- Kraken is notably the second top-tier digital asset exchange to indicate plans to go public after Coinbase.
- The exchange has chosen the direct listing route over the IPO route, as it gives them the flexibility to go public without issuing new shares.
- Kraken CEO Jesse Powell says ‘they’re not in a rush to raise capital’, hence maybe the decision to go public next year.
Kraken CEO and co-founder Jesse Powell has reiterated that the digital currency exchange is likely to go the direct listing route. Planning to go public next year, Kraken has recorded one of its highest-ever surges in trading volumes and new client sign-ups along with an all-time high result in the fourth quarter.
Founded in 2011, Kraken is one of the most prominent crypto exchanges worldwide. According to CoinMarketCap, Kraken is the fourth-largest exchange by trading volume with more than 6 million clients. The exchange is reportedly considering following in Coinbase’s footsteps by 2022 by going public, according to CNBC.
“We’re looking at being able to go public sometime next year… It would probably be a direct listing, similar to Coinbase,” Powell noted.
What is Behind the Move?
Jesse Powell mentioned in an interview that Kraken had benefitted tremendously from the recent surge in Bitcoin prices. Bitcoin saw a significant rally around mid-March, with prices reaching record highs of over $60,000. Traders attributed the surge to the entry of several institutional investors into the market.
The result was a notable surge for Kraken as well, which saw about four times as many new user signups on its platform in 2021’s first quarter compared to the second half of 2020. At the same time, spot trading volumes in this quarter were 1.5 times higher than all of 2020, reaching a record high of $160 billion.
“For us, any volatility is good but it’s always better when it’s on the way up,” Powell commented. “The first quarter just completely blew the entirety of last year. We beat last year’s numbers by the end of February. The whole market has really just exploded.”
The Popularity of Direct Listings in Exchanges
Direct listings have become a popular choice for several notable tech companies that are planning to go public without having to issue any new shares. They also provide an alternative to initial public offerings (IPOs) which have been criticized by many tech investors on grounds of shares mispricing besides a lengthy and costly underwriting process.
Coinbase, Kraken’s chief rival in the US, is all set to go public on April 14, after generating record revenues of $1.8 billion in the year’s first quarter – more than what it made in all of 2020 put together. The listing is supposed to augment Coinbase’s value up to $100 billion. It is on these very lines that Kraken seems to be pursuing a stock market debut in 2022.
“We’re not in a rush to raise capital,” Powell said, adding that Kraken has a strong balance sheet. “The reason to do it would be to bring on some more strategic investors who can help us with geographic expansion and growth.”