An initial public offering (IPO) refers to the process through which a private company sells cryptocurrency assets of its business to public for new issuance, as stated by Cointelegraph. Through regulations, a cryptocurrency company is allowed to raise capital from public investors. An IPO is considered a major step for cryptocurrency based businesses from a regulatory point-of-view.
Based on Cointelegraph’s data, for cryptocurrency companies to lauch their IPOs, they need to engage with underwriters or investment banks which evaluate and assume risks in return for a fee to launch their coins for public. After an IPO gets over, cryptocurrency assets of a company gets traded on a cryptocurrency exchange. Through public trading, reporting standards increase because of regulatory requirements to help cryptocurrency companies meet all of its obligations. When their growth comes to the point where it can work with publicly traded benefits and responsibilities, they start showing their interest of being listed on a cryptocurrency exchange.
According to Cointelegraph, cryptocurrency equity can be sold to the public through initial coin offerings (ICOs). Blockchain based firms which aim to raise funds can sell cryptocurrencies to the public. Digital tokens issued to back organisation’s equity shares is referred to as cryptocurrency equity. When users buy cryptocurrency stock from ICO, the company’s shares are placed in digital tokens into their blockchain account.
Cointelegraph showed that cryptocurrency companies can benefit from IPOs by gaining exposure and prestige which is achieved through public trading. A cryptocurrency company, which has worked with regulators, can raise an IPO and is considered more trustworthy than a business at a nascent stage. An IPO can allow cryptocurrency companies to gain access to public markets and raise additional capital through secondary offerings, and a company can offer compensation in coins if it’s publicly traded which is considered to be more liquid in value.
(With insights from Cointelegraph)