Kraken, the US-based exchange, is considering whether to use an IPO or direct listing to go public. Kraken CEO Jesse Powell said that following the performance of Coinbase, they were considering other options to go public next year. If things go as predicted, the company will be the second crypto exchange to go public in the US.
Direct Listing for Kraken Considers IPO Vs. Going Public
Kraken, one of the major US-based crypto exchanges, has doubts about going public. Its CEO, Jesse Powell, indicated earlier this year that they would use a direct listing approach to launch next year. This stance mimics that of Coinbase. But now he is not so sure about it, due to the weak performance Coinbase has been up to now. Powell declared In an interview with Fortune:
An IPO looks a bit more attractive in light of the performance of direct listings. I would say we are looking at this more seriously and are now taking advantage of seeing how the direct public offering for Coinbase played out.
This statement may sound strange to some, as the direct listing process allows for a more involved price discovery period. This would be in line with how cryptocurrency assets also garner their prices. An initial public offering would involve obtaining input from underwriters that would ultimately help determine the initial price of the stock.
However, Powell’s opinion now would mean that the company is ready for the financial advice of these underwriters. Powell stressed that these two environments (Wall Street and the crypto market) were very different. He was very cautious and did not give any definite answer about how the company would eventually go public. He implied that Kraken would have more experience and resources next year:
More analyst coverage, and a track record of growth for the industry that people feel they can trust.
shaken not stirred
Cryptocurrency companies are now affiliated with traditional markets and even with banks, which now offer some complementary products in the space. But this outspoken fellowship didn’t stop Powell from criticizing the legacy system and its implications. Powell emphasized:
[Wall Street has] There is much to be lost from the success of this space. I think you may be seeing people facing this cognitive dissonance becoming increasingly aware of the impending doom of the legacy financial system.
Despite this, the trend suggests that more crypto exchanges will test the public markets in the coming years. Kraken will be the second exchange after Coinbase to go public in the US markets. But other crypto-related companies have already filed IPOs. Canaan, an ASIC mining company, filed $400 million IPO on Nasdaq in 2019.
What do you think about Kraken’s skepticism regarding direct listing? Tell us in the comments section below.
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