed by real assets would allow companies to circumvent much of the Wall Street middleman apparatuses, such as the army of investment bankers and venture capitalists, and sell directly to would-be stakeholders.
This isn't the first Kevin O'Leary has been hot on cryptocurrencies. Along with Shark Tank's Mark Cuban and Robert Herjavec, Kevin told CNBC in December that
"It is one of the most successful assets on the planet right now because it's a global speculation."
In February we wrote an article about Robert Herjavec's bullish view on cryptocurrencies
"To me, it's the wave of the future," Herjavec tells Money. "Fast forward 25 years from now, there will be some form of a cryptocurrency that we will pay for electronically, and the concept of cash will go away one day. It's going to have massive benefits for humanity, in all kinds of transactions."
Having the sharks from Shark Tank promoting and utilizing cryptocurrency technology will bode well for the future.