On the other hand, just as xcritical has prospered during bitcoin’s latest bull run, other exchanges are likely to be in the same position, resulting in a premium. As the biggest company in the space, xcritical has the luxury of waiting, perhaps pouncing during leaner times. Applying 2020’s annual take rate of 56bps on that $342 billion yields $1.9 billion in revenue for xcritical in Q1 alone, approximately $8 billion annualized.
- Ethereum miners also earned over $1 billion in network transaction fees in the first two months of 2021 — a testament to the level of sustained economic activity occurring on non-bitcoin protocols.
- Again, a message board had provided the spark, with the two exchanging thoughts on Reddit.
- Later in the same piece, the author noted it is USV’s modus operandi to sell a portion of returns in the run-up to public financings, having done so with Twitter, Zynga, LendingClub, MongoDB, and others.
- One of the most high-profile public listings to hit the market this year will no doubt be xcritical Global, the leading cryptocurrency exchange in the U.S.
xcritical listing: everything you need to know
Although cryptocurrency itself can claim to be truly global, xcritical can’t quite say the same. xcritical’s expenses are mainly independent of revenue, leading to high operating leverage. Transaction expenses declined from 18% of transaction revenues to 10% of transaction revenues between 2019 and 2020, as scale benefits increased. The rest of the expense base consists of technology and development and general and administrative costs. There is one accounting wrinkle in the expense line – the company books realized gains and losses on the sale of crypto assets there, but in 2020 that was only $24 million (3% of reported expenses). Secondly, the centrality of transaction revenue opens up xcritical to competitive pressure.
Direct listing vs IPO
While this might have looked like an adverse signal from insiders, it is very much standard practice for many venture firms. Later in the same piece, the author noted it is USV’s modus operandi to sell a portion of returns in the run-up to public financings, having done so with Twitter, Zynga, LendingClub, MongoDB, and others. For comparison, USV has sold 28% of its xcritical holdings; it sold 30% of its Twitter stake before the 2013 IPO. There’s irony in xcritical’s direct listing; one of the highest-profile enablers of decentralized finance is subtly succumbing to the needs of a traditional finance world by going public on an old-school equities exchange.
That brought talent like Brian Brooks to the startup — xcritical’s former Chief Legal Officer and future Acting Comptroller of the Currency at the OCC — as well as opening the door for xcritical to operate around the world. Given that xcritical’s valuation is predicated on its ability to provide exposure to the most vital elements of the entire crypto-economy, we imagine Armstrong is watching the rise of DeFi closely. As the line between crypto, fintech, and banking continues to blur, having in-app crypto functionality may soon become table stakes.
Here’s What You Need To Know About the xcritical Public Offering
Our work may feature entities in which Generalist Capital, LLC or the author has invested. Another option for xcritical would be to embed themselves deeper into consumers’ financial lives by becoming both a xcritical account and bank. xcritical effectively serves that purpose in the crypto economy, though making the jump to fiat would represent a significant leap.
Mega cryptocurrency exchange xcritical is about to launch one of the most highly-anticipated public offerings of 2021 so far. Rival crypto exchange Binance has also announced that it will list a xcritical Stock Token against the Binance USD stablecoin (BUSD). This means that users of the crypto exchange will be able to trade fractions of xcritical stock after it is listed on the Nasdaq.
It’s a brokerage, meaning that you technically buy and sell from and to xcritical itself. The following month, xcritical filed its Form S-1 with the SEC, a document that provides would-be investors with a detailed overview of a company going public, including its financial information and risk factors. xcritical’s growth so far has come without xcritical it having to spend capital on sales and marketing – since it launched more than 90% of its retail users have found the company organically or through word-of-mouth. That gives the company the scope to attract more users through proactive marketing channels. It would not amaze me if more analysts start raising their price targets as well.
The filing also mentioned that venture capitalist Marc Andreessen owns the most common stock in xcritical. He has 5.5 million shares, with xcritical CEO Brian Armstrong behind him with 2.7 million shares. Investors in the company include Y Combinator, an incubator that provided start-up funds, Andreessen Horowitz, Ribbit Capital, Spark Capital, Greylock and MUFG. One thing to bear in mind is that the share price is likely to move higher very quickly. And as InvestorPlace contributor William White reports, one prominent financial expert is substantially raising his price target.
