Public scrutiny
XRP issuer Ripple is not what one might term “predictable”.
The blockchain-based technology company has gained much attention for its strategic acquisitions to position it as a link between traditional finance and cryptocurrencies.
It also successful defeated the US Securities and Exchange Commission in court after the SEC accused it of unregistered security offerings.
The court ruled that XRP is not a security when sold publicly on exchanges but is when sold to institutional investors.
These developments strongly suggested that Ripple was moving swiftly ahead to list as a public offering.
Yet, surprisingly, it has eschewed that idea – at least for the time being.
Sitting pretty
Ripple president Monica Long has publicly stated that the company has “no plan, no timeline” for an initial public offering.
Her reasoning is that Ripple has no need to go public when it has some $500 million in funding at its disposal.
The company also enjoys a $40 billion private valuation.
On the face of it, the rationale is sound.
While the Ripple to USD price has not set the world alight, it has certainly held its own in a highly-competitive market.
Furthermore, analysts predict its price to go beyond $14 by 2030.
Cautionary crypto tales
However, as logical as Long’s statement is, Ripple will be only too aware of what has happened to other crypto players that have chosen to list publicly.
Two platforms pursued this route in 2021.
Robinhood quickly learnt that its IPO had little effect on market performance as listing presented all the usual volatilities associated with public trading.
To this day, Coinbase feels the pain of its decision to go public.
Though there had been some initial cause for celebration this fell away in subsequent years.
What both companies came to understand is that Wall Street is not for the faint-of-heart, particularly when digital assets are still viewed with scepticism by many conventional traders.
Preventing a standoff
Ripple will also know that a public listing will pit its longtime, tech-savvy users against conventional investors.
Though crypto is considered more mainstream than it was a decade ago, there is still an air of “counterculture” about it.
Equity investors remain sticklers for dollars-and-cents returns whereas token holders view transactions differently.
A public listing could well see equity investors demanding that Ripple monetise XRP reserves – a move that would inevitably lead to a backlash of epic proportions.
No reason to create Ripples
Ripple’s position not to go public can therefore be explained easily.
With its sights clearly set on acquiring as many traditional platforms as possible to build investor confidence – its acquisition of global multi-asset prime broker Hidden Road [https://hiddenroad.com] being the best example – there is no real reason to do so.
It is on strong financial footing, so much so that it now has the capital strength to explore innovative new ways to bridge the gap between crypto assets and conventional markets.
It also will have heeded the cautionary tales of 2021 and why IPOs are not the silver bullet many had been anticipating they would be.
