Last week our theme was “Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility.”
Our theme for this week is “Silvergate Bank Plans to go Public.“
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Twenty-four years go, Netscape released the first free web browser, giving consumers an easy way to access the Internet. But, Netscape did more than just revolutionize our Internet experience, it also revolutionized the model on how to build disruptive companies. Netscape’s IPO kicked off for the Internet era.
While cryptocurrencies prices crashed further yesterday, with Bitcoin reaching a new low this year around $3,500, several major crypto companies are attempting public offerings in hopes of raising billions of dollars to secure market share in the highly competitive cryptocurrency industry.
One of them is Silvergate Bank plans to raise $50 million through the Initial Public Offering. Silvergate provides financial infrastructure solutions and services to clients in the digital currency industry. Silvergate Bank has more than 480 digital currency customers, with 145 in the pipeline, and it estimates the financial services market for digital currency companies, to be $30-$40 billion. Silvergate Bank would be listed in the New York Stock Exchange (NYSE) under the ticker “SI”.
Bitmain, Canaan, and Ebang, the three biggest players in the crypto mining industry, are racing to be the first publicly offered cryptocurrency mining company in hopes of securing retail investors’ loyalty by being the first one offered on the public markets.
In August 2018, mining firm Argo Blockchain PLC, which offers consumers the ability to mine four cryptocurrencies (BTG, ETH, ETC and Zcash), became the first crypto company to join the London Stock Exchange (LSE), raising around $32 million on a valuation of $61 million. In Canada, HIVE Blockchain, with a market capitalization of $106 million today, when it debuted in September 2017, its stock price soared by 220%, from $0.30 to $0.97.
While we’ve all heard rumors in the past, about an initial public offering by Coinbase, the company announced that it won’t IPO any time soon. When Coinbase does decide to pursue an IPO in the U.S., it would give investors a way to gain exposure to a regulated crypto security.
The time is less than ideal for a public debut with crypto prices low, yet there is a clear trend unfolding among crypto companies to raise funds in the equity markets.
Its possible that the rise of crypto-fueled IPOs could shift the tide, as more exposure for the blockchain and leading crypto companies can benefit the industry. The decision by several crypto companies to pursue an IPO could add legitimacy to the industry. Public offerings by crypto companies could serve as a major step toward the mainstream adoption for the entire industry, enabling a large number of investors to get exposure to crypto-related projects on the public market.
Since ICOs became popular in 2017, there have been constant reminders of the financial risks involved for participants. Unlike ICOs, initial public offerings place regulatory scrutiny on companies and require them to meet certain transparency standards. Initial public offerings by crypto companies show an understanding by these organizations for a regulatory and legal framework, to attract long-term investment, legitimize their businesses, and accelerate growth.
When compared to last year, the last eleven months have been filled with so many positive developments. The first crypto IPO will be very important. The cryptocurrency market will bounce back and its first IPO could be the spark. It will serve as a very clear indication of what will follow and how the crypto industry will evolve.
Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.