Venture capital turned to crypto firms throughout the early 2020s, with investment in the US smashing the $7 billion mark in 2022. They’ve driven impressive growth across the industry and will now be looking to deliver returns via a healthy stream of crypto IPOs. And they’ll have it, too – over the next year, let me tell you, we’ll see record numbers of crypto firms begin to float.
The foundations of a crypto IPO boom are already in place, and nowhere more so than in the US. We’ve already seen stablecoin issuer Circle file for an IPO this year as they announced a 16% revenue increase, and they’re not the only ones. Other prominent names within the industry are rumoured to be gearing up to list, including the likes of Ripple and Kraken.
Of course, the change of administration in the US is an undeniable factor in the move toward traditional stock markets. No matter what you think about his policies, there’s no doubt that Donald Trump’s pro-crypto stance is rippling through the regulators, institutional investors and businesses working across the sector. That only smooths the pathway to IPO.
We’ve already seen a more relaxed approach to crypto regulation take hold. The SEC now has a far more crypto-friendly leader in Paul Atkins, and the agency has already dropped a staggering number of cases against digital asset firms since the start of the year.
Not only that, but the Department of Justice has also backed off from crypto cases, disbanding their cryptocurrency unit altogether (The Guardian).
Regulators aren’t just more comfortable with digital assets now – they are actively pursuing clear legal frameworks that encourage innovation. The SEC has launched a crypto task force (Reuters) that is actively collaborating with the crypto sector, working to provide clarity on the classification of these assets, disclosure requirements and pathways to registration.
Such a change in approach from regulators will only grease the wheels of the IPO process and encourage more and more firms to float.
Historically, heavy regulatory scrutiny was a barrier to IPOs across the crypto sector. Businesses knew regulators had a less-than-positive view of digital assets, and listing didn’t always seem realistic.
Institutional adoption of the assets also appeared out of reach for some time, but over the last decade or so, we have seen a wave sweep through the sector. It’s been building for years and culminated in the SEC’s approval of spot Bitcoin and Ether ETFs in 2024 – a major moment for the entirety of digital finance.
Following these developments, the crypto industry has gone from strength to strength. Innovative exchanges, issuers and mining startups have grown and become wildly successful businesses, and the venture capital firms that have helped them on their way are ready to reap the rewards. Many firms are prepared to make their way onto traditional stock markets.
Coinbase is a prime example of a VC-backed firm that has seen success and made its way onto the Nasdaq. The cryptocurrency exchange is the only major crypto name to have floated, albeit via Direct Public Offering, and sets an example for others looking to follow in its footsteps.
Plus, given that many sector titans have launched their own venture arms, the pipeline of VC-backed crypto firms headed toward IPOs will only strengthen over the next few years. We’ve got Binance Labs, Kraken Ventures and Coinbase Ventures, to name just a few, that are concentrating their efforts primarily across the blockchain sector, creating more and more firms destined for the stock market.
Floating isn’t just in a VC firm’s best interests either. The entire crypto industry has come a long way in a relatively short space of time, and now, firms will want to send strong compliance signals to cement their proximity to the traditional finance sector.
Those that float on traditional stock markets are seen, at least to a certain extent, as having a regulatory seal of approval. It’s an important mark of legitimacy that crypto firms will seek out this year, making listing the natural next step.
Venture capital firms have provided the resources they need to compete on the global stage, so much so that they can now see themselves on traditional stock markets – something that seemed out of reach for so long given the harsh and heavy glare of regulators.
That glare is now subsiding, but the growth of innovative crypto startups isn’t. Mark my words: the industry will see more IPOs than ever in 2025.
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Fiorenzo Manganiello is Co-Founder and Managing Partner of LIAN Group
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The views expressed in this article are those of the author and do not necessarily reflect the views of AlphaWeek or its publisher, The Sortino Group
