This report, written by Tiger Research , deeply analyzes the motivations of Web3 companies to shift from token financing to IPOs, and how this transformation reshapes their growth strategies and industry ecosystems.
Summary of key points
Web3 companies use IPOs as a strategic tool to build a formal regulatory framework, which not only wins the trust of institutional investors and regulators, but also achieves deep integration with traditional financial markets.
The token financing model exposes structural defects such as sharp price fluctuations, regulatory ambiguity and liquidity management pressure, highlighting the necessity of transitioning to IPO
It is expected that centralized exchanges (Bithumb, Kraken), stablecoin issuers (Circle, Paxos), and Web3 solution providers (Chainalysis, Nansen) will lead the IPO wave, expand institutional funding channels and strengthen global competitiveness through listing
1. From tokens to stocks: IPO transformation trend in the Web3 industry
Circle, the issuer of stablecoin USDC, has submitted an initial public offering (IPO) application to the U.S. Securities and Exchange Commission (SEC), a move that has attracted widespread attention in the Web3 industry about the IPO path.
Web3 companies have always preferred the token financing model: directly reaching retail investors through ICO (initial coin offering) and IDO (decentralized exchange initial offering), and selling future token rights to institutional investors through SAFT (simple agreement for future tokens). These methods have promoted the early explosive growth of the Web3 industry, but the sharp fluctuations in token prices and regulatory uncertainty continue to plague institutional investors, and the token model has seriously restricted institutional investors from realizing investment returns.
In this context, IPO becomes an alternative. Web3 enterprises can obtain more stable and long-term financial support through IPO, reduce legal uncertainty through active compliance, establish a standardized enterprise valuation framework, and reach a wider investor group. This report deeply analyzes the core motivations of Web3 enterprises to switch from the token model to IPO, and evaluates the impact of this transformation on the industry ecosystem and future prospects.
2. The underlying logic behind Web3 companies choosing IPO
2.1 Regulatory trust as a strategic asset
Web3 companies use IPOs as a regulatory compliance certification mark. Just as food companies win consumer trust through quality certification, IPOs allow Web3 companies to clearly demonstrate their compliance efforts to the market. This strategy is particularly effective in trust-driven business areas such as stablecoin issuance and custody services.
Circle continues to promote the IPO process to prove its strategic value. The company attempted a SPAC listing in 2021 but failed, and now plans to hit the IPO again in early 2025. Since 2018, Circle has established the credibility of stablecoins by obtaining the New York State BitLicense and regularly publishing reserve reports, but the lack of formal market verification has only gained limited trust. The IPO enables Circle to formally establish credibility through the SECs standardized disclosure framework, and compared to Tethers market access passport, it can cooperate with global financial institutions and enter a wider range of traditional markets.
Coinbase validates the value of its compliance strategy through its IPO. The exchange adhered to strict legal compliance before its IPO and quickly expanded its footprint after its listing: establishing a strategic partnership with BlackRock, providing ETF custody services, and establishing connections with more than 150 government agencies. This development trajectory shows that institutional investors formally recognized Coinbases compliance efforts through its IPO, and this recognition turned into a key competitive advantage in building trust.
2.2 Structural Dilemma of Token Financing
Token financing plays a key role in the early development of the Web3 industry, providing a fast and efficient financing channel. However, companies need to deal with unique complexities after issuing tokens: they must rely on centralized exchanges (CEX) to expand investor coverage, and exchanges use opaque and subjective listing standards to create significant uncertainty; after listing, they need to provide direct liquidity or ensure market-making cooperation. In contrast, the traditional IPO process follows standardized procedures and a clear regulatory framework.
Token unlocking events are often accompanied by a sharp drop in price. Source: Keyrock
Price volatility is another core issue. Large-scale token unlocking has caused severe market price fluctuations. Keyrock data shows that 90% of unlocking events have led to price declines, and team token unlocking has caused an average of 25% price plunges. This price collapse makes it difficult for institutional investors to realize investment returns, reinforcing their negative perception of the token model.
Crypto VC funding plummets: 2021-2025, source: Decentralised.co
This trend is substantially changing the landscape of the crypto venture capital market. According to Decentralised.co data, global crypto venture capital investment will drop by more than 60% from 2022 to 2024. Singapore’s ABCDE Capital recently suspended new project investment and fund raising, indicating a visible shift in the market.
It is difficult for companies to effectively connect the token economic model with the actual operation. Aethir and Jupiter have achieved considerable revenue in the Web3 industry, but these business achievements are rarely linked to token prices, and often blur the business focus. Fireblocks and Chainalysis mainly provide centralized services rather than token products, and there is a lack of organic fit and clear necessity for issuing tokens. Designing and verifying the utility of tokens has become a major challenge, which not only distracts from the focus of existing businesses, but also brings additional regulatory and financial complexities, prompting Web3 companies to turn to IPOs for breakthroughs.
