The Breakdown - As eToro IPO Pops is Wall Street Getting Crypto Fever?

Episode Date: May 16, 2025

eToro's successful NASDAQ debut signals renewed investor appetite for crypto-focused companies, potentially reopening the IPO window for others like Kraken and Circle. Meanwhile, traditional finance giants JPMorgan and Standard Chartered accelerate their blockchain integrations, highlighting growing convergence with crypto. Plus, Bitcoin treasury company 21 Capital gears up for a massive market entry amid debates over the next crypto bubble. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: https://blockworks.co/newsletter/thebreakdown Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, May 15th, and today we are talking about an IPO that actually went well. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. Give it a rating, give it a review. Or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown. pod. Well, friends, E. Toro's monster NASDAQ debut suggests that the IPO window may be wide open. Fintech trading platform, E Toro, saw a huge pop on their public listing yesterday with the stock rising

29%. The listing was already hot heading into the IPO, with the company upsizing the number of shares on offer. Initial pricing also went well above Wall Street forecasts, making the first-day pop even more noteworthy. The company now has a public valuation of $5.4 billion, so it's still a relative Minow compared to its rival Robin Hood that's currently priced at $54 billion. It might be going too far to call Eitoro a crypto IPO, although the trading platform is increasingly focused on crypto. They offer 130 crypto assets, but see very little volume on most trading pairs. Eitoro generated 12.1 billion in revenue from digital assets last year, which was up Forex from the previous year. That dwarfs their 330 million in revenue from equities, commodities, and currencies, largely due to a 1% fee on both

buying and selling crypto, set against free trading for stock. The platform recorded over $11.8 billion in cost to generate that crypto revenue, so that doesn't make them extraordinarily profitable. Still, Itoro's balance sheet looks very concentrated on the crypto business with everything else being relatively negligible. And because of that, the point is that E. Toro has verified market demand for new public crypto companies. The platform shared the rocky road to a public listing that many companies have faced over the past few years. They first attempted to go public via SPAC but couldn't get the deal out the door before market conditions turned. The deal would have valued the company at $10.4 billion, so based on where

they are now, Itoro did leave some money on the table by missing the window. Itoro got caught up in Gensler's Dragnet in 2023 and suspended trading for 24 crypto tokens named in SEC lawsuits. The company then filed for a traditional IPO this March, right into the jaws of the Liberation Day market collapse. But the stock is now trading on the NASDAQ and its performance seems like a green light for other crypto companies to list. There's half a dozen crypto firms looking to go public over the coming year, and right now appears to be one of their best opportunities. We have Galaxy Digital uplisting from the Toronto Stock Exchange on Friday, so that box has already checked. Circle followed a similar path to Itoro with a failed spec in preparations

recommencing in earnest in late 2024. They've said they're targeting the first half of this year, and are only awaiting a sign-off from the SEC so that listing could be any week now. A new entrant is Anamoka Brands, whose CEO Yatsu told the Financial Times earlier this week that this is a unique moment to enter the world's largest capital market. Sue said that a year ago, the investment firm wouldn't have been considering a U.S. listing, but it's now a, quote, very important part of the roadmap. He added, If the U.S. didn't do what they did with regulators under Biden, we probably would have competitors in the U.S. Normally, we'd be fighting with some giant or something. It's the biggest market,

so we should go there, right? Sue later walked back the comments slightly, calling them a misunderstanding, and stating, I was referring to ramping up our overall activity in the U.S., primarily products and service offerings. I was not explicitly stating that we will list in the U.S. or in New York, although that's certainly a possibility. Potentially, the biggest crypto IPO will be Cracken. The exchange hasn't seen a public valuation since 2021 when they raised funds at $10.8 billion. But the company's Q1 earnings showed 19% year-on-year revenue growth, with 187 million in EBITDA profits for the quarter. That's around one-fifth of Coinbase's profits and only slightly behind the U.S. leader's 24% year-on-year growth. Cracken has been making a lot of moves to prepare for IPO,

with a recent leadership shakeup and a big acquisition alongside cost-cutting layoffs as well. All reports suggest they're targeting next year, but E-Toro's success might encourage them to strike while the iron is hot. Generally, this is a signal that U.S. capital markets appear hungry for new entrants. Katie Roof of Bloomberg tweeted, E-Toro IPO priced above the range, increased the size of IPO due to demand, and then we popped. Are we back? Zach Towns and the CEO, meanwhile, a Bitcoin life insurance company said, hard not to be bullish on fintech when E. Toro raised $620 million in an upsized IPO, and

Chime follows their S-1 on the same day. Dan Tapiero noted that this is the first public exit for his crypto-equity-focused fund, 10-T, no doubt helping investors recommit to the thesis. And as someone who has been watching this up close and personal, the lack of IPO liquidity has been a major detriment to LPs, so that has got to be an exciting one. We'll see what comes next, but for now, a crypto-focused trading platform is the biggest news on Wall Street. continues to be the case that the biggest theme for right now, outside of the testy politics of Washington, is the blending of tradfai and crypto. tokenization infrastructure continues to be a big theme within that, with J.P. Morgan

testing new capabilities with Chainlink and Ando Finance. The bank has completed a test transaction that settled the transfer of tokenized U.S. treasuries between public and private blockchains. That should come as no surprise with J.P. Morgan's Kinexas network, essentially just a permission to Ethereum fork, allowing for good compatibility with crypto tooling. Still, the proof of concept is an important one. assets were transferred from AndoChane to Kinexas, which, by the way, if that's not how they pronounce it, boy, whoever you have in charge of naming should be fired, because there are simply too many consonants next to each other. Anyway, the transfer happened with near instantaneous payment flowing in the other

direction, an arrangement that's referred to as delivery versus payment or DVP. Settling transactions in less than a day is basically impossible for Tradfai Rails, so the use case is extremely enticing for legacy financial firms. In a press statement that companies wrote, DVP transactions are difficult to execute in traditional finance due to fragmented systems and manual workflows, leading to costly settlement delays and increased counterparty risk. In just the past decade, it is estimated that payment and settlement failures have cost market participants at least 914 billion. DVP issues are further compounded in cross-border transactions by complex regulatory, geographical,

and currency limitations. ChainLink CEO Sergey Nazarov said, It is becoming increasingly clear to the world's institutions that they have a large addressable market in the public chain community, and that they need a reliable set of technical standards and cross-chain connection capabilities to successfully transact in this new world. Another interesting signal coming from TradFi is executives jumping ship to crypto-native firms. We saw a reasonable amount of this kind of activity during the last crypto winter, as Tradfi shut down their crypto pilots, and that was clearly about people with conviction looking to keep building

in crypto. Now, with TradFi racing to adopt crypