Goldman, JPMorgan Eye Crypto Clients as IPO Prospects Brighten
The Takeaway
• JPMorgan, Goldman Sachs, Morgan Stanley bankers meet with crypto firms
• Fireblocks aims to be ready for any IPO by 2026, has $500 million in cash
• Crypto companies try to diversify revenue streams to prepare for potential IPOs
Investment bankers from top Wall Street firms including JPMorgan, Goldman Sachs and Morgan Stanley have been meeting with crypto executives, according to industry participants, hoping to get a foot in the door for lucrative initial public offerings that crypto companies might pursue after the election.
The new enthusiasm reflects optimism that improving market and regulatory conditions after a Donald Trump victory in the U.S. presidential election could clear a way for companies like Kraken, Fireblocks and Chainalysis to go public. Bankers’ interest in meetings is also a shift from much of the past two years, when many investment banks saw crypto companies as too risky to do business with, advisers say.
Many in the crypto industry expected that this week’s election could usher in a golden age for crypto, compared with President Joe Biden’s term. Trump has promised to make the U.S. the crypto capital of the world, vowing to remove U.S. Securities and Exchange Commission Chair Gary Gensler, a Biden nominee who spearheaded a crypto industry crackdown. Bitcoin hit record high Tuesday night, surpassing $75,000, as it became clear that Trump would win the election.
Over the last month, “some banks that were not really wanting to touch digital asset space because of the regulatory uncertainty are now much more open and interested in having those conversations,” said Eric Sibbitt, a partner in law firm Paul Hastings’ capital markets group who specializes in fintech and payments.
Advisers say a solid pipeline is developing of crypto companies gearing up to go public in 2025 or 2026, and the banks are positioning themselves to advise those companies should the regulatory environment clear up.
“There are a lot of fintech companies that are gearing up to go IPO, and crypto companies are in that mix too,” said Jigar Patel, global head of fintech and internet banking at Morgan Stanley.
Internal committees at banks would need to approve any new crypto clients, and there’s little indication of any imminent IPOs. But the shift underlines how Wall Street has increasingly seen the crypto industry as a potential source of deal fees, both from public debuts and from potential mergers and acquisitions, secondary share sales, debt issuance and other transactions.
Wall Street had lined up for big crypto clients during the crypto market boom of 2021. Coinbase went public via a direct listing that April, working with banks including Goldman Sachs, JPMorgan, Allen & Co. and Citigroup to orchestrate the debut. And in July 2021, stablecoin issuer Circle announced plans to go public via a special purpose acquisition company, with Goldman and Citi both working on the SPAC deal with Concord Acquisition Corp.
Circle’s SPAC deal never went through. A decline in crypto prices over the course of 2022 triggered collapses at crypto exchange FTX and other high-profile crypto firms. Citi resigned as an adviser on the Circle deal that May, and Goldman Sachs resigned in November 2022, both without providing a reason, according to a filing. Circle and Concord terminated the proposed deal in December 2022.
The crypto collapses also sparked a regulatory crackdown, including SEC lawsuits in 2023 alleging that Coinbase, Binance, and Kraken had been operating unregistered securities exchanges. Many banks had been worried about dangers including the reputational risks of advising crypto companies whose business regulators might deem illegal.
“A lot of banks pulled back in working with these companies just because it’s a lot of risk to undertake,” Patel said. “As the regulation becomes more clear, as there’s more guidance from the SEC and there’s more conviction around it, I think the tone will change.”
Goldman always evaluates clients on a case-by-case basis and has made no change to that stance with regard to crypto companies, according to a person familiar with the bank’s thinking.
JPMorgan declined to comment for this story.
Crypto companies that survived the 2022 meltdown have started to turn a corner over the past year as crypto markets have recovered, and have been holding more discussions with firms that could guide them to public markets.
“We are seeing discussions about people wanting to talk about potential IPOs, or in some cases, doing beauty contests for potential advisers, bankers or lawyers,” Sibbitt said.
IPO hopefuls include Circle, which announced in January 2024 that it had filed confidentially to go public. It’s not clear which advisers Circle worked with on that filing. Executives at crypto exchange Kraken, meanwhile, have long said the company aims to go public, and they announced last week that it had reached more than $1 billion in net revenue and had named a new chief financial officer.
Other companies focused on crypto market infrastructure or analytics, including Fireblocks, Chainalysis, FalconX, Anchorage, and NYDIG, could be public market candidates, said Elliot Chun, partner at crypto- and fintech-focused advisory firm Architect Partners. They are either already registered with regulators or focus on lower-risk parts of the crypto market, and they have emerged as the dominant firms in their respective niches.
“They are all category-leading infrastructure providers,” Chun said.
Stars Aligning
For a wave of crypto IPOs to kick off, however, a number of factors have to align.
Fireblocks CEO Michael Shaulov said he wants to make sure the company is ready for an IPO in 2026 if needed, but timing would depend on the regulatory landscape and other crypto companies going first and performing well. Fireblocks, which was valued at $8 billion in 2022, is well funded, with about $500 million in cash in the bank, Shaulov said.
And even if a more favorable regulatory environment materializes in the new administration, crypto debuts still depend on the state of the broader IPO market. Bankers generally expect IPOs to see an uptick in 2025 but to remain at below-average levels.
Crypto companies also face the added challenges of crypto’s boom-and-bust nature, and of convincing investors that their businesses can withstand down markets.
Many firms have been focusing on adding new, more stable revenue streams to address potential investor concerns. Crypto wallet provider Ledger, for example, has been trying to sell not only hardware but also software and services that generate recurring revenue.
“Crypto market movements still influence our business, which is why we don’t rush into the IPO market immediately, ” said Ledger CEO Pascal Gauthier. Ledger, which was valued at 1.3 billion euros in 2023, has no intention to immediately go public but will see whether the market offers an opportunity post-election, Gauthier said.
Some crypto companies are also waiting for the passage of federal legislation that could clear up regulatory uncertainty. Industry advisers and executives see Circle as a bellwether for other crypto firms with plans to go public, while Congress has proposed several draft versions of stablecoin bills that could materially affect the company’s business.
Kraken, meanwhile, is currently in the middle of litigation with securities regulators, the outcome of which could be too big a risk for potential investors to swallow. New SEC leadership could clear the way for regulatory settlements that would resolve those uncertainties.
Companies and their advisers likely want to have their regulatory paperwork teed up and be poised to move quickly once big uncertainties are resolved. “If a market window opens, but you are not ready because of where you are on the SEC registration process, that’s obviously not very helpful,” Paul Hastings’ Sibbitt said.
