Will Blockchain.com break open the public markets for crypto companies?

In the waning months of 2020 and the beginning parts of 2021, companies were flooding into the U.S. public markets at a pace unlike anything seen in years—and investors were gobbling the shares up seemingly as quick as they could, whether the stock went live through a direct listing, SPAC, or IPO.

So, when the cryptocurrency exchange giant Coinbase unveiled plans to go public through a direct listing, investors took notice. Soon, just about everyone—investors, regulators, journalists—began asking: Would Coinbase be the appetizer for a full menu of crypto listings to come? It seemed that would at least be the case last spring, when, in the weeks building up to Coinbase’s debut, some of the biggest names in crypto—Blockchain.com, Kraken, and Gemini—began flirting with the notion.

And yet, one year and some change later, many of the biggest names in crypto remain private—for now. Sure, there have been a few that went public via special purpose acquisition companies and others, mainly miners, that have made their debuts, too. But, with an influx of venture money, many of the largest names have opted to stay private. Whether they continue to do so is, once again, sparking questions, though.

On April 18, Bloomberg reported that Blockchain.com, a crypto exchange, was interviewing banks for an IPO that could happen as soon as 2022, citing people familiar with the matter. (A Blockchain.com spokesperson did not respond to Fortune’s request for comment.) 

Founded in 2011, the London-based company is coming off of what was likely a banner year where crypto markets went on a hockey-stick-like trajectory. In October, Blockchain.com cofounders Nicolas Cary and Peter Smith told former Fortune staffer (and author of The Ledger) Robert Hackett that the company had already brought in more than $1.5 billion of revenues year-to-date at the time and what Smith, the CEO, called a “mindboggling” $1.1 trillion-plus of transaction volumes. Blockchain.com toyed with the idea of going public last year, with Smith telling Barron’s at the time that Blockchain.com was “carefully considering its public-market options.” And following a new funding round in March that valued the company at a whopping $14 billion, Blockchain.com may be ready to go public at some point soon. 

Now whether the offering opens the floodgates to other crypto companies going public like so many expected Coinbase’s to is an entirely different matter. 

With central bankers plotting aggressive interest rate hikes in the face of surging inflation, on top of the war in Ukraine, investors have become far more risk-conscious in 2022 than they were even just a few months ago—and especially more so when compared to a year ago when soaring stock and crypto prices were leading to talk of bubbles. The IPO market, as a result, has essentially dried up with many new listings floundering on arrival. In the first quarter, there were just 18 IPOs in the U.S., marking the lowest quarterly total in at least three years, according to Renaissance Capital. “It’s been a bloodbath,” Renaissance Capital senior strategist Matt Kennedy tells me. 

How investors would respond to a newly listed crypto company’s stock today is hard to say.

The decision of whether to buy any company’s stock on listing day ultimately boils down to the relatively simple question of how investors think the shares will perform. And crypto-linked stocks have undergone some massive swings in the markets of late, ensnared by the broader shift in investors’ portfolios. Just look at Coinbase’s shares, which are down more than 40% on the year—despite the fact that the company’s latest earnings blew away analyst expectations. “Crypto is a very hard market to predict,” Kennedy says, “and we’ve seen investors shifting to stocks with stable growth and cash flows.”

Still, Kennedy expects the IPO window to reopen in the back half of 2022—including for crypto companies. And there may be more than just Blockchain.com shares coming live soon, too.

Kraken CEO Jesse Powell, for one, has said that his crypto exchange is looking at a public debut in the second half of 2022. In a statement to Fortune, Kraken said it is “always exploring all strategic options available to us to decide what’s in the best interest of the business and its stakeholders.” And further out, others like Binance.US and BlockFi have been said to be considering listings in the coming years. Even bankers appear to now be trying to court Sam Bankman-Fried’s FTX into the public markets.

“I wouldn’t count crypto IPOs out,” Kennedy says.

Declan Harty
@declanharty
Declan.harty@fortune.com

DECENTRALIZED NEWS

Credits 🚀 

Robinhood has acquired London-based crypto and payments company Ziglu.

Coinbase has finally released the beta version of its non-fungible token marketplace.

A new algorithmic stablecoin called USDD created by Tron founder Justin Sun is slated to be issued and circulated in May.

Venture capital firm Andreessen Horowitz has launched an academic lab focused on crypto and Web3 research.

Monero jumped in price after developers unveiled that a new software upgrade was in the pipeline.

Fidelity is building its crypto and metaverse ETF lineup. 

Debits 🐻 

A plan by Sam Bankman-Fried's FTX to overhaul the way crypto derivatives are traded and executed is rankling Wall Street execs like CME Group CEO Terry Duffy. 

