{"id":46934,"date":"2021-07-30T07:00:00","date_gmt":"2021-07-30T04:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=46934"},"modified":"2025-09-01T18:52:40","modified_gmt":"2025-09-01T15:52:40","slug":"from-liquidity-on-the-exchange-to-the-mainstream-how-much-does-it-cost-to-build-a-crypto-ipo","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/from-liquidity-on-the-exchange-to-the-mainstream-how-much-does-it-cost-to-build-a-crypto-ipo\/","title":{"rendered":"From liquidity on the exchange to the mainstream: how much does it cost to build a crypto-IPO"},"content":{"rendered":"<p>There is particular interest among many players in the cryptocurrency industry \u2014 both newcomers and veterans \u2014 in tapping the buoyant stock market, spurred by the successful <a href=\"https:\/\/u1f987.com\/en\/news\/coinbase-shares-begin-trading-on-nasdaq-market-capitalisation-tops-100bn\">experience of Coinbase<\/a>.<\/p>\n<p>In a hypothetical ranking of companies stuck at the starting gate, heavyweight industry players and little-known dark horses appear. Among the contenders for exchange tickers are trading platforms and alternative payment systems, miners and equipment manufacturers for coin mining, crypto-lending companies and blockchain startups.<\/p>\n<p>Among them <a href=\"https:\/\/u1f987.com\/en\/news\/kraken-rethinks-ipo-stance-after-coinbase-debut\">Kraken<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/bakkt-to-go-public-via-spac-merger-valued-at-about-2-1-billion\">Bakkt<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/blockfi-to-close-investment-round-and-push-ahead-with-ipo-amid-regulatory-pressure\">BlockFi<\/a> and <a href=\"https:\/\/www.coindesk.com\/crypto-exchange-apifiny-hires-new-president-inches-towards-public-listing\">Apifiny<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/circle-to-go-public-via-spac-merger-valued-at-4-5-billion\">Circle<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/stronghold-digital-mining-to-raise-105-million-in-nasdaq-ipo\">Stronghold Digital Mining<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/block-one-backed-bitcoin-exchange-to-raise-75-million-from-softbank\">Bullish<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/us-mining-company-aims-to-go-public-at-a-2-billion-valuation\">Bitfury<\/a>&#8216;s subsidiary, <a href=\"https:\/\/u1f987.com\/en\/news\/chia-founders-raise-61-million-and-plan-ipo\">Chia Network<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/indonesian-regulated-crypto-exchange-tokocrypto-plans-ipo\">TokoCrypto<\/a>.<\/p>\n<p>In pursuit of the coveted goal, any means are good: a transparent direct listing, a noisy IPO, a canny SPAC, and even exotic &#8216;cocktails&#8217; based on several standard options.<\/p>\n<h2 class=\"wp-block-heading\">Five benefits of going public<\/h2>\n<p>The most sought-after and understandable path for companies and future shareholders remains the respectable IPO path. The main objective of the primary offering is obvious \u2014 to attract investment for the development of an existing operation or diversification of the business. The process is transparent \u2014 a private firm transforms into a public company traded on an exchange, where anyone through a broker may buy a portion of its securities.<\/p>\n<p>In the life cycle of a company, the moment of going public is considered a milestone, for obtaining a stock ticker promises (at least in theory) benefits previously unavailable:<\/p>\n<ul class=\"wp-block-list\">\n<li>Solid investments. IPO is an excellent way to attract millions on legal grounds and under favorable conditions. The funds raised through the IPO are directed toward upgrading the business, entering new markets, expanding the range of offerings, and pursuing acquisitions of rising but already formidable rivals.