The crypto market had found an ally in President Donald Trump, whose pro-crypto policies sparked much excitement. But the administration's aggressive tariff plans are giving investors and crypto startups pause.
Several crypto and crypto-related companies were getting ready to go public, hoping to ride a wave of regulatory rollbacks and increasing public awareness of crypto. But the market slump has tempered that enthusiasm.
"There's a risk-off mood in markets, and that affects crypto," Yat Siu, chairman and co-founder of Animoca Brands, told Investor's Business Daily. Animoca Brands, a Hong Kong-based company that specializes in blockchain and web3 technology, says it is seriously pursuing an IPO.
President Trump's April announcement of tariffs on virtually every U.S. trading partner wiped out over $6 trillion in just two days and sent the Nasdaq into a bear market. Bitcoin was not spared from the bloodshed as prices plunged nearly 30% from all-time highs in January, according to Coindesk. The cryptocurrency, which is regarded as a proxy for the overall crypto industry's mood, tends to act like a speculative investment that's sensitive to risk.
Crypto Market: Who Wants To Go Public First?
Crypto companies have adopted a wait-and-see approach. An executive of a major blockchain company filing to go public says the hardest hit will be companies planning to go public within the next few months. The executive, who requested anonymity to discuss IPO plans, says a fast-moving market will likely improve within several months, and adds that their company is not changing its plans to debut in the fall.
Meanwhile, companies like eToro and Circle are at the forefront of those hoping to come to market, with both companies recently filing for an IPO. But the market downturn is dampening investor enthusiasm — and delaying public offerings, with eToro halting its IPO plans.
"Everyone wants to be second," Matthew Kennedy, senior IPO market strategist at Renaissance Capital, told IBD. "No one wants to take that initial hit to valuation because for the first company that goes forward, investors are going to want a substantial discount to publicly traded peers." Renaissance Capital is a provider of IPO research and IPO-focused ETFs.
"Valuation has been at the front and center for a lot of these private companies sitting on the sidelines," Kennedy said.
Crypto Market: Impact Of Downturn
The market downturn has clearly poured cold water on the crypto market excitement about IPOs.
"Look, there's uncertainty caused by all the actions of the Trump administration," Dan Tapiero, founder and CEO of 10T and 1RoundTable Partners, told IBD. Through his funds and investments, Tapiero has more than $1.5 billion invested in companies that focus on crypto and other decentralized technologies, including Animoca, Circle, Etoro, Figure, Gemini and Kraken.
"Businesses don't like uncertainty so we'll have a little bit of an indigestion period," Tapiero said. He doesn't expect long-term harm to market enthusiasm for market debuts, but says there could be reckoning coming in June or July.
Companies are counting on the Federal Reserve to help offset some of the market pain. "I think everyone's waiting to see what's happening with rate cuts," says Animoca's Yat Siu. Additionally, the unpredictable nature of Trump's tariff policy is contributing to a risk-off attitude on Wall Street. And this is having an impact on the timing of crypto IPOs.
Has The IPO Window Closed?
But in an April speech, Powell said the Fed will likely hold rates steady amid inflation worries and weaker-than-expected growth due to tariffs. Meanwhile, President Trump also signaled that no help is coming for markets wrestling with pricing in tariff risk. "I don't want anything to go down," Trump said in early April. "But sometimes you have to take medicine to fix something."
Experts say the market's mood can't be underestimated. "You might be accurate on your assessment of fundamentals, but if the market doesn't believe it, it doesn't matter," hedge fund manager and Roppel Report founder Jim Roppel told IBD's "Monthly Market Report" show. "The window (for IPOs) was looking like it was just about to open the floodgates — and now it's closed."
But Siu remains confident. "It's causing distress, but we'll get to a point where we'll get clarity," he said. "They'll figure out a way."
Boost From Regulation Rollback
The optimism is largely based on a new trend: U.S. regulators shifting to a more crypto-friendly posture under the Trump administration. "Clearly, it's the U.S. regulatory framework," said Siu.
The crypto market reeled following investigations centered on the view that cryptocurrencies should be considered securities and therefore subject to regulation by the Securities and Exchange Commission. But the Trump administration has either closed or dismissed these investigations.
In February, the Securities and Exchange Commission dismissed its lawsuit against Coinbase, in which the SEC had accused it of being an unregistered exchange. Investigations of other exchanges like Kraken and Gemini have also been dropped.
Less Crypto Scrutiny
Executives say the reduced scrutiny makes doing business in crypto exchanges and related decentralized technologies easier.
"I wouldn't say it's a rollback so much as it is a clarity of policy position and rules by which blockchain can participate in the market," Mike Cagney, co-founder and CEO of Figure Markets and co-founder of Figure, told IBD. Figure, with operations that include a crypto exchange and blockchain-based technology platforms, intends to go public this year.
The regulatory shift has even attracted overseas companies to consider market debuts in the U.S. Animoca said that while no final decision has been made, it is now considering a U.S. IPO, a significant departure from its stance a half year ago when the company was considering listing in Hong Kong or in the Middle East.
Crypto Market Enthusiasm
Tapiero says crypto exchanges were expected to lead the IPO wave largely because their business models were fairly easy to understand for average investors.
"They're making the most amount of money," he said. "They're the most mature businesses. They have moats, they have history, and the world knows how to value exchanges, whether they're doing crypto or something else."
Tapiero expects three to five companies to come to market over the next 12 months.
The crypto industry also hopes formal IPOs will give the crypto industry more legitimacy through investor scrutiny and financial discipline, which are key to wider acceptance.
"The industry tends to shoot itself in the foot every so often," Tapiero said, referring to major scandals like the implosion of FTX. "Going through the process of being listed, there's a legitimization process."
Unlocking A New Wave Of Crypto IPOs
Renaissance's Kennedy says that Circle, most likely to move forward with an IPO, could unlock the floodgates by coming to market first.
"Right now, they might be between a rock and a hard place," he said. "The wind had really been at their back for an IPO after a great year in 2024, so it had these tailwinds. We're about to see new stablecoin regulation as well, which the company had been pushing for."
However, high interest rates, which have an outsize effect on Circle's business model, are likely to delay plans. "A worst-case scenario for this company would be for crypto volumes to slow and for interest rates to come down, so there is a risk they could wait too long," Kennedy said.
Circle did not respond to a request for comment.
Figure's Mike Cagney also sees a first-mover advantage. "I actually think it's good to go early because you're defining the narrative of what a successful company is," he said. Diverse opportunity can also appeal to investors. "There hasn't been a real opportunity to invest in Web3 and blockchain technology companies," he added.
Crypto Market: Still Optimistic About IPOs
The pace of market debuts is also set to accelerate. "Within the next two years, we'll see eight to 10 companies," Tapiero said. "And then there are companies we're not invested in that will also come to market."
Pushing U.S. listings is its attractiveness as a premier capital market. "The Trump administration has clearly stated they want the U.S. to become the global crypto and blockchain hub for the world," said Tapiero. "The easiest, quickest way the traditional world can have that happen, and for the Trump administration to have that desire actualized, is for 20 to 40 of the most profitable crypto companies in the world, not just American companies, to list on U.S. exchanges."
"Equity as a form of ownership is not going away," said Tapiero.
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