Kevin O'Leary: NYC hotel wants to use a $400 million cryptocoin offering to sell ownership like a stock
- "Instead of a stock, a share, it's a coin. With a smart contract approved by the SEC," says the "Shark Tank" investor and O'Shares chairman.
- "You will be an owner of a third of this hotel. If it works, it will be the first of its kind," O'Leary says.
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.
"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."
However, O'Leary said he could not reveal the name of the hotel yet because of a nondisclosure agreement.
"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."
Typical initial coin offerings 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.
"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.
O'Leary made his initial fortune by selling The Learning Company, a venture first called Softkey that he started in his basement, to Mattel for $4 billion.
— Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."