Web3 Companies are Riding the IPO Wave
Web3 companies are embarking on a wave of Initial Public Offerings (IPOs) as a key path to escape the challenges of token financing, build regulatory trust, and expand their sources of institutional funding, thereby achieving deep integration with traditional financial markets and ensuring long-term competitive positioning. This article originates from Tiger Research Reports and is reprinted by Block Beats.
(Background: Circle submits IPO application with a valuation of up to $5 billion. Why is Coinbase the hidden winner of USDC?)
(Background context: The “First Year of Crypto IPOs” — Amber Group lists on Nasdaq, with over 10 companies queueing for IPOs, including Kraken, Gemini, Circle…)
Summary Points
- Web3 companies view IPOs as a strategic tool for establishing a formal regulatory framework, earning the trust of institutional investors and regulators, while also achieving deep integration with traditional financial markets.
- Token financing models expose structural flaws such as price volatility, regulatory ambiguity, and liquidity management pressures, highlighting the necessity of shifting to IPOs.
- Centralized exchanges (Bithumb, Kraken), stablecoin issuers (Circle, Paxos), and Web3 solution providers (Chainalysis, Nansen) are expected to lead the IPO wave, expanding institutional capital channels and strengthening global competitiveness.
1. From Tokens to Stocks: The IPO Transition Trend in the Web3 Industry
The stablecoin issuer Circle has submitted an IPO application to the U.S. Securities and Exchange Commission (SEC), triggering widespread attention in the Web3 industry regarding the IPO route.
Web3 companies have traditionally favored token financing models: reaching retail investors directly via Initial Coin Offerings (ICO) and Initial DEX Offerings (IDO), and selling future token rights to institutional investors via Simple Agreements for Future Tokens (SAFT).
These models fueled early explosive growth in the Web3 industry, but token price volatility and regulatory uncertainty have continuously troubled institutional investors, severely hindering their ability to achieve investment returns from the token model.
Against this backdrop, IPOs have become an alternative. Through IPOs, Web3 companies can secure more stable, long-term financial support, reduce legal uncertainties through proactive compliance, establish standardized corporate valuation frameworks, and reach a broader investor base. This report delves into the core motivations behind Web3 companies transitioning from token models to IPOs and evaluates the impact and future prospects of this transformation on the industry ecosystem.
2. The Deep Logic Behind Web3 Companies Choosing IPOs
2.1 Regulatory Trust as a Strategic Asset
Web3 companies are positioning IPOs as a “regulatory compliance certification mark.” Just as food companies earn consumer trust through quality certifications, IPOs enable Web3 companies to clearly showcase their compliance efforts to the market. This strategy is particularly effective in trust-driven business areas such as stablecoin issuance and custodial services.
Circle has continued to push its IPO process to validate its strategic value. The company attempted a SPAC listing in 2021 without success but plans to attempt an IPO again in early 2025. Since 2018, Circle has built trust in its stablecoin by obtaining a BitLicense from New York State and regularly releasing reserve reports, but it received limited trust due to the lack of formal market validation.
Through an IPO, Circle can formally establish credibility through the SEC’s standardized disclosure framework, gaining “market entry passports” compared to Tether, facilitating cooperation with global financial institutions, and entering a broader traditional market.
Coinbase validates the strategic value of compliance through its IPO. The exchange insisted on strict legal compliance before its IPO and quickly expanded its offerings post-listing: establishing strategic partnerships with BlackRock, offering ETF custodial services, and connecting with over 150 government agencies. This development trajectory shows that institutional investors officially recognized Coinbase’s compliance efforts through its IPO, which has become a key competitive advantage in building trust.
2.2 Structural Issues with Token Financing
Token financing played a key role in the early development of the Web3 industry by providing fast and efficient funding channels. However, after issuing tokens, companies must contend with unique complexities: relying on centralized exchanges (CEX) to expand investor coverage, while exchanges employ opaque and subjective listing standards, creating major uncertainties; after listing, companies must provide direct liquidity or ensure market-making collaborations.
In contrast, the traditional IPO process follows standardized procedures and clear regulatory frameworks.
Token unlock events are often accompanied by significant price declines. Source: Keyrock
Price volatility presents another core issue. Large-scale token unlock events lead to severe market price fluctuations. Keyrock data shows that 90% of unlock events cause price drops, with team token unlocks typically triggering a 25% price crash.
This price collapse makes it difficult for institutional investors to achieve investment returns, reinforcing their negative perception of the token model.
Crypto VC financing has sharply declined: 2021-2025. Source: Decentralised.co
This trend is significantly altering the landscape of the crypto venture capital market. Decentralised.co data shows that global crypto venture capital dropped over 60% between 2022 and 2024. Singapore’s ABCDE Capital recently paused new project investments and fundraising, reflecting visible market changes.
