While headlines in 2023 for our sector have focused on regulatory and court battles, rug pulls and bad actors, many legitimate market initiatives evince a different story. One theme that we’ve covered over the past few weeks is the increased interest in crypto and blockchain-enabled tech among traditional institutional players – from the long queue for crypto-ETFs to increased professional manager appetite for allocations into crypto and digital asset investments. As we the final quarter begins, will awakened public capital markets emerge as a parallel theme?
According to EY’s Global IPO Trends Q3 2023 report published Wednesday, the public listing numbers suggest renewed momentum. And key factors, such as the valuation gap, are also improving – 61% of the year’s tech-sector IPOs through Q3 are now trading above their offer price, up from 40% for the same period last year.
Yet new listings in the crypto sector have remained frozen. Some high-profile players including Bullish, eToro and Circle scrapped their deSPAC plans earlier in the year in the face of ongoing intransigence for SEC approval. Historically, the majority (57%) of our index followed regular way IPOs, 24% took the SPAC route and TSX migrations to the NASDAQ (9%), reverse-merger (5%) and direct listing (5%) account for the rest. Each route, of course, must navigate the SEC. Year to date we have seen none do so successfully.
Will Q4 see a change? Historically it is the most active quarter, and the growing interaction with major institutional players should impart legitimacy and improve IPO-friendly fundamentals. But absent a thaw in SEC relations – which remain a public market gatekeeping in the US – increased kinetics for public crypto is unlikely.
