The crypto industry is finally going mainstream on Wall Street.
First and foremost, crypto began to curry favor with top banks and financial service companies this year such as Visa, PayPal, JPMorgan, and many others. Secondly, institutional investors have begun to allocate serious capital and attention to Bitcoin and other digital assets, citing the asset class’s ability to hedge against inflation and other macro trends.
This has thus made crypto an investable asset class from an equity standpoint.
Many expect large companies in the space to begin to roll out initial public offerings, where they can sell shares to raise money on public markets.
With money being extremely cheap due to record-low interest rates in the U.S. and stimulus cheques being sent to nearly every family, there is a consensus that going public now is a no-brainer. Airbnb’s shares, for instance, surged 100 percent on their first trading day earlier this month.
It is almost certain that Coinbase is going public in 2021.
“Coinbase Global, Inc. today announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions.”
This means that the firm is seeking to go public in the coming months.
The market appears to be excited about this initial public offering as is. Pre-IPO contracts for the leading digital asset exchange currently trade at an implied valuation of $60-70 billion for the company.
To put this figure into context, that would be around 20 percent of BTC’s market capitalization, Ethereum’s total market capitalization, or over three times the size of the DeFi market, as Santos explains.
Digital Currency Group
Digital Currency Group, a conglomerate that owns firms like CoinDesk and Grayscale Investments, is believed to be the next crypto giant that will go public after Coinbase.
Along with its primary arms/subsidiaries, which also includes an over-the-counter desk and lender Genesis Global, DCG also has a comprehensive venture capital arm that invests in firms across the space.
Owning firms like Grayscale Investments and Genesis Global, Digital Currency Group has built up not only an extremely profitable business but also a good reputation amongst institutional players that are friendly towards cryptocurrency.
This may make it logical for it to raise capital via public markets from notable institutional buyers.
The thing is, DCG may not need public funding to succeed.
Ripple was the first billion-dollar company in crypto to hint at its intentions to go public when Brad Garlinghouse, CEO of the company, said in a New York Times interview at Davos’ World Economic Forum 2020 that Ripple could undergo an IPO.
These plans may currently be up in the air with the ongoing Securities and Exchange Commission (SEC) complaint regarding the sale of XRP.
Lawyers in the space, such as Jake Chervinsky, have mentioned that the potentially unknown or confusing status around XRP will make it difficult for public investors to invest in Ripple.
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