Kraken CEO Jesse Powell said a more traditional IPO makes more sense than a listing after Coinbase’s mixed results.
Powell attributes Coinbase’s mixed performance directly to the more volatile nature of a listing.
Earlier, Powell said that Kraken is considering going public in 2022 via a direct listing. But after seeing mixed results from rival crypto exchange Coinbase’s direct listing in April, Powell may back down on the idea.
The IPO of Coinbase serves as a precursor not only for crypto companies entering the public market, but also for the tools by which they do so. Coinbase, which was valued at $68.1 billion shortly after its direct listing, is now worth around $47 billion.
Kraken vs. IPO
Kraken CEO directly attributed most of Coinbase’s various results to its listing. With more traditional public offerings (IPOs), investment banks undertake the issuance of stocks that help consolidate its value. This lack of institutional support with direct listing makes a company’s stock price much more volatile in the market.
Additionally, traditional IPOs typically prevent existing shareholders from selling their shares for the first time. As a result, a smaller supply of shares goes on sale, easing selling pressure and keeping the price afloat.
Powell thinks these factors definitely come into play for Coinbase, so he’s heading for an IPO. He reiterated that the company hopes to go public in the second half of 2022.
Hopefully we will have more analyst coverage and we can record further growth for the industry.
Alongside an IPO, a market more familiar with cryptocurrencies will likely help the company exit.
Some may find it somewhat ironic that Powell considers a more typical IPO rather than a direct listing. Traditional financial institutions are often seen as “cursed” by crypto enthusiasts who advocate the decentralization of crypto. An IPO would require the direct involvement of Wall Street bankers, which decentralized finance advocates are trying to disrupt. Earlier, Coinbase CEO Brian Armstrong said that the direct listing process is more suited to crypto valuations.
However, the integration of more traditional finance into the decentralized crypto world seems inevitable. While many entrepreneurs in the crypto space feel increasingly empowered by traditional sources of finance, centralized companies fear missing out on innovation.
I think you may be seeing people facing this cognitive dissonance to become increasingly aware of the impending doom of the old financial system.