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Crypto IPOs: The Pros and Cons of Going Public

Last Updated November 13, 2023 3:17 PM
James Morales
Last Updated November 13, 2023 3:17 PM
  • To date, few crypto firms have gone public.
  • Anticipated IPOs for Circle and Bithumb suggest more crypto companies could become publicly traded.
  • Some firms in the space have no intention of hitting the stock market, however.

In a sector dominated by hotshot startups, for over a decade, the venture capitalist’s checkbook has been the primary financial driving force behind crypto companies’ growth. 

While only a handful of the industry’s most established businesses have gone public so far, with several high-profile Initial Public Offerings (IPOs) on the horizon, the crypto sector is primed to hit the global stock market. Although some firms are intent on maintaining the status quo. 

Scandal-Plagued Bithumb Prepares For 2025 Listing 

With the exception of Coinbase and Robinhood Markets, which both went public in 2021, crypto exchange operators have largely stayed away from the stock market. 

According to local news  outlets, however, the crypto exchange Bithumb could soon become the first publicly traded digital asset business in Korea, and one of just a handful in the entire world.

Reportedly aiming for a KOSDAQ listing in the first half of 2025, Bithumb’s planned IPO isn’t necessarily about raising capital, however.

In fact, with assets worth over 400B won on its balance sheet, the firm’s funding runway is longer than many of its peers in the space. So why go public now?

Besides bolstering cash reserves, IPOs can also serve to legitimize businesses. Compared to their privately held peers, public companies tend to be more transparent. For Bithumb, public accountability could help to rebuild trust in the exchange, which has eroded significantly in recent years, threatening the firm’s market share.

In a country that was already reeling from the Terra-Luna crisis of 2022, Bithumb’s reputation took a major hit when its de facto owner Kang Jong Hyun was arrested on suspicion of fraud earlier this year.

After Kang’s arrest triggered major changes to the company’s ownership structure, Bithumb’s latest IPO plans are in line with ongoing efforts to disassociate the exchange from its former Chairman.

Of course, going public isn’t a silver bullet for Bithumb or any other crypto firm. But how many of the scandals that have plagued the sector in recent years could have been prevented by the higher standards of accountability and oversight demanded from public companies?

Circle Mulls World-First Stablecoin IPO in 2024

Like Bithumb, the USDC issuer Circle could benefit from the enhanced trust often assigned to publicly listed companies. As CEO Jeremy Allaire commented  after Circle’s bid to list on the New York Stock Exchange fell through, a public listing is “part of Circle’s core strategy to enhance trust and transparency.”

Now, amid rumors that the firm is considering an IPO in 2024, the global stablecoin ecosystem could be on course for a game-changing public float.

Already one of the most respected stablecoin issuers, whose backers include major financial institutions including Goldman Sachs, BlackRock, and Fidelity, going public might help Circle assuage lingering consumer doubts over stablecoins’ safety. In turn, this could usher in a new dawn of adoption, advancing the technology’s use beyond the realm of decentralized finance.

Among its peers, USDC’s market capitalization is currently second only to Tether’s USDT, and Circle’s flagship stablecoin is one of the crypto sector’s most successful products.

USDC market cap
  At it’s peak, Circle’s USDC had a market capitalization of over $50B.

But although stablecoins have demonstrated enduring appeal among a variety of users, they remain small fry compared to fiat-based payment methods, where blue-chip public companies dominate. 

For example, in 2022, Visa processed  an average of $38.6B worth of transactions each day – more than the entire current circulating supply of USDC.

And yet, despite the apparent advantages of increased trust, some crypto companies view the stock market with suspicion. 

Why Some Crypto Firms Resist the Stock Market

While digital assets have become increasingly mainstream, the rebellious spirit of early crypto pioneers continues to inspire companies that operate in the space today. 

Among infrastructure providers and some exchanges, Initial Coin Offerings (ICOs) have provided crypto projects with a funding pathway that rejects the classic model for business growth. Meanwhile, Decentralized Autonomous Organizations (DAOs) have emerged as a viable alternative to traditional company formation.

Even some of the largest, most well-known digital asset firms have opted not to pursue an IPO.

For example, in line with Tether’s for-the-people self-image, in public comments, CEO Paulo Ardoino has rejected the prospect of a stock market floatation, noting that an IPO would make the company beholden to Wall Street. “I’m proud that Tether is not planning to go public,” he said. “We want to keep doing what we are doing and keep helping our audience.”

By focusing on its stablecoin reserves rather than quarterly earnings, Tether has built its business around accountability to users rather than shareholders. In contrast with Circle’s strategy, which seeks to build public trust through association with the traditional financial sector and the promise of an IPO, the USDT issuer has emphasized alternative modes of transparency.

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