After Circle secretly submitted its IPO application, which other crypto companies might go public this year?

Author: Daniel Kuhn, CoinDesk

Compiled by: Felix, PANews

According to a confidential filing with the U.S. SEC, U.S.-based stablecoin issuer Circle is preparing to go public again. Previously, in 2021, Circle planned to merge with a SPAC and list on the NYSE, but it ended in failure.

( Note: * In the U.S., going public can be achieved not only through a traditional * IPO but also by merging with a special purpose acquisition company (SPAC). SPACs, commonly known as "blank check companies," essentially function like a publicly listed private equity fund. The sponsors first establish a company, submit an IPO prospectus, raise funds through the IPO, and then find a target company to acquire within 12 to 24 months. Most SPACs are listed on NASDAQ, with some listed on the NYSE.)

As the crypto market rebounds against the backdrop of a strengthening economy, investment funds and potential IPOs in the blockchain sector seem poised for a turnaround this year. Although the crypto industry has been around for 15 years, there are very few companies that have gone public.

In December last year, Goldman Sachs predicted that IPO activity would become more active in the second half of 2024, especially if the Federal Reserve cuts interest rates, which would lower transaction costs and stimulate the economy. While there are many potential obstacles, including the U.S. presidential election, congressional infighting, wars, and inflation, as Goldman Sachs stated, "when financial markets are strong, IPOs tend to be frequent," and it is increasingly evident that the crypto market is strengthening.

Additionally, with the launch of spot Bitcoin ETFs, the crypto market is becoming more mature. Many companies have raised substantial funds, and investors in established companies (typically with a 10-year horizon) may be seeking returns.

Moreover, due to economic uncertainty, if the crypto market remains high in the short term, there may be a window of opportunity for IPOs before a recession. A representative example is Coinbase, which directly listed in early 2021 as one of the few public companies during the last bull market.

Who is Most Likely to IPO?

In the crypto space, there are over a dozen "unicorn" companies valued at over $1 billion that are the most likely candidates for an IPO.

While some companies may prefer to remain private for greater control and to reduce scrutiny, generally speaking, if a company raises external capital, there are only two ways for investors to achieve an "exit": either through a public listing or bankruptcy.

This article analyzes many of these companies to determine which ones might announce IPO plans this year. This is a representative but not exhaustive list, aimed at giving readers insight into the factors influencing IPOs. These companies may focus on exchanges, custody, and stablecoins, all of which have significant growth potential during the cryptocurrency rebound.

In November last year, Kraken CEO Dave Ripley stated that the company was considering going public. The company had previously taken preliminary steps to initiate a review application with the U.S. SEC. However, a year later, the SEC has not declared Kraken as a "valid" candidate. Nevertheless, according to The Block, since then, Kraken's executive team has been composed of seasoned executives with public offering experience, including Chief Compliance Officer CJ Rinaldi and Chief Financial Officer Carrie Dolan. Kraken's recent valuation is close to $11 billion, and the company also has one of the strongest legal/compliance departments in the industry, led by attorney Marco Santori.

Against Kraken's favor is the lawsuit filed by the U.S. SEC last year, accusing Kraken of being an unregistered brokerage, leaving Kraken with only the option of going public. Notably, several other exchanges and brokerages, including Israel's eToro and CoinDesk's parent company Bullish, have attempted to go public but were rejected by the U.S. SEC. If we broaden our view beyond the U.S. market, the EU's Bitpanda and Mexico's Bitso should also be on the radar.

In the crypto custody space, competitors Anchorage and BitGo may also be exploring public listings. Both are leading companies in the custody field, and their business scope has expanded beyond custody to include other security services and the popular field of tokenization.

A spokesperson stated in an email, "Anchorage Digital provides secure and reliable digital asset infrastructure services for global institutions. Our client base includes asset management firms, registered investment advisors, crypto protocols, venture capital firms, etc.," avoiding questions about going public.

BitGo, founded in 2013, was valued at $1.75 billion in its Series C funding round in 2023, a relatively low valuation that may be linked to a SPAC merger. Meanwhile, Anchorage is also a federally chartered bank, with a latest valuation of $3 billion.

The third-largest stablecoin issuer, Paxos, may also apply for an IPO. Paxos is the preferred issuer for third parties seeking to create branded stablecoins. For example, Paxos is the issuer of PayPal's recently launched PYUSD token and Binance's BUSD (now discontinued). Stablecoins have become one of the clearest use cases for blockchain.

There are many other companies and emerging tracks in the crypto space. Several long-established large blockchain hardware companies, including Ledger and Trezor, payment technology companies Ripple and BitPay, as well as financial service providers like Bitwise, may be considering an IPO.

In addition to efficient corporate governance, key factors for going public also include market adaptability and growth potential. Chainalysis, which has numerous government contracts, may also be in a favorable position for an IPO this year. Notably, among existing crypto public companies, most are involved in crypto mining, partly because, despite the volatility of Bitcoin prices, this is a business with the most predictable cash flow.

The final thought is that if someone provides funding, FTX may also attempt to go public.

Delphi Digital CEO Anil Lulla stated, "Honestly, it all depends on how Circle's IPO progresses. If it goes well, many other companies may try to follow suit."