US-based stablecoin issuer Circle is taking another step in going public, according to a confidential document filed with the Securities and Exchange Commission (SEC). This will be the major cryptocurrency company's second attempt at a public listing, after its initial plan to merge with a special purpose acquisition company, or SPAC, in 2021 failed.
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With cryptocurrencies rebounding amid a strengthening economy, this year appears poised for a potential rebound in investment funding and potential initial public offerings in the blockchain sector. Despite being around for 15 years, there are very few publicly traded companies in the cryptocurrency sector.
In December, Goldman Sachs forecast stronger IPO activity in the back half of 2024, especially if the Fed cuts interest rates, which will lower the cost of deal making and stimulate the economy.
There are many potential hurdles here, including a US presidential election, congressional infighting, war and inflation, but “when financial markets are strong, public offerings tend to be strong,” says Goldman, and it is becoming increasingly clear that markets Cryptocurrencies are strengthening.
Furthermore, with the launch of the Bitcoin Spot ETF (ETF) yesterday, cryptocurrencies are moving into a more mature stage. Many companies have raised a significant amount of capital, and the venture capital backers of an older company — who typically operate on 10-year time horizons — are more likely to be looking for a return.
Furthermore, given continued economic uncertainty, if cryptocurrency markets remain elevated in the short-term, this could represent a window of opportunity to go public before the downturn. Coinbase, which went live in early 2021, may be represented here, as one of the few companies to go public during the previous bull market.
There are more than a dozen “unicorns,” or private companies worth more than $1 billion, in the cryptocurrency space, and they are the most likely companies to go IPO. Some may prefer to remain in the private sector, which provides a greater level of control over companies and invites less scrutiny. But in general, if a company raises external capital, the two most likely “exits” for investors are either a public listing or bankruptcy.
CoinDesk analyzed several of these companies to determine which ones could announce plans to go public this year. This is a representative, but not complete, list intended to give an idea of the influencing factors. These deals are likely to be concentrated in the stock exchange, custody and stablecoin sectors, all of which have huge potential for growth amid the crypto recovery.
In November, Kraken CEO Dave Ripley said the company was strongly considering going public. It previously took tentative steps by initiating a review by the Securities and Exchange Commission, which a year later did not declare Kraken an “effective” candidate. However, since then, The Block reported that Kraken has filled its executive suite with seasoned executives with experience in public offerings, including Chief Compliance Officer CJ Rinaldi and CFO Carrie Dolan.
Kraken was last valued at just under $11 billion, and also boasts one of the strongest legal/compliance units in the industry, headed by attorney Marco Santori.
Working against Kraken is a lawsuit filed last year by the Securities and Exchange Commission, the agency that would have to approve its public listing. It should be noted that several other exchanges and brokerages, including Israel-based eToro and CoinDesk's parent company, Bullish, have explored going public but have been blocked by the SEC. Bitpanda, in the EU, and Bitso, in Mexico, should also be monitored in case the conversation expands beyond US markets.
In the crypto custody sector, rivals Anchorage and BitGo are also likely to explore public listings. Both companies, considered industry leaders, have expanded beyond their core cryptocurrency custodian business, including other security services in addition to the bustling crypto space.
“Anchorage Digital serves a global roster of institutions with safe and secure digital asset infrastructure. “Our client base includes asset managers, registered investment advisors, cryptocurrency protocols, venture capital firms, and more,” a CoinDesk spokesperson said in an email, avoiding The question is about going public.
Founded in 2013, BitGo was valued at $1.75 billion during its 2023 Series C raise — a low enough valuation where a SPAC merger may be possible. Meanwhile, Anchorage, also a federally chartered bank, was valued at $3 billion.
Paxos, the third-largest stablecoin issuer, may also be a contender to go public. Paxos is an authorized issuer for third parties looking to create branded stablecoins. For example, it is the issuer of PayPal's recently launched PYUSD token and Binance's since-discontinued BUSD token. Stablecoins have emerged as one of the most obvious uses of blockchain technology.
There are a lot of other companies you can mention and emerging sectors in this field. There are several large, well-established blockchain hardware companies, including Ledger and Trezor, payments technology companies like Ripple and BitPay, as well as financial services providers like Bitwise that may consider going public.
The key things to look for, besides strong corporate governance, are market fit and growth potential. Chainalysis, with its government contracts group, may also be in a strong position to go public this year. It should be noted that among publicly traded companies in the cryptocurrency space, the majority are involved in cryptocurrency mining, partly because this is an industry in which cash flows are easy to predict, despite the volatility of Bitcoin prices.
As a final thought, I think it's possible that a revived FTX could try to go public – if only because who else would fund it?
“It all depends on how sincere Circle's IPO is. If all goes well, there are plenty of other companies potentially exploring it,” said Anil Lulla, CEO of Delphi Digital.