<\/li>\n<li>Legitimisation and entry into the top tier of business. This is especially important for most crypto companies. Going public is widely viewed by potential holders as legitimising a promising enterprise. Previously, investment in its capital could be made only through dubious channels, and investing was associated with an unacceptably high degree of risk. Now it is one of many &#8216;white&#8217; firms of the first tier of modern business.<\/li>\n<li>Reputational bonuses. This is hard to overstate. A new player on the equity market begins public activity with a clean slate under the auspices of a reputable exchange. From now on all moves of the public company will be under the vigilant eye of regulators, and financial reporting will become transparent and controllable, boosting both reputation and investment attractiveness.<\/li>\n<li>A clear competitive edge. The presence of a ticker provides a solid lead over rivals. And the ability to offer publicly traded shares to employees is an excellent tool to persuade top specialists, previously employed by rivals, to switch sides. And, of course, listed securities traditionally serve as excellent collateral for any bank loan.<\/li>\n<\/ul>\n<p>A powerful publicity push. Any IPO attracts heightened media attention, treating the upcoming event as a major news hook, with interest from experts and potential shareholders. A well-conceived roadshow ensures strong public-relations reach on an international scale.<\/p>\n<p>Naturally, all this comes at a price, and the costs are no small matter. According to KPMG \u2014 a member of the Big Four \u2014 total costs <a href=\"https:\/\/assets.kpmg\/content\/dam\/kpmg\/pdf\/2015\/06\/KPMG-A-Guide-to-Going-Public-Interactive.pdf\">col\u00adlectively fluctuate from 7% to 10%<\/a> of the funds raised, and for crypto companies the rates can be higher.<\/p>\n<p>But the payoff is clear, as the impressive statistics show. From 1 January to 10 May 2021, 670 IPOs worldwide raised $140.3 billion \u2014 four times as much as in the previous year \u2014 Forbes citing Refinitiv.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/wkr7vmXh0armD3Mh5-AAZHFaFwwuLNhDS1EmbJ3dSluLIVt4nxUFFfk1qTk_aOMU4qo0gDuewxFw7_dyigtfeTnDy-2uyJn6d6hDFLob5NIoQ8g_wWHU7vD9qiq-vyjHYiQwDwI3\" alt=\"\u0417\u0430 \u043b\u0438\u043a\u0432\u0438\u0434\u043d\u043e\u0441\u0442\u044c\u044e \u043d\u0430 \u0431\u0438\u0440\u0436\u0443 \u0438\u043b\u0438 \u0438\u0437 \u0430\u043d\u0434\u0435\u0433\u0440\u0430\u0443\u043d\u0434\u0430 \u0432 \u043c\u0435\u0439\u043d\u0441\u0442\u0440\u0438\u043c: \u0441\u043a\u043e\u043b\u044c\u043a\u043e \u0441\u0442\u043e\u0438\u0442 \u043a\u0440\u0438\u043f\u0442\u043e-IPO \u043f\u043e\u0441\u0442\u0440\u043e\u0438\u0442\u044c\"\/><figcaption>Five months in 2021 proved a two-decade record \u2014 in the number of IPOs and the amount raised. Data: Refinitiv\/Forbes.<\/figcaption><\/figure>\n<\/div>\n<h2 class=\"wp-block-heading\">How much does it cost to build a crypto-IPO<\/h2>\n<p>The cost structure for taking a company to the stock market looks like this: <\/p>\n<ul class=\"wp-block-list\">\n<li>IPO underwriting commissions;<\/li>\n<li>costs of legal support for the process;<\/li>\n<li>fees for auditors, accountants, and financial advisers;<\/li>\n<li>SEC registration costs;<\/li>\n<li>FINRA registration fees;<\/li>\n<li>exchange listing fees;<\/li>\n<li>other expenses.<\/li>\n<\/ul>\n<p>The most expensive part is the work of underwriters \u2014 investment banks underwriting the share issue. Commissions range from 3.5% to 7%,<a href=\"https:\/\/www.pwc.com\/us\/en\/services\/deals\/library\/cost-of-an-ipo.html\"> according to PwC<\/a>, after analysing the financial statements of 829 companies that completed IPOs.