Companies are struggling to effectively integrate token economic models with operational realities. Aethir and Jupiter have achieved notable revenue in the Web3 industry, but these commercial successes have seldom aligned with token prices, often obscuring business focus. Fireblocks and Chainalysis primarily offer centralized services rather than token-based products, making token issuance lack organic fit and clear necessity. Designing and validating token utility has become a major challenge, which not only distracts from existing business focus but also introduces additional regulatory and financial complexity, prompting Web3 companies to turn to IPOs for breakthroughs.
2.3 Expanding Investor Coverage
Global sovereign wealth funds manage assets exceeding $13 trillion. Source: globalswf.com
IPOs provide Web3 companies with the biggest advantage: access to large institutional capital that token financing cannot reach. Due to internal compliance policies, traditional financial institutions, pension funds, and mutual funds cannot directly invest in cryptocurrencies but can invest in publicly listed companies’ stocks on regulated securities markets.
Global sovereign wealth funds manage assets of around $13 trillion, revealing the potential funding pool that Web3 companies can access through IPOs.
Even in regions with strict crypto regulations, such as South Korea and Japan, IPOs can create effective indirect investment channels. South Korean institutional investors may not directly invest in Bitcoin ETFs but can indirectly participate in the crypto market through listed companies like Coinbase and MicroStrategy. Japanese investors can avoid high crypto transaction taxes by investing in Metaplanet stocks for efficient crypto asset investment opportunities. This expanded accessibility will encourage diverse investor participation, providing legal and stable investment tools within the regulatory framework.
2.4 Strategic Value as a Flexible Financing Tool
IPOs allow companies to effectively raise large-scale capital. Coinbase and Coincheck successfully raised funds via IPOs and implemented aggressive business diversification strategies: Coincheck used its Nasdaq listing funds to acquire Next Finance Tech; Coinbase enhanced its global competitiveness by acquiring FairX (a derivatives exchange), One River Digital (an asset management company), and BUX Europe (an EU market entry). Although the specific contributions of IPO funds to these acquisitions are undisclosed, they likely provided a crucial foundation for the expansion strategy.
IPOs also give companies the ability to use their stock as a payment method for mergers and acquisitions. Publicly listed companies can conduct mergers and acquisitions using stock, reducing reliance on cash or volatile crypto assets. This operation achieves efficient capital management and strategic cooperation development. After going public, companies can continuously utilize new stock issuance, convertible bonds, and rights issues as diverse capital market tools to achieve flexible financing aligned with their growth strategy.
3. Future Outlook for the Web3 IPO Market
In the coming years, IPO activities in the Web3 field will significantly increase, reflecting the accelerated institutionalization of Web3 companies and benefiting from successful cases such as Coinbase, which raised massive funds through public offerings and achieved global expansion. Centralized exchanges, custodial service providers, stablecoin issuers, and Web3 solution companies are expected to lead this IPO wave.
3.1 Centralized Exchanges and Custodial Service Providers
Exchanges like Bithumb, Bitkub, Kraken, and custodial service providers like BitGo are leading IPO candidates. These companies build competitive advantages through compliance infrastructure and asset security, and they need to go public to enhance institutional credibility and market strength. Their revenues are highly correlated with the crypto market cycle, and IPO funds will help them expand into new businesses for stable income.
3.2 Stablecoin Issuers
After Circle, compliant stablecoin issuers such as Paxos may follow the IPO route. The stablecoin market places high importance on reserve transparency and clear regulation, and an IPO can demonstrate a regulatory framework and establish market trust. With the continued evolution of global regulations such as the EU’s MiCA and the U.S. Stablecoin Act, IPOs will provide issuers with important strategic advantages.
3.3 Web3 Solution Providers
Web3 analytics companies like Chainalysis and Nansen are also key IPO candidates. These companies provide professional services to government and institutional clients and need to go public to enhance market credibility and consolidate their global leadership. IPO funds will be invested in technological upgrades, international expansion, and talent acquisition to build a sustainable development foundation.
4. Conclusion
The rise of IPOs in the Web3 industry marks a clear shift towards mainstream capital markets. Through IPOs, Web3 companies not only gain funding but also formalize regulatory compliance, attract institutional investors, and enhance global competitiveness. Amid the continued contraction of crypto venture capital, IPOs offer a stable and flexible financing alternative.
However, IPOs are not suitable for all Web3 companies. Even those opting for IPOs are unlikely to fully abandon token financing. While IPOs offer broader funding channels, stronger credibility, and easier global market access, they also require significant investments in compliance, internal controls, and public disclosures. Token models, on the other hand, support rapid early-stage financing and cultivate active community ecosystems.
Companies can strategically combine both models: exchanges can use IPOs to build institutional trust for global expansion, while leveraging tokens to enhance user participation and loyalty. Web3 companies need to carefully choose the optimal combination of IPOs and token issuance based on their business model, development stage, and market strategy.
