By Holger Arians, CEO of Banxa
According to Crypto Twitter, the next “bull run” for the crypto industry is always just around the corner. But in recent weeks, we have seen in earnest some encouraging signs that a new era of maturity could be on the web3 horizon. From spot Bitcoin ETF applications to policy efforts by legislators and regulators across the globe, a number of signs for cautious optimism have emerged.
Publicly traded crypto companies are likely to play a significant role in this next chapter of the web3 journey. Being a public company comes with its rewards and challenges, especially when navigating the complex landscape of crypto in the realm of public markets. Public crypto companies are nothing short of trailblazers, inviting intense scrutiny in order to move the industry forward. Coinbase, Marathon Digital Holdings, and Block are just a few of the organizations that have taken on these responsibilities as they drive the industry further toward maturity and mainstream adoption.
The Challenges of Going Public
One of the major challenges faced by publicly-traded crypto companies is the ever-changing and sometimes opaque regulatory landscape. While the crypto industry is ever so gradually becoming more recognized and regulated, the lack of consistent guidelines poses significant hurdles. In the United States, for instance, recent regulatory actions against industry giants like Coinbase have left companies considering offshore options. Publicly traded crypto companies understandably feel the full weight of every development on crypto regulations.
Some of the biggest challenges make for the smallest of headlines. With dry topics like indefinite-lived intangible assets or impairment calculation methods, minutia can loom large. Simply put, the rules of accounting for crypto companies have no clear standard. This is no one’s fault. Regulators, standards bodies, subject matter experts, and companies are all working fervently to get crypto accounting caught up with crypto itself.
All this is to say: being a publicly traded crypto company is not easy.
Why It’s Worth It
And yet, the contributions made by publicly traded crypto companies should not be overlooked. Building understanding, familiarity, and interest among capital markets audiences could pay future dividends for the entire web3 industry.
On an individual company level, public markets provide crypto businesses with access to a larger pool of investors and extensive sources of capital, as opposed to relying on venture capital dollars or fraught acronyms like ICOs and TGEs. In the process, the investing public gains exposure to investment opportunities in crypto. Opportunities that, crucially, have been fully vetted by regulators and are under constant assessment by the immense scrutiny of the global public marketplace.
Operating as a publicly traded company requires adherence to rigorous regulatory and compliance standards. This commitment to transparency and accountability lends credibility and trust to the company and the broader crypto industry. These are some of the core virtues of the crypto movements – transparency, accountability. Furthermore, access to crypto investments in the public markets means that anyone can access these potentially transformative opportunities, rather than limit access to the ultra-wealthy private investors and market-makers . This is another core virtue of crypto – openness.
Pursuing the route of becoming a public company is by no means the only path forward. Private enterprise has been critical for the rise of crypto, and will continue to be. Everyone has a role to play. For publicly traded companies involved in crypto, from the crypto-native to the crypto-curious and everything in between, our responsibility is to play a part in shaping the new rules and contours of public markets to make room for the crypto movement. This can only be achieved in close collaboration and dialogue between regulators, public exchanges, accounting bodies, auditors, and the industry.
