Crypto Frontline

Brad Garlinghouse, the CEO of Ripple Labs, the US-based company behind Ripple (XRP) had spread the idea of IPOs (Initial Public Offerings) for blockchain-based projects. During a two-hour interview with the Wall Street Journal in Davos, he reportedly talked on the matter, according to Asheesh Birla, Ripple’s Senior Vice President of Products:

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.

IPOs and not ICOs

As opposed to the Initial Coin Offerings (ICOs), IPOs will mean the crypto-related companies will get listed on the stock market. This could be an interesting new trend for the industry, but there are a few downsides that must be addressed before it can occur. In the case of XRP, we’re talking about a centralized ecosystem, that wants to mainly address the issue of cross-border payments.

The project is assumed to have high potential in the upcoming years, although critics say that there’s no need for a cryptocurrency in order to speed-up financial transactions around the world. At the time of writing, XRP is the third-biggest token by market capitalization, with all tokens in circulation estimated at $6.5 billion.

Conducting an IPO will require a lot of regulatory compliances, as opposed to the ICO industry, where regulation is still a great issue. Ripple is one of the companies that can make an IPO, but not the same can be said about all the other industry players.

What do we need for a crypto IPO trend?

Stock market investors are motivated to buy stakes in companies based on trust and financial performance. A stock is worth only as much as the profit it can generate and up until now, the number of blockchain-based startups that managed to develop efficient business models is very reduced.

During the World Economic Forum that took place in Davos in January, Ripple’s CEO had put the idea of crypto IPO into the discussion, with Ripple as one of the companies able to go public. There needs to be a greater degree of regulation in the ICO space and in the broad crypto industry before we’ll have many more blockchain companies able to go public. At the same time, it will be interesting to watch whether Ripple will eventually go public since that could mark a very important milestone.