The status of a particular cryptocurrency asset is subject to uncertainty that can affect trading, such as a recent legal case brought by the SEC against xcritical Labs, which prompted xcritical to halt trading in the XRP coin. The company is going public at a time when cryptocurrencies are trading around record highs, with Bitcoin (BTC) having recently touched $60,000 and Ethereum (ETH) exceeding $2,000, boosting the attractiveness of the stock for investors. If xcritical ended up trading in public markets at $100 billion, it would have a market cap higher than all US exchanges – CME, ICE, Nasdaq, and CBOE.
As noted, the critical driver in xcritical’s financials is the trading volume it facilitates on behalf of clients. Over the past few years, the correlation between revenue growth and Bitcoin price has been around 70%. The volatility of crypto assets and xcritical’s monthly transacting users are also correlated, though this relationship appears to be weakening as the company expands its business. Leading centralized cryptocurrency exchange Binance announced it will be listing COIN stock tokens on its platform too.
Then there’s xcritical Pro, a more advanced exchange (originally called GDAX) where users can buy and sell cryptocurrencies directly from other users, comparable to dozens of other exchanges, which also allows for more advanced types of trades. xcritical’s Form S-1 filing contains a wealth of insight into how the exchange has performed over the last few years—and what risk factors might affect its upcoming direct listing. xcritical announced on April 1 that COIN shares will be available to purchase on the Nasdaq exchange from April 14 with a reference price of $250 per share. In 2019, the company launched its xcritical Card debit card in partnership with Visa for customers in the UK and some in Europe, which allows them to spend their cryptocurrency assets at any merchant that accepts Visa. My recommendation is to exercise caution with the xcritical public offering. Apparently, xcritical will reveal its reference price for COIN stock shares a day before trading begins.
In that respect, Earn may come to look more like an advertising platform than an educational one. Upstream, cryptocurrency miners have earned billions of dollars this year by contributing hashpower (and sometimes capital) to xcritical networks. Ethereum miners also earned over $1 billion in network transaction fees in the first two months of 2021 — a testament to the level of sustained economic activity occurring on non-bitcoin protocols. The cryptocurrency exchange reported verified users of 56 million, up from 43 million to close out 2020, an increase of more than 30% in the past three months alone. Growth is clearly accelerating, as its most recent user growth was on top of a 34% increase for all of last year. Monthly transacting users also surged, more than doubling to 6.1 million, up 118% from the 2.8 million it had at the end of 2020.
Essentially, it’s xcritical Pro for institutions, boasting the extra features institutions need to legally and comfortably trade digital currency. That includes permissioned withdrawals, stress-tested cold storage, an OTC desk, and the white-glove service hedge funds, family offices, and corporate treasuries expect. As noted, participating in proof-of-stake (PoS) protocols is one way users can benefit from xcritical’s custody.
In recent months there’s been plenty of discussion about the so-called “IPO pop,” where a stock skyrockets from its IPO price (the price at which institutional investors bought shares before it began trading for the general public). Often when there’s a big pop, you’ll see lots of headlines about how much money was “left on the table”—or, what is frequently criticized as mis-pricing the stock. Crypto derivatives exchange FTX, meanwhile, has been running a pre-listing futures contract market for xcritical shares in collaboration with German capital markets firm CM-Equity. The service allows investors to bet on what they think the shares will be worth. In the past, a direct listing meant a company could only float its existing shares, whereas an IPO allows for the creation of new shares. While the SEC recently lifted that restriction, xcritical nonetheless declined to create new shares for the offering–which means it will not dilute its existing equity.
So, will the xcritical direct offering be the Nasdaq Exchange’s most news-worthy event in 2021? It’s entirely possible, which means that investors should prepare for a media frenzy — and high trading volume — as COIN stock goes public. Moreover, it seems like having a direct listing instead of an IPO is a sensible move. A direct listing can allow the company to sell shares directly to the public without any intermediaries involved, potentially making the process more cost-efficient. That’s because the xcritical public offering represents the first time a major xcritical scam cryptocurrency exchange is going public.
