Kevin O'Leary Participates In Real Estate ICO: 'It's Going To Be The First Of Its Kind'

Asset-based coins are likely to replace small-cap stocks in terms of investor demand, said "Shark Tank" personality and O'Shares ETFs Chairman Kevin O'Leary.

What Happened

The U.S. Securities and Exchange Commission has given approval for certain brokers to issue asset-based coins, and there is an upcoming "big deal in New York" that O'Leary will be a part of, he said as a guest co-host on CNBC's "Squawk Box." While many aspects of the deal remain confidential, O'Leary said  it consists of a "$400 million coin issuance for a real estate asset you have heard of."

The owner of a "very prestigious brand hotel" plans to issue an asset-based coin internationally for ownership, with buyers participating in the distribution and holding smart contracts for the blockchain, O'Leary said.

"You will be an owner of one-third of this hotel, and if this works, it's going to be the first of its kind."

Why It's Important

Instead of issuing equity, the unnamed hotel operator offers investors a "completely liquid, completely transparent" asset, he said. The smart contract gives investors ownership in perpetuity, and any changes to the ownership are completely disclosed in the blockchain, he said. 

The hotel operator won't need to pay investment bankers a 5-to-7-percent commission, as would be the norm in an equity offer, O'Leary said. Instead, the hotel operator will likely attract millions of people buying coins for $20 each. 

What's Next

The $400 million value of the deal O'Leary is working on isn't a large number by Wall Street standards, but is big enough to get the market's attention, especially "if this works," O'Leary said.

Initial coin offerings will likely find success, but only if the issuers behind a deal make it clear they want to work with — not against — the SEC, the "Shark Tank" star said.

"I don't want to destroy any government. I want to make money." 

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