At Davos Ripple CEO Brad Garlinghouse made headlines by predicting that not only would his company most likely have an IPO sometime in 2020, but that it would just be one of the many IPOs that are going to hit the crypto industry. In the wake of his comments, there has been talk of how feasible IPOs are for crypto companies. While the IPO structure would be something amenable to many companies in the space, with the regulatory situation being what it is, compliance could be an obstacle.
Coinciding with these developments, news broke last week of a new SEC proposal making the rounds that would potentially exempt fintech startups from some of the securities regulations currently in place. Many in the crypto space have reacted to the news with optimism, but others see it as possibly opening the doors to another ICO frenzy that would hurt the industry in the long run.
To get an insider’s read on both of these topics we spoke with Changelly cryptocurrency exchange CEO and crypto visionary Eric Benz.
IPO talks making ripples
To start things off we focused on the possibility of there being an IPO boom in the crypto industry. Benz is bullish on the prospects of it happening as he anticipates a future flourishing in this space that will see the technology get applied in ways we have yet to think of. He said, “This market is a completely new frontier in so many different ways and we are merely scratching the surface with what we are seeing with use cases. Blockchain technology has unlimited potential and we are sure to see some major breakthroughs in the coming years. I very much believe in the possibility of there being an IPO-boom similar to what we initially saw with ICO's but of course in a much more regulated and controlled manner. I’m excited to see what is to come from these incredible projects.”
Naturally, whenever IPOs come up so too does the regulatory situation. We asked Benz if the current regulatory framework was conducive to an IPO boom and what kind of projects would actually be able to pull it off. At the moment, according to Benz, there are only a handful of “very liquid projects” that are capable of pulling off a successful IPO. However, Benz thinks that as time passes and the industry solidifies itself, we are going to see more IPOs and the crypto space branching out into more regulated and traditional territory.
Concerning XRP specifically, Benz thinks that an IPO will benefit the company immensely: “I have personally known Brad for a few years now and his tenacity and vision has propelled Ripple labs into the powerhouse they are today. This is by far one of the most respected and longest-running crypto businesses to date and any potential IPO will catapult the currency (XRP) to reach completely new heights and cement Ripple Labs as one of the most important companies in the world.”
But the crypto-verse is not just composed of companies like Ripple. In fact, many in the space would consider Ripple to be an outlier, with the true heart of crypto lying in more privacy-centered projects. We talked to Benz about what — if anything — the IPO optimism would mean to companies on the other end of the spectrum, like Monero.
While Benz thinks that “no matter which way you look at a project like Monero, it will always challenge regulators but I think that there’s an opportunity even for privacy coins to have a place in this new ever-evolving crypto ‘regulated life ecosystem. What that would look like right now is hard to picture, but we are just getting started. I think, if the people involved are driven to make it happen, there’s no bar on what can be achieved in this space.”
SEC signals it’s ready to play ball
Benz then highlighted the recent SEC proposal as a possible onramp for companies like XMR in the future. As for whether or not the proposal will be accepted, it’s still far from clear. Benz’s take on it is this: “Adoption is something which takes place in many different verticals including regulatory as we have seen in recent months. With the innovative nature of blockchain technology, it is no surprise that the SEC is making noise that this could potentially become a reality and this is a very big step in the right direction. If the SEC wants to remain relevant then adapting its policies to fit more innovative technologies is going to be a very important requirement. This will not be an overnight process but in due course, we will see many similar announcements coming from regulatory bodies in the future.”
But what about the grifters? There’s been some concern voiced in the community that a move like this would open up doors for people with not the best intentions. We asked Benz if he thinks that this move would reinject harmful elements of the ICO boom back into the industry.
Benz is adamant that we, as a whole, have made progress since those days, but fraud is always a concern: “Whenever one window opens many will try and enter it with some, of course, being fraudulent, which unfortunately is part of the maturation process with industries like ours. As the ecosystem has matured so have investors so it is becoming even more difficult to raise financing on fraud tokens but it will happen again and again and it is the job of organizations like the SEC to develop innovative new measures to limit the risk investors are exposed to.”
Looking back on those heady ICO days, Benz characterizes the time as a necessary step in the evolution of the industry. Things have changed and for the better, even though we still see and will continue to see shitcoins here and there: “As with any period of innovation there will always be projects who fail to deliver on their potential or promises. The ICO boom was no different really than the dot com boom we witnessed a couple of decades earlier. As with any experience it usually leads to a maturation process both for the technology and the customer. Crypto tokens and blockchains are not exceptions and over the past decade they have gone through massive growth cycles, each time instilling more and more confidence in the investors which participate. We will still see shitcoin projects but how we handle them and educate others as a result of prior experience is really the only way to continue to achieve growth and adoption.”
However the cards fall with IPOs and SEC regulations, the consequences have the potential to really change the way things work in crypto. Be sure to check out our continuing coverage of the situation.