The Coinbase acquisition case echoes the peak period of ICOs.

Written by: Muyao Shen, Bloomberg

Compiled by: Saoirse, Foresight News

Coinbase, a global company, has acquired the digital asset investment platform Echo for $375 million, which evokes some not-so-distant memories — during the boom period less than a decade ago, thousands of cryptocurrency projects raised billions of dollars by directly selling tokens to investors.

Initial Coin Offerings (ICOs) created the boom and bust cycles in the cryptocurrency market and introduced many investors to cryptocurrencies for the first time. In 2018, the speculative bubble burst rapidly, and regulators began to crack down on rampant fraud, leading to a halt in token sales. Market participants believe that Coinbase's recent acquisition is a signal: old things are returning in a new form.

The shift in the market landscape began last year: cryptocurrency trader and influencer Jordan Fish (better known by his alias Cobie) founded Echo, which started providing private financing for cryptocurrency projects. Earlier this year, Echo launched a tool called Sonar that supports ICO model financing. According to Coinbase, Echo has facilitated approximately $200 million in funding for cryptocurrency projects through over 300 transactions.

Shuyao Kong, co-founder of the blockchain project Megaeth, stated: “ICOs have quietly returned, but so far, they are mostly still limited to the core circles of cryptocurrency. Coinbase's acquisition of Echo has changed this situation — it has brought the ICO mechanism to a globally regulated audience.” The project raised $10 million in just three minutes last year through Echo.

Christopher Perkins, the president and managing partner of the New York-based venture capital fund CoinFund, pointed out that this acquisition also indicates a clear demand in the market for a “fair, transparent, efficient, and competitive process required for the public listing of assets.”

The current optimism emerging in the industry is closely related to the signals released by Trump’s second administration: while regulators are formulating the first legal framework for the cryptocurrency industry in the United States, they do not intend to hinder what they define as “innovation.”

Sandeep Nailwal, co-founder of Polygon, stated: “Since President Trump took office and the regulatory restrictions in the cryptocurrency space were lifted, ICOs have become one of the first rapidly popular innovative models in the crypto industry. It ensures that retail investors—rather than a small number of privileged investors—can access quality projects on the day the project launches, which is a very valuable point.”

Coinbase CEO Brian Armstrong announced a warm-up message on Monday to pave the way for this acquisition: the largest cryptocurrency exchange in the U.S. will restart the popular cryptocurrency podcast “Up Only” owned by Cobie. Coinbase paid $25 million for the NFT representing the rights to restart the podcast. The podcast has not released new content since 2022. Similar to exercising an option, to activate this NFT, Cobie needs to produce 8 new podcast episodes.

@brian_armstrong's post on the X platform

Industry participants believe that the most important significance of this acquisition is to enhance Coinbase's competitiveness against Binance — currently, Binance remains the largest cryptocurrency exchange in the world, maintaining its leading position in the industry. Binance already has multiple platforms, including Binance Launchpad, which can help early cryptocurrency projects gain market liquidity for their tokens.

Santiago Roel Santos, the founder and CEO of the crypto private equity firm Inversion, stated: “Acquiring Echo makes Coinbase's services more attractive to retail users - through Sonar, users can participate in private and public token sales. It will be interesting to see how Coinbase integrates Echo (especially Sonar) to enable retail users to engage more in early investments and token projects.”

What remains uncertain at the moment is whether there will be another crash after another round of prosperity for ICOs.