This article was compiled and organized by BlockWeeks
Bitcoin is the biggest winner of this round of the U.S. election so far. Since November 5, this oldest and largest cryptocurrency in global history has risen 40%, and there is ample reason to believe the rally is not over. The "red wave" really gave the "orange coin" a boost.
Other crypto assets are likewise expected to benefit. Investors are anticipating a shift in the SEC's attitude toward digital assets, and many have already written that loosening or even overturning the SEC's approach of classifying crypto assets as securities would provide support for the crypto market and participants on all sides.
But what is less discussed is what the United States' new attitude toward digital assets may bring to the public markets. Since Coinbase listed on U.S. stocks through a direct listing in 2021, the only ones that have truly succeeded in opening the door to the public markets have been Bitcoin miners and a handful of small SPACs. Current SEC Chairman Gary Gensler was confirmed on April 17, 2021, only four days after Coinbase's direct listing; since then, the public markets have been essentially closed to crypto companies. But all of this is about to change—the public markets are about to get a taste of crypto.
Signs of this shift have already appeared in the past few weeks. Japanese crypto exchange CoinCheck announced that it has been approved to list in the United States through a SPAC. This will be the first crypto exchange to gain public market status in the United States since Coinbase, but it will certainly not be the last. Shareholders of the SPAC—Thunder Bridge IV (ticker THCP)—will vote on the merger by Wednesday, December 5, and the deal is expected to close around December 10.
At present, the investable crypto stock landscape in the United States mainly consists of Coinbase, Bitcoin miners, balance-sheet coin-holding companies (such as MicroStrategy), and a group of crypto-related fintech companies such as PayPal and Robinhood. But expected changes in SEC leadership and regulatory stance may ultimately open the public markets to crypto companies in a substantive way, thereby bringing about a major expansion of the crypto stock landscape.
Once exchanges, brokers, data companies, infrastructure providers, and others are included in this landscape, both venture capital and public market investors will benefit. According to statistics in the article, since 2018, at least 300 startups have completed financings of $50 million or more, of which more than 50 raised $100 million or more. Venture capital may finally be able to achieve exits, thereby helping to revive the venture financing environment that has remained sluggish for the past two years; at the same time, public market investors will also gain richer tools to bet on this growth track.
The broadening of the listing channel will also revitalize the domestic U.S. crypto entrepreneurial environment. The current SEC stance has prompted venture capital to focus more on structurally complex token-type deals rather than traditional businesses, which may harm the entire crypto ecosystem. Some equity-based startups, especially exchanges and brokers that directly handle digital assets, have mostly moved overseas. But changes in the regulatory environment combined with more accessible public markets may re-energize startup activity in the United States, bringing more domestic jobs and capital formation.
Bitcoin and crypto are not illegal in the United States, but over the past four years, banking and market regulators have been working hard to suppress their growth, and even tried to shut them down completely. Jurisdictions such as the United Kingdom, Europe, the Middle East, Hong Kong, and Singapore have taken advantage of the United States' restrictive posture to attract businesses away from the United States through clear regulatory rules—but this situation is about to change.
The market is anticipating a major shift in the United States that will benefit multiple sub-sectors such as stablecoins, token issuance rules, taxation, and compliance reporting. But don't forget the public markets. For U.S. digital assets, this is a new dawn, and the public markets are likely to join the party in earnest.
