The crypto industry has seen tremendous growth over the past year. As expected, companies in the space have grown as well. Now, several top names are looking into a possible Initial Public Offering (IPO).
Considering how much of a big deal this is, it goes without saying that an IPO shouldn't be handled with levity or a carefree attitude. It is also evident that not everyone ends up eventually listing. So, intent doesn't necessarily translate to success.
We’ve listed out some of the companies on the IPO track and their chances of successfully listing.
Coinbase is the largest cryptocurrency exchange in North America. The company has been especially healthy over the past few years, piggybacking on what has been a boom in the North American crypto space and enjoying an influx of customers. So, when the IPO flurry began in 2020, it was only right that individuals and companies began considering the prospects of the firm going public
The exchange eventually confirmed its ambitions for a public listing. In December, it announced that it had filed for a Form S-1 with the Securities and Exchange Commission (SEC) and would begin the process of confirming its public listing.
Coinbase has the best chances of success for any crypto company. If not for anything, the company has its pedigree and the name to back its IPO claims up. Its business has grown considerably over the past few years, and it has even seen a surge in its institutional business thanks to the entrance of big-name players.
In December, Messari, a New York research company, reported that Coinbase's value was pegged around $28 billion. The research company explained that it got the valuation based on Coinbase's operations, with the exchange serving over 35 million customers and seeing over $1 billion in daily trading volumes.
Messari also pointed to Coinbase Custody, the exchange's institutional custody service. The subsidiary now has over $20 billion in assets under management - up from $7 billion in 2019. Coinbase has been the exchange of choice for most institutional players, and it has continued to enjoy significant gains over time.
In Coinbase's previous fundraising round, the exchange hit a valuation of $8 billion. That was in 2018, and the market has matured significantly since then. So, it is only a matter of how much investors believe the company is worth.
The Gemini Foundation
The Gemini Foundation is another top crypto exchange that, like Coinbase, is reported to be eyeing an IPO. The New York company has endured a pretty rough start, and its regulatory-friendly approach has ultimately paid off.
Bloomberg first reported the news of Gemini's IPO, explaining that the company's founders, Tyler and Cameron Winklevoss, were eyeing the opportunity and keeping their options open.
In terms of chances, Gemini has relatively high hopes. The company has grown tremendously over the past few years, announcing recently that its combined business had crossed $10 billion in assets under management.
However, what truly sets Gemini apart is its approach to regulation. While many crypto firms were skeptical about acquiescing to regulators' wishes, Gemini did. The exchange was one of the first to have strict identity verification policies, and it has pushed the regulatory-friendly agenda for quite a while. In that time, it has built an impressive relationship with regulators - something that will definitely come in handy when it's time to list on an exchange.
Of course, there is also the fact that the Winklevoss twins have some impressive connections. Both are savvy businessmen and have been exposed to the inner workings of Wall Street for years now. Both men will definitely be able to get an IPO through if they decide that this is the right time.
Ripple Labs is a San Francisco company that acts as the issuer of XRP, the fourth-largest cryptocurrency by market value. Speaking at the World Economic Forum last year, the company's CEO, Brad Garlinghouse, explained that they - as well as several other crypto firms - were looking into the possibility of a public listing.
In the next 12 months, you'll see IPOs in the crypto/blockchain space. We're not going to be the first and we're not going to be the last, but I expect us to be on the leading side…it's a natural evolution for our company," Garlinghouse reportedly said.
In truth, the company does have an interesting chance. In 2019, Ripple solidified its business and expanded significantly. It purchased 10 percent of MoneyGram, integrating the latter with its on-demand liquidity (ODL) product. At the end of the year, analysts put the company's worth at $10 billion.
Sadly, 2020 didn't end on the best note for Ripple. The SEC sued the company towards the tail end of last year, alleging that the company had made an unregistered securities offering in its Initial Coin Offering (ICO) for XRP. The suit also alleged that Garlinghouse and Chris Larsen, one of Ripple's founders, had sold XRP worth $600 million without reporting their profits.
If successful, the SEC suit could derail Ripple significantly. However, the company could still emerge victoriously and come out with a renewed focus on an IPO.