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Crypto Goes IPO — Ripple Could Lead the Blockchain Industry's Charge

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  • Crypto Goes IPO — Ripple Could Lead the Blockchain Industry's Charge

    2020 could be the year that crypto companies step forward and take the plunge into going public. As the biggest players in the industry cautiously watch for opportunities to gain regulatory approval, Ripple CEO Brad Garlinghouse used the prestigious Davos World Economic Forum summit to announce that the firm was considering an initial public offering later on in the year.

    Crypto companies looking to go public face a paradox. Financial firms often have to meet stringent regulatory standards. Failing to adequately reassure regulators can result in companies being frozen out of lucrative markets or forced to shut down altogether. But simply leaping to the other end of the spectrum and attempting as much integration with the financial mainstream as possible is not as easy as it sounds. Many investors and mainstream financial companies are reluctant to take on the high level of risk associated with crypto or don’t understand digital currencies at all.

    Nonetheless, there are notable exceptions. Many of the world’s financial titans are experimenting both with blockchain technology and cryptocurrencies. A global race is on to develop central bank digital currencies. The world’s biggest tech companies are also working on ambitious stablecoin schemes that could change the world of payments as we know it. The ideas are there, but companies are struggling to get off the ground.

    Not even the titans of the industry have been able to go public. Bitmain, once thought as practically untouchable with a self-valuation of over $1 billion, had several failed attempts at an IPO before succumbing to vicious in-fighting between the two founders.

    But it can be done. Pro-crypto Silvergate Bank launched on the New York Stock Exchange on Nov. 7. Canaan, long considered the underdog in the battle for top spot with its Chinese mining rival Bitmain, limped across the finish line in late November last year. With these companies leading the charge, Ripple is clearly not far behind.

    Ripple CEO predicts more IPOs in 2020

    Davos is widely considered one of the most important gatherings of the world’s financial and political elite. Criticized by British Prime Minister Boris Johnson as a place where billionaires “quaff champagne,” the international summit attracts decision-makers from all four corners of the globe.

    In a talk at the World Economic Forum sponsored by Ripple, Garlinghouse opined that IPOs will be more prevalent in both the crypto and blockchain space in the coming year. More importantly, the CEO also strongly hinted that Ripple itself would be one such company daring to go public in 2020:

    “In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company.”

    Founded in 2012, Ripple has since grown into a crypto heavyweight. Regardless of how the cryptocurrency XRP has fared, the company eked out its existence prior to the pre-boom years and survived 2018’s so-called “crypto winter.” While the timing of Garlinghouse’s comments has piqued interest from analysts, the markets have not moved as much as some had anticipated. Bethel Loh, macro strategist at ThinkMarkets, explained to Cointelegraph that this was not altogether that surprising:

    “Price action was largely unimpressed by the news, given this wasn’t the first time Garlinghouse had hinted at a potential IPO. While there was a bit of chop, it was nothing out of the ordinary in terms of Ripple volatility.”

    But why now? All tentative launch proposals must navigate the treacherous crypto markets, and Ripple’s potential IPO is no different. Elias Simos, senior analyst at Decentral Park Capital, told Cointelegraph that Ripple is likely anticipating an improvement of market conditions, in which it forecasts increased demand for XRP, along with improved company equity value:

    “We are at the early innings of a new bull market where at the same time last year, we had just concluded a brutal bear market. The perceptions that come with each phase of the cycle favor the current condition more. A bull market also means more volume and, with it, possibly more demand for the XRP token — and possibly a boost in the equity value of the co. After all, a bunch of Ripple’s revenues comes from what they call ‘programmatic sales’ of XRP, which is effectively selling the XRP token to crypto exchanges.”

    But Ripple’s routine sell-offs are not the only source of funding. Throughout the course of the company’s existence, it has attracted some powerful backers. Andreessen Horowitz, Peter Thiel, Lightspeed Venture Partners and Google Ventures all invested in the first two years.

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