2.3 Expanding investor coverage
The global sovereign wealth fund management scale exceeds 13 trillion US dollars. Source: globalswf.com
IPOs provide the biggest advantage for Web3 companies: access to large institutional capital that is difficult to reach through token financing. Due to internal compliance policy restrictions, traditional financial institutions, pension funds, and mutual funds cannot directly invest in cryptocurrencies, but they can invest in stocks of listed companies on regulated securities markets. Global sovereign wealth funds manage approximately $13 trillion in assets, which reveals the potential size of the funding pool that Web3 companies can reach through IPOs.
Even in areas with strict crypto regulation such as South Korea and Japan, IPOs can create effective indirect investment channels. Although Korean institutional investors cannot directly invest in Bitcoin ETFs, they can indirectly participate in the crypto market through listed companies such as Coinbase and MicroStrategy; Japanese investors can avoid high crypto transaction taxes and obtain efficient crypto asset investment opportunities through Metaplanet stocks. This accessibility expansion will promote the participation of multiple investors and provide legal and stable investment tools within the regulatory framework.
2.4 Strategic value as a flexible financing tool
IPOs enable companies to effectively obtain large-scale capital. Coincheck and Coinbase successfully raised funds through IPOs and implemented aggressive business diversification: Coincheck used funds from its Nasdaq listing to acquire Next Finance Tech; Coinbase enhanced its global competitiveness by acquiring FairX (derivatives exchange), One River Digital (asset management company), and BUX Europe (entrance to the EU market). Although the specific contribution of IPO funds to these acquisitions has not been disclosed, it is likely to provide an important foundation for the expansion strategy.
IPOs also give companies the ability to use stock as a means of payment for mergers and acquisitions. Listed companies can implement mergers and acquisitions through stock consideration, reducing their reliance on cash or volatile crypto assets. This operation achieves efficient capital management and strategic cooperation. After listing, companies can continue to use diversified capital market tools such as new stock issuance, convertible bonds, and rights issues to achieve continuous and flexible financing that matches their growth strategy.
3. Future Outlook of Web3 Industry IPO Market
In the next few years, Web3 IPO activities will increase significantly, which not only reflects the accelerated institutionalization of Web3, but also benefits from the successful cases of Coinbase and others that raised huge funds through public offerings and achieved global expansion. Centralized exchanges, custody service providers, stablecoin issuers and Web3 solution companies will lead this wave of IPOs.
3.1 Centralized exchanges and custodian service providers
Exchanges such as Bithumb, Bitkub, and Kraken and custodians such as BitGo are the main candidates for IPOs. These companies build competitive advantages through compliance construction and asset security, and need to enhance their institutional credibility and market strength through IPOs. Their revenue is highly correlated with the crypto market cycle, and IPO funds will help them expand new businesses and achieve stable income.
3.2 Stablecoin Issuers
Following Circle, Paxos and other compliant stablecoin issuers may follow up with IPOs. The stablecoin market values transparent reserves and clear supervision. IPOs can both demonstrate compliance frameworks and build market trust. As global regulations such as the EU MiCA and the US Stablecoin Act continue to evolve, IPOs will give issuers important strategic advantages.
3.3 Web3 Solution Companies
Web3 analysis companies such as Chainalysis and Nansen are also key candidates for IPOs. These companies provide professional services to government and institutional clients and need to enhance their market credibility and consolidate their global leadership through IPOs. The funds raised from IPOs will be invested in technology upgrades, international expansion, and talent introduction to build a foundation for sustainable development.
4. Conclusion
The rise of IPOs in the Web3 industry marks a clear shift toward mainstream capital markets. Through IPOs, Web3 companies not only obtain funds, but also formalize regulatory compliance, attract institutional investors, and enhance global competitiveness. In the context of the continued shrinking of crypto venture capital, IPOs provide a stable and flexible financing alternative.
However, IPO is not suitable for all Web3 companies. Even companies that choose IPO are unlikely to completely abandon token financing. Although IPO can provide broader funding channels, stronger credibility and easier access to global markets, it requires a lot of compliance costs, internal control construction and public disclosure. The token model supports rapid early financing and cultivates an active community ecosystem.
Companies can strategically combine the two models: exchanges can build institutional trust through IPOs to achieve global expansion, while using tokens to increase user engagement and loyalty. Web3 companies need to carefully choose the optimal combination of IPO and token issuance based on their business model, development stage, and market strategy.