Democratic lawmakers like Rep. Jared Huffman of California think more scrutiny should be given to the environmental impact of crypto mining. 

Ripple CEO Brad Garlinghouse is worried that "tribalism" around Bitcoin and other cryptos may be weighing down the entire market's potential.

The world's largest crypto exchange, Binance, came under fire from Twitter users after tweeting out a new emoji that bore a striking resemblance to a swastika.

Hacker(s) nabbed $182 million in crypto from DeFi project Beanstalk Farms.

Verified accounts on Twitter keep getting ensnared by hackers who are conducting massive phishing schemes under the guise of "raffles."

FOMO NO MO

Meet Chris. Dixon, that is. Maybe you've heard of him? Odds are, if you're a crypto entrepreneur or executive, you know Chris. He is after all perhaps the most important investor in Web3. But how well do you actually know him?

Over the last six weeks, my colleague Jessica Mathews, has been reporting out the story behind the "founder" of Andreessen Horowitz's crypto ambitions, as fellow a16z general partner Ali Yahya describes Dixon. It's a story that starts in Springfield, Ohio, where a young Dixon's "lifelong interest in computers" was born out of a letter from then Atari chief scientist Alan Kay, brings us to a takeout window at 12th and First in New York, and eventually leads us to California, where Dixon has become one of the foundational architects behind a16z's crypto ambitions, and, in a way, the building of the next stage of the Internet.

From the article:

The decisions he’s making now will help shape what the future of Web3 holds—which companies ultimately end up being its most important players, and what role that crypto plays in all our lives going forward. Dixon could likely end up renowned like some of his (at times controversial) predecessors: Arthur Rock, who shaped the origins of Silicon Valley; Eugene Kleiner and Don Valentine, who would define the dotcom boom; and Peter Thiel and Bill Gurley, who were the first to back some of the companies that now make up Big Tech. Alternatively, hindsight might make Dixon out to be a gambler—a promising investor who, once he went down the rabbit hole, put one too many eggs in the same basket.

BUBBLE-O-METER

"I could easily make $10 million."

The Wolf of Wall Street himself, Jordan Belfort, is all in on crypto, according to an article from The New York Times' David Yaffe-Bellany published last week. And while Belfort recognizes that he could "easily" walk away with millions from offers like NFT collections based on his Wolf status, the former Stratton Oakmont-ian says he's keeping away from the outrageous. 

THE LEDGER’S LATEST

If Elon Musk succeeds at buying Twitter, one thing's for sure: He's making a horrible investment by Shawn Tully 

Partnerships with brick-and-mortar stores critical to the future of Bitcoin, Morgan Stanley contends by Marco Quiroz-Gutierrez

Ethereum is trying to move to a 'proof-of-stake' model. If it does, a dominant DeFi platform presents a huge potential threat by Taylor Locke

Love in the metaverse: Everything you need to know about dating, sex, and marriage in a virtual world by Mahnoor Khan

Former employees allege overblown projections at quantum encryption startup Arqit by Jessica Mathews

Ireland wants to ban crypto contributions to political parties because of Russian election meddling, while Ukraine is getting millions in alternative currencies by Marco Quiroz-Gutierrez

'The NFT thingy is starting to burst,' warns guru whose 'Black Swan' theory foresaw 2007 financial crisis by Erin Prater

Carl Icahn challenges BlackRock and other big firms to join his pig fight against McDonald's by Tristan Bove

(Some of these stories require a subscription to access. Thank you for supporting our journalism.)

IF YOU DON'T KNOW, CRYPTO

RIP Memes and Mumbles. Welcome to The Ledger's newest section: If You Don't Know, Crypto. And yes, it's OK to sing that. I am right now, as I jam out to some Biggie. Based on our survey—I told you your voices would be heard—we're retiring our memes and mumbles section. In its place, If You Don't Know, Crypto will offer our crypto-curious readers a weekly breakdown of something in the weeds of the digital assets market. It'll be brief, but I can promise plenty of hyperlinks.

So, without further ado, let's talk stablecoins. From the highest level possible, stablecoins are exactly what the name implies: A cryptocurrency designed to be steady in the wild, gyrating digital asset markets. The appeal for investors is that stablecoins can be used as a safe haven in times of distress and a mechanism to move money onto and between crypto exchanges. How? Stablecoins—that is, collateralized ones and not the algorithmic kind—are usually pegged to a reserve asset like the U.S. dollar or gold through the purported backing of different assets that often includes a mix of Treasury bonds, cash, and more. (Tether, the world's largest stablecoin, claims to be 100% backed by cash and cash equivalents, but there are plenty of questions about that.) However, stablecoins are not without controversy. U.S. financial regulators and lawmakers have been expressing a need for clearer rules around the tokens for months now.