<\/p>\n<p>In percentage terms, going public is costlier for startups valued at under $100 million. The minimum fee applies only to firms valued at more than $1 billion. This is why many players in the crypto space are not rushing to IPO, but concentrating on successive rounds of financing, steadily driving up valuations.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/pfx-iMJT48aj1ZXk9KJssfcHJxVzXVts4CDWKqHj803IUCKVs7gj1B9A7sdI316-e3WUya809vA85E7Ws3R_bpi_N5-n5WGA0EUFnCSLx4G2TkG-yy8by0ShInauTI6f1HfwWsp1\" alt=\"\u0417\u0430 \u043b\u0438\u043a\u0432\u0438\u0434\u043d\u043e\u0441\u0442\u044c\u044e \u043d\u0430 \u0431\u0438\u0440\u0436\u0443 \u0438\u043b\u0438 \u0438\u0437 \u0430\u043d\u0434\u0435\u0433\u0440\u0430\u0443\u043d\u0434\u0430 \u0432 \u043c\u0435\u0439\u043d\u0441\u0442\u0440\u0438\u043c: \u0441\u043a\u043e\u043b\u044c\u043a\u043e \u0441\u0442\u043e\u0438\u0442 \u043a\u0440\u0438\u043f\u0442\u043e-IPO \u043f\u043e\u0441\u0442\u0440\u043e\u0438\u0442\u044c\"\/><figcaption>The higher the valuation, the lower the fee: IPO costs (underwriter services only) are 3.5%\u20137.0% of the amount raised. Data: PwC.<\/figcaption><\/figure>\n<\/div>\n<p>Legal and auditing costs are represented by payments for audits, filing various registration forms (notably the S-1), communications between lawyers and financial advisers with the SEC and other regulatory bodies, and for comprehensive legal support. It is not possible to estimate precisely, but the figure runs into tens of thousands of dollars.<\/p>\n<p>But SEC registration fees are easy to calculate. The rule is simple: for every $1m of shares offered in an IPO, pay $129.80. The rate is periodically adjusted \u2014 upward.<\/p>\n<p>For FINRA \u2014 the non-profit body that develops rules for brokers and monitors their compliance \u2014 one must contribute $500 plus 0.015% of the value of the proposed issue. The total cannot exceed $225,500.<\/p>\n<p>Breaches in the budget are hammered out by the listing fees of the major exchanges (NYSE and NASDAQ). The initial entry fee \u2014 from $50,000 to $295,000 \u2014 is paid once and depends on the number of offered securities. There is also an annual listing fee \u2014 from $43,000 to $159,000.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/6D30lIFBfr9fyAQ0Dy42cjBsJixjFFRR4mrMUbvb_c0beLU916rqsDVITmkfxHOX4GFmOZp9ACumKk3TkJx2EmzdEXg9enmQuRISGbhWqr14dc2z7mQcVjqfb5oMB0YKAdSf4tSQ\" alt=\"\u0417\u0430 \u043b\u0438\u043a\u0432\u0438\u0434\u043d\u043e\u0441\u0442\u044c\u044e \u043d\u0430 \u0431\u0438\u0440\u0436\u0443 \u0438\u043b\u0438 \u0438\u0437 \u0430\u043d\u0434\u0435\u0433\u0440\u0430\u0443\u043d\u0434\u0430 \u0432 \u043c\u0435\u0439\u043d\u0441\u0442\u0440\u0438\u043c: \u0441\u043a\u043e\u043b\u044c\u043a\u043e \u0441\u0442\u043e\u0438\u0442 \u043a\u0440\u0438\u043f\u0442\u043e-IPO \u043f\u043e\u0441\u0442\u0440\u043e\u0438\u0442\u044c\"\/><figcaption>The expensive privilege: the right to list costs from $50,000 to $259,000 upfront plus from $43,000 to $159,000 per year. Data: PwC.<\/figcaption><\/figure>\n<\/div>\n<p>Costs depend not only on valuation and scale of expectations, but also on the sector to which the company belongs. Participants in the cryptocurrency industry are classified under the financial services segment, where costs are particularly high.<\/p>\n<p>For a company with annual revenue up to $100 million, intending to sell $99 million worth of stock through the IPO, the process costs on average between $2 million and $16.5 million.