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Ripple Delays IPO Amid Regulatory Challenges in the U.S.

2024.01.17

 

Key Takeaways

  • Ripple postpones IPO plans due to U.S. regulatory challenges.
  • CEO Brad Garlinghouse criticizes SEC’s approach, keeping IPO options open.

Ripple’s IPO Plans in Limbo

At the World Economic Forum in Davos, Switzerland, Ripple CEO Brad Garlinghouse revealed that the company has paused its plans for an initial public offering (IPO). Garlinghouse attributes this decision to the ongoing legal battle with the U.S. Securities and Exchange Commission (SEC) and what he describes as a “hostile” regulatory environment in the U.S. Ripple, known for its cryptocurrency XRP, has been embroiled in a lawsuit with the SEC since 2020, challenging the company’s operational framework.

Exploring International Opportunities for Public Listing

Despite the challenges in the U.S., Ripple has been exploring markets outside the country for its public listing. Garlinghouse highlighted that Ripple looked at jurisdictions with clearer regulations for cryptocurrencies. The CEO’s remarks suggest that the company is not closing the door on going public but is considering alternative locations where regulatory frameworks are more favorable for crypto businesses.

Tensions with the SEC and the Path Forward

Garlinghouse’s frustration with the SEC’s approach to regulating the crypto industry was evident in his comments. He noted the difficulties of pursuing an IPO in the U.S. under the current regulatory climate, citing the SEC’s lawsuit against Coinbase as an example. Coinbase, which is listed in the U.S., faced SEC allegations of operating as an unregistered broker and exchange.

Ripple’s Criticism of SEC Leadership 

Garlinghouse has been vocally critical of the SEC’s approach towards cryptocurrency regulation. Recently, he referred to SEC Chair Gary Gensler as a “political liability” and expressed hope for a change in leadership at the SEC. This change, he believes, could pave the way for Ripple to consider a U.S. listing in the future. However, the SEC has not responded to these remarks. Garlinghouse maintains that an IPO remains an option for Ripple but clarifies that it is not an immediate priority for the company.

Ripple’s Strategic Financial Moves

Amidst the regulatory uncertainty, Ripple has taken strategic steps to ensure shareholder liquidity. This month, Reuters reported that Ripple repurchased shares from its shareholders, with Garlinghouse confirming that the company has bought back $1 billion of its stock. This move, according to Garlinghouse, is aimed at providing liquidity to long-term investors, some of whom have been with Ripple since its early days in 2012.

The Crypto Industry’s Outlook

The broader cryptocurrency market, including Ripple, has experienced a buoyant period, with Bitcoin rallying more than 150% last year. This resurgence has injected renewed confidence into the crypto industry, with firms like Circle, the issuer of the stablecoin USDC, filing for an IPO in the U.S. Despite Ripple’s current challenges with the SEC, the overall market trend suggests growing interest and confidence in cryptocurrency businesses among investors.

 


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