Ripple, the company behind the cryptocurrency XRP, has explored holding its initial public offering (IPO) outside the United States due to the stringent regulations in the country; a hostile regulator, as their CEO puts it. The company now considers the US regulatory environment hostile and has put its IPO plans on hold. Meanwhile, it has bought back $1 billion of its stock from shareholders.
Delayed IPO – Is the SEC being Unfair
Earlier, Ripple had planned to go public after a legal battle with the US Securities and Exchange Commission (SEC) ended. The lawsuit had begun in 2020, and the company was planning an IPO after the case ended. However, it seems like we will not see that happening anytime soon.
Ripple CEO Brad Garlinghouse blames the US Securities and Exchange Commission for its decision to look elsewhere for an IPO. He believes the SEC has been unclear and inconsistent in its approach to regulating the crypto industry, which has made it rather difficult for companies like Ripple to navigate.
In his conversation with CNBC, Garlinghouse expressed that attempting to go public in circumstances where the regulator is very hostile is not fun, considering the SEC has to approve their S-1. Before a company goes public (IPO), they file a document called an S-1 prospectus with the SEC. This document explains the company’s business, finances, and risks involved in investing in them.
In his conversation, Garlinghouse also cited the example of Coinbase, another cryptocurrency company that was sued by the SEC even after its IPO for allegedly offering unregistered securities.
Ripple’s CEO is of the opinion that a change in leadership at the SEC could perhaps pave the way for a US IPO for Ripple in the future. The CEO referred to the current SEC Chair, Gary Gensler, as a political liability and suggested that his replacement might be more open to working with the crypto industry.
Ripple on hold with IPO Plans but Prioritizes Shareholder Liquidity
Earlier, Ripple considered going public in other countries besides the US, but those plans are paused for now.
The company had explored alternative markets for its IPO due to the presence of clear rules of the road according to Garlinghouse. However, he clarified that capital-raising was not a primary motivation for pursuing an IPO as they do not currently have a pressing need for capital. The CEO emphasized that the option remains open and will be reevaluated in the future, potentially influenced by changes in the SEC leadership.
In the meantime, Ripple is focusing on providing liquidity to its shareholders through its share buyback program. The company says it wants to reward investors who have been with it since its early days.
Other cryptocurrency companies are also taking advantage of the recent rally in the market to go public. Circle, the company behind the stablecoin USDC, filed for an IPO in the US earlier this month.
It remains to be seen whether Ripple will ultimately choose to go public in the US or elsewhere. Ripple’s decision on where to go public will likely depend on the regulatory environment. It seems like the company may wait for a clearer regulatory environment before making a decision.
Celine Brooks is a renowned journalist and author specializing in cryptocurrency and blockchain technology. She holds a Master’s degree in Economics from Harvard University and is very passionate about Crypto. Celine regularly hosts webinars and workshops, sharing her insights and forecasts about the evolving digital currency landscape. She is also an active contributor to several leading financial and tech publications, where she breaks down complex crypto trends into understandable insights for everyday investors.