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/4P_gu_0ZHqjWT0kN4dw_GTIFRCUqCkI25_XbKIMtNKfnr54ulDUz5pv8Z7SHlBRL7gkPDl9ZnqNEAiP7zjzx45qtpgkZB7K1oYrAecCyvR8h_XxNvArFe9om-cNx9sJ8B7Gc40c6\" alt=\"\u0417\u0430 \u043b\u0438\u043a\u0432\u0438\u0434\u043d\u043e\u0441\u0442\u044c\u044e \u043d\u0430 \u0431\u0438\u0440\u0436\u0443 \u0438\u043b\u0438 \u0438\u0437 \u0430\u043d\u0434\u0435\u0433\u0440\u0430\u0443\u043d\u0434\u0430 \u0432 \u043c\u0435\u0439\u043d\u0441\u0442\u0440\u0438\u043c: \u0441\u043a\u043e\u043b\u044c\u043a\u043e \u0441\u0442\u043e\u0438\u0442 \u043a\u0440\u0438\u043f\u0442\u043e-IPO \u043f\u043e\u0441\u0442\u0440\u043e\u0438\u0442\u044c\"\/><figcaption>From $2 million to $16.5 million \u2014 not every &#8216;child&#8217; can afford an IPO. Data: PwC.<\/figcaption><\/figure>\n<\/div>\n<p>\u201cUnicorns\u201d with annual revenues above $1 billion, seeking to raise the same amount through an IPO, would theoretically have to shell out $44 million-$171.3 million.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/PVcTvFpQsRQD4BqgxV0D1eE9ZsjmTnQAPZPI0coetEtBEa8NZQ16v_orUj3mupMt7Hf3MJysN4VH4MM7rY39Qc4d9swNS4hBmU_-TcNQWylzYEFYUZZRsnioZtJJtPQv8th7XmAE\" alt=\"\u0417\u0430 \u043b\u0438\u043a\u0432\u0438\u0434\u043d\u043e\u0441\u0442\u044c\u044e \u043d\u0430 \u0431\u0438\u0440\u0436\u0443 \u0438\u043b\u0438 \u0438\u0437 \u0430\u043d\u0434\u0435\u0433\u0440\u0430\u0443\u043d\u0434\u0430 \u0432 \u043c\u0435\u0439\u043d\u0441\u0442\u0440\u0438\u043c: \u0441\u043a\u043e\u043b\u044c\u043a\u043e \u0441\u0442\u043e\u0438\u0442 \u043a\u0440\u0438\u043f\u0442\u043e-IPO \u043f\u043e\u0441\u0442\u0440\u043e\u0438\u0442\u044c\"\/><figcaption>IPO for a billion-dollar-revenue company costs $44m\u2013$171m. Data: PwC.<\/figcaption><\/figure>\n<\/div>\n<h2 class=\"wp-block-heading\">Many set out, not all will reach<\/h2>\n<p>No fewer than fifteen representatives of the cryptocurrency industry are preparing to go public, exploring options and weighing possibilities. They are not deterred by the looming multi\u2011million-dollar costs. It seems that, in their valuation, the five publicity benefits are worth far more than the initial investment in a listed ticker.<\/p>\n<p>There is no certainty that all participants in the IPO race will reach the coveted goal, even among hardened optimists. Yet the prospect of leaping from the underground to the mainstream entices both leaders and outsiders of this marathon in equal measure. Who among them will reach the intermediate milestone of listing and reap the benefits of going public earlier than the rest? More on that in our forthcoming features.<\/p>\n<p>Subscribe to ForkLog news on Telegram: <a href=\"https:\/\/t.me\/forklogfeed\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog Feed<\/a> \u2014 the full news stream, <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog<\/a> \u2014 the most important news, infographics and opinions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There is particular interest among many players in the cryptocurrency industry \u2014 both newcomers and veterans \u2014 in tapping the buoyant stock market, spurred by the successful experience of Coinbase.<\/p>\n","protected":false},"author":1,"featured_media":46935,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1211],"class_list":["post-46934","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-stock-market"],"aioseo_notices":[],"amp_enabled":true,"views":"10","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/46934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=46934"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/46934\/revisions"}],"predecessor-version":[{"id":46936,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/46934\/revisions\/46936"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/46935"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=46934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=46934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=46934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}