Which Crypto Firms Will Follow Coinbase, Circle Into the Public Markets?

Crypto firms – some as young as a couple of months old – are turning to the public markets for liquidity. At this stage, it’s anyone’s guess as to which company will announce its intention to list next. 

The number of announcements has accelerated after the largest U.S. exchange, Coinbase, went public via a direct listing in April.

Crypto lender BlockFi, cross-border payments network Ripple and crypto exchange Kraken are all considering going public. 

Crypto exchange Apifiny, bitcoin futures exchange Bakkt, lending fintech SoFi and cryptocurrency trading platform eToro have set plans to go public.

And stablecoin issuer Circle and Peter Thiel-backed crypto exchange Bullish both have special purpose acquisition company (SPAC) deals in motion. 

So who’s next?

The most likely suspects for a new public listing are crypto exchanges that could compete against Coinbase – Gemini, Blockchain.com and FTX, said Oppenheimer analyst Owen Lau.

Fees on exchanges are still very high and crypto exchanges have yet to experience a race to zero, and every company in the crypto space relies on exchanges for crypto price data. 

“The heart of the capital markets system is the exchange,” Lau said.

Going public allows early investors in a company to cash out. It also gives firms the validation of publicly available financials, allows them to issue additional shares to acquire other firms and offers them a global boost to their brands, Lau added.

Other firms that would be in a position to go public would be those that can serve clients outside just the crypto space, like blockchain sleuthing firm Chainalysis and digital securities firm Securitize, Lau added. 

"Those are the dark horses I would think about," Lau said.

The other crypto vertical that may see more public exits is crypto mining, said Mizuho Securities analyst Dan Dolev. 

Following in the footsteps of Riot Blockchain, Hive Blockchain and Marathon Patent Group, these public offerings would include mining firms that are based in the U.S. and see an opportunity to pick up the slack following China’s crypto mining ban or allay environmental concerns.

“It’s almost better to do it when bitcoin's at $30,000 rather than when it was $60,000 because you get the 50-50 chance of it going up versus down,” Dolev said. “Because stocks are trading on what’s going to happen and not what happened in the past.” 

Crypto security firms that offer custody and multi-party computation (MPC) are another key piece of infrastructure that may be looking to be acquired by larger companies (such as PayPal’s purchase of Curv) or go public via a SPAC, Dolev said. 

“Option one for a lot of these companies that need to [exit] and can’t find a good enough price will be the SPAC route,” Dolev said. 

The odd part of the recent spate of announcements is that there has been no shortage of capital for crypto startups to tap into in the private markets, said Lisa Ellis, an analyst for the brokerage firm MoffettNathanson. 

Going public through a SPAC as a young crypto company raises additional questions because being acquired by a shell company doesn’t require these firms to file a proper S-1. 

Volatile crypto business cycles are well suited for venture capitalists who expect to be in investments for 10 years, but the public markets have a much shorter, one-to-three-year timeframe for investments, Ellis added. 

“When you’re accessing public markets, it makes me want to ask a lot of questions … especially if they’re under 10 years old,” Ellis said. “Because it can cause a lot of problems if your stock price goes down when people are bearish on crypto.”