U.S. IPO: Is it the ultimate destination for encryption companies or a temporary measure?

Organized by: ChainCatcher

Currently, about 13 cryptocurrency companies are queuing up to apply for listing in the U.S. with the SEC, covering various institutions such as exchanges, mining companies, and DeFi protocols.

Why do so many crypto companies want to go public in the United States? What is the core appeal of an IPO in the U.S.? For crypto companies, is going public in the U.S. a broad avenue to success, or does it conceal challenges and risks that cannot be ignored?

In this episode of Space “Going Public in the U.S., the Final Destination for Crypto Companies?”, we invite OSL’s Strategic Partnership Director Kevin Law, Futu Canada BDM Midori Ge, HashKey Group’s PR Manager and Researcher Jade, EVG Partner Sean Tao, Waterdrip Capital Investment Manager Joy Chen, Distill AI Contributor XinGPT, BM Capital CEO Tim, and 0G Chinese Head JT Song to engage in an in-depth dialogue about “Whether going public in the U.S. has become the ultimate goal for the development of crypto enterprises.”

You can click to listen to the full playback.

Question 1: Why do many cryptocurrency companies choose to go public in the United States? What are the key attractions of an IPO in the U.S.?

Kevin: The combination of the U.S. IPO and traditional finance with Web3 will be a key focus for future development, as Web3 is gradually achieving integration with Web2 from both technological and capital market perspectives.

Midori: I have been responsible for Southeast Asia exhibition business at Metisport in Hong Kong for two years, currently residing in Toronto, and I am very focused on overseas markets recently.

The Futu case shows that the core value of going public in the U.S. for cryptocurrency companies lies in the market depth, valuation premium, and global brand endorsement provided by exchanges like NASDAQ, which are crucial for enhancing industry credibility and gaining traffic.

Sean: Circle’s single-day trading volume peaked at $26 billion, surpassing the total liquidity of all tokens except BTC and ETH.

This year, the intensive listing of cryptocurrency companies in the U.S. is mainly based on:

Optimization of the regulatory environment

Valuation advantages of US stocks (e.g., Circle’s market value exceeds USDC issuance)

Stronger brand premium effect

Joy: Market feedback shows a phenomenon: even some high-quality crypto projects with annual revenues reaching tens of millions of dollars and stable cash flow, after landing on cryptocurrency exchanges, find that their market value, liquidity, and trading volume struggle to truly reflect the fundamentals of the business.

In contrast, mature capital markets such as the US and Hong Kong stock markets can more accurately reflect project value. This is precisely the core reason why an increasing number of Crypto Native projects choose to list in these markets.

XinGPT: As the Head of the Chinese Market at Lindulabs, I focus on analyzing trading data for cryptocurrency assets as well as US and Hong Kong stocks. Based on my research experience in exchange venture capital and the AI field, I maintain a cautious attitude towards the listing of cryptocurrency companies: currently, only a few areas, such as exchanges and stablecoins, have stable cash flows, while most projects still rely on token economics.

Cryptocurrency businesses with clear operations (such as Circle) have greater potential for going public, while native projects (such as pump.fund) face compatibility challenges with traditional capital markets. The future of the industry lies in establishing a dual-channel for tokens and stocks:

Promote high-quality DeFi projects (such as ARV) to go public through reverse listings.

Encourage traditional enterprises to issue tokens and build innovative financial mechanisms.

JT: Circle serves as a bridge between the cryptocurrency and traditional finance, with core advantages such as a mature business model, clear policy support, and stable profitability, meeting the Web3 configuration needs of institutional investors. Its global liquidity performance is outstanding, with trading volume in the Korean market reaching 500 million USD in just three days, demonstrating a capital attraction that is difficult for traditional cryptocurrency markets to match.

Kevin: We have noticed that traditional financial institutions are showing interest in the cryptocurrency space, and we have recently received inquiries from several leading intermediaries regarding tokenization projects and money market funds. The core challenges these institutions face are similar to those of U.S. listings — they need to clearly explain the project structure, application scenarios, and compliance to regulatory authorities.

Question 2: What are the core compliance challenges for cryptocurrency companies going public in the United States? How can they address the three major hurdles of regulatory classification, financial transparency, and business model compliance? What feasible compliance paths are available for companies that have issued tokens?

Midory: The core compliance challenge faced by cryptocurrency companies going public in the U.S. lies in the determination of securities attributes, especially for companies with issued tokens. This involves two key dimensions: first, how to meet the securities identification standards such as the Howey Test, and second, how to establish required financial audit transparency.

As seen in cases like Ripple, the determination of securities attributes often requires long-term argumentation. In contrast, companies with relatively simple business structures like Sortium have a clearer path to listing. For most crypto enterprises, the biggest challenge lies in how to transform existing token economic models into compliant ones, ensuring they meet regulatory requirements while also satisfying the auditing standards of the capital markets. This compliance process is essentially a key bridge for the integration of crypto finance with the traditional financial system.

Jade: From a practical operational perspective, companies that have issued tokens face unique challenges when going public in the U.S. As Mr. Midary mentioned, the key lies in building a compliant business structure. Currently, the Hong Kong stock market provides a relatively convenient path for the integration of crypto assets and traditional stocks through methods such as capital injection and additional share issuance.

Sean: From the perspective of U.S. IPO practices, crypto companies must meet two key conditions: a clear business structure and transparent revenue. The companies we invest in that plan to go public must have comprehensive financial disclosures. For companies that have already issued tokens, the current mainstream approach is to raise funds through private placements to qualified investors, similar to Sun Yuchen’s acquisition of SRM.

However, the difficulty for token-issuing companies to go public in the U.S. has significantly increased, with the core challenge being the determination of token characteristics. Circle took years to establish the regulatory status of its stablecoin, and currently, no token-issuing company has been able to simultaneously meet the regulatory frameworks of the SEC and CFTC.

Joy: The standards for listing on the US stock market are clear (such as a net profit of 750,000 USD or a market value of 50 million USD), and revenue is not a strict requirement. The precedent of biotechnology companies going public without revenue indicates that market expectations are equally important.

Cryptocurrency projects share similar traits, but companies that have issued tokens face higher barriers and need to clearly distinguish between token issuance and listing operations. The industry consensus is to simplify the financing structure and prudently plan the sequence of token issuance and listing.

Existing cases have proven that complex business structures can also be listed through compliance demonstration.

Tim: Cryptocurrency companies must overcome two major regulatory hurdles to go public in the U.S.: first is compliance with securities laws, which requires determining the token’s attributes based on the Howey Test, with the project’s white paper serving as key evidence; secondly, there are financial disclosure standards, where the tokenomics white paper cannot replace the prospectus, and companies need to enhance financial transparency, governance structures, and anti-money laundering systems.

For companies that have already issued tokens, achieving listing requires dual restructuring:

Redefine the token functionality, separating it from the platform’s financial association;

Package the business as a technology service company through SPV or a dual-layer architecture.

These two restructurings are necessary prerequisites for obtaining a reasonable valuation.

JT: The cryptocurrency industry faces a dual transparency issue, namely the opacity of VC investments and the excessive transparency of on-chain data. Regulation is showing a dual trend – relaxation of stablecoin policies and tightening of exchange regulations.

If the project meets the transparency standards of listed companies, the threshold for listing will be lowered. In the future, a “stock + token” parallel model may emerge, blurring the boundaries between TGE and IPO, promoting more international financing innovations.

Question 3: Will the concentration of IPOs by crypto companies accelerate the integration of Web3 and traditional finance, or will it deviate from the decentralized spirit of the crypto industry?

Tim: This is indeed a question that combines idealism with practical significance. The essence of decentralization is not to oppose capitalism, but to resist monopolies and opaque operations. From a positive perspective, IPOs help promote regulatory transparency, which can facilitate Web3’s breakthrough beyond niche circles and drive industry evolution.

However, potential risks are equally worth noting: VCs, bankers, and auditing firms may become the new “gatekeepers” of Web3, leading to the dilution of native user rights and an institutional tendency in governance discourse. The IPO of crypto companies is essentially a double-edged sword, requiring a balance between industry development and the original intention of decentralization.

Jade: The cryptocurrency market is currently facing liquidity tightening, and the phenomenon of leading projects squeezing the ecosystem is essentially a cyclical adjustment. With the possibility of the Federal Reserve lowering interest rates, new liquidity injections will bring opportunities for innovative projects. The integration of cryptocurrency and traditional finance has become a trend, and Bitcoin’s “American stock marketization” indicates that IPOs may become a popular new path.

In the long term, compliance and decentralization will develop in parallel, and the current adjustment is a necessary stage for the maturity of the industry.

JT: The essence of cryptocurrency companies’ IPOs is to promote the integration of Web3 and traditional finance. The core development path of the current cryptocurrency industry—whether it is account abstraction or trading solutions—is driving financial inclusion. When investors start paying attention to cryptocurrency concept stocks, they will naturally delve into the business logic behind them, which effectively completes the following market education process:

The network effects of cognitive crypto projects

Discover untapped areas of innovation

Gradually establish an industry recognition framework

Joy: Circle’s market value far exceeded expectations, rising from an estimated $30 billion to $40-50 billion, directly driving the wave of crypto companies pursuing IPOs in the US.

The asset allocation strategies for corporate encrypted assets show polarization: companies like Boya Interactive adopt conservative strategies (with Bitcoin as asset reserves), leading to stable market value growth from 220 million to 2.3 billion USD in 2023-2024; in contrast, aggressive strategies like those of MicroStrategy (issuing bonds to increase Bitcoin holdings) result in significant stock price fluctuations.

Currently, the cryptocurrency concept stocks in the US stock market are mainly divided into three categories: Bitcoin allocation stocks, mining company stocks, and trading service stocks. The common characteristics of these listed companies are clear cash flow, stable business, and strong compliance. However, it is worth noting that most native cryptocurrency projects do not possess these characteristics, and their development may be more suitable for staying within the crypto ecosystem.

Question 4: In the current surge of listings for cryptocurrency companies, what investment opportunities can native users seize? At the same time, what potential risks should they avoid?

Tim: This “buying coins for growth” strategy is essentially a cyclical gamble, similar to the Tesla effect, with MicroStrategy becoming an alternative to Bitcoin ETFs. This strategy is highly dependent on market conditions: during a bull market, market capitalization expands, and management is hailed as stock market wizards; during a bear market, they face asset devaluation and backlash from investors, leading to a deterioration of the fundamentals.

This is more like a brand finance operation rather than a sustainable business model. Currently, listed companies adopting this strategy are essentially engaging in high-risk speculation under the guise of compliance—if successful, they are hailed as financial innovation, but if they fail, they become financial black holes.

Kevin: From the perspective of market enthusiasm and fundamental analysis, Circle’s IPO case is quite representative. Its stock price started at over $30 at issuance and once soared to nearly $300, but two key factors must be noted: first, the company needs to allocate half of its interest to specific institutions, and second, its market capitalization is significantly higher than the actual scale of USDC. This valuation deviation reflects an irrational aspect of the market.

Recent discussions with industry veterans have confirmed this view: even if a successful IPO occurs, the long-term trend of the stock price still needs to return to fundamentals. This reminds us that when participating in the IPO frenzy, we must carefully assess the actual value of the assets, rather than merely chasing short-term market enthusiasm.