Kevin O’Leary, the famous “Shark Tank” investor, explained that he’s currently working on a unique and first of its kind affair. The deal involves a “very prestigious brand hotel” in New York, and O’Leary is working to allow them to sell ownership in the company through a $400 million cryptocurrency offering instead of a stock IPO.
Asset-Backed Initial Coin Offering
The U.S. Securities and Exchange Commission (SEC) has given approval for certain brokers to issue asset-based coins, and there is an upcoming “big deal in New York” of which O’Leary will be a part, he said as a guest co-host on CNBC’s “Squawk Box.”
“There’s a big deal coming in New York in the next three weeks,” said the chairman of the ETF firm O’Shares Investments. The $400 million coin issuance shall be backed by the hotel, creating an “asset-backed” token. There were no names taken, however, owing to a nondisclosure agreement.
The token shall have a smart contract approved by the SEC, which recently spoke against deregulated ICOs and called all tokens as “securities.”
O’Leary linked the coins to a share and outlined that every coin-holder would function as a shareholder in the hotel, thus, creating a “first of its kind” offering in the investor’s words.
Usually, a typical initial coin offering (ICO) involves the selling of digital tokens in companies but does not imply any ownership stakes like stocks. Similar to an IPO, the asset-backed ICO would adhere to government securities rules and offer prospective investors with a similar kind of marketing materials.
“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’.”
A recent statement released by the SEC indicated that all platforms that offered the ‘trading of digital assets that are securities’ must register with the regulatory agency.
Cryptocurrency enthusiasts believe that asset-based coins will replace small-cap stocks, a thought that was echoed by the Shark Tank fame investor.
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.
O’Leary made his initial fortune by selling The Learning Company, a venture called Softkey that he started in his basement, to Mattel for $4 billion.