What companies in the crypto space are likely to go public this year?

Author: Daniel Kuhn, CoinDesk; Compiler: Songxue, Golden Finance

According to confidential documents submitted to the U.S. Securities and Exchange Commission (SEC), U.S.-based stablecoin issuer Circle is trying again Initial public offering. This would be the major cryptocurrency company’s second attempt to go public, after a planned merger with a specialized acquisition company (SPAC) failed in 2021.

Investment funds and potential initial public offerings in the blockchain space appear poised for a rebound this year as cryptocurrencies rebound amid a strengthening economy. Despite being around for 15 years, there are very few publicly traded companies in the cryptocurrency space.

In December, Goldman Sachs predicted stronger IPO activity in the second half of 2024, especially if the Federal Reserve cuts interest rates, which would lower transaction costs and stimulate the economy.

There are many potential obstacles here, including the U.S. presidential election, congressional infighting, war, and inflation, but as Goldman Sachs says,“IPOs tend to be strong when financial markets are strong,” and It is becoming increasingly clear that the cryptocurrency market is strengthening.

In addition, with the launch of spot Bitcoin exchange-traded funds (ETFs), cryptocurrencies are entering a more mature stage. Many companies have raised significant amounts of capital, and the venture capital backers of the oldest companies (who typically have tenures of 10 years) may be looking for returns.

Additionally, with lingering economic uncertainty, if the cryptocurrency market remains elevated in the near term, this could represent a window of opportunity to go public before an economic downturn. Coinbase’s direct listing in early 2021 may be representative as one of the few companies to go public during the last bull market.

Who is likely to IPO?

The cryptocurrency space is home to more than a dozen “unicorns,” or private companies valued at more than $1 billion, which are the most likely candidates for an IPO. Some may prefer to remain private, which provides a higher level of corporate control and reduces scrutiny. But in general, if a company raises outside funding, the two most likely ways investors can "exit" are either by going public or going bankrupt.

CoinDesk analyzed many of these companies to determine which ones could announce plans to go public this year. This is a representative list, not a complete list, intended to give you an idea of ​​the factors at play. The likely focus will be on the exchange, custody and stablecoin sectors, all of which offer significant growth potential during the cryptocurrency rally.

Last November,Kraken CEO Dave Ripley said the company was strongly considering going public. Previously, the company took initial steps to initiate a review with the SEC, but a year later, the SEC has not declared Kraken a "valid" candidate. However, Kraken's top management has since been filled with executives experienced in public offerings, including chief compliance officer C.J. Rinaldi and chief financial officer Carrie Dolan, The Block reported.

Kraken was recently valued at nearly $11 billion and also has one of the strongest legal/compliance departments in the industry, led by attorney Marco Santori.

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Last year, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Kraken, which must approve its public listing. Notably, several other exchanges and brokerages, including Israel’s eToro and CoinDesk parent Bullish, have attempted to go public but were blocked by the SEC. If the discussion extends beyond the US market, the EU's Bitpanda and Mexico's Bitso should also be on the radar.

In the cryptocurrency custody space, rivals Anchorage and BitGo may also be exploring public listings. Both companies are considered leaders in the space and have branched out beyond their core cryptocurrency custody business to include other security services as well as the popular area of ​​tokenization.

“Anchorage Digital provides secure and reliable digital asset infrastructure services to global institutions. Our customer base includes asset management companies, registered investment advisors, encryption protocols, venture capital firms, and more.” A spokesperson said in An email dodged questions about the listing.

BitGo, founded in 2013, was valued at $1.75 billion in a 2023 Series C round — a valuation low enough to warrant a SPAC merger. Meanwhile, Bank of Anchorage, also a federally chartered bank, was last valued at $3 billion.

Paxos, the third-largest stablecoin issuer, may also be a contender for the listing. Paxos is the issuer of choice for third parties looking to create branded stablecoins. For example, it is the issuer of PayPal’s recently launched PYUSD token and Binance’s discontinued BUSD token. Stablecoins have become one of the most obvious uses for blockchain.

There are many other companies and emerging industries in this space. There are several large, long-established blockchain hardware companies (including Ledger and Trezor), payment technology companies (such as Ripple and BitPay), and financial services providers (such as Bitwise) that may be considering public stock offerings.

In addition to strong corporate governance, key factors to look for are market fit and growth potential. Chainalysis, which has a large number of government contracts, may also be well-positioned to go public this year. It’s worth noting that of the existing cryptocurrency public companies, the majority are involved in cryptocurrency mining, in part because this is an industry with the most predictable cash flows, despite the volatility of Bitcoin prices.

One last thought,I think a resurrected FTX might try to go public - if only because who else would fund it?

“Everything depends on how Circle’s IPO goes. If it goes well, many other companies may explore it.” Delphi Digital CEO A Said Anil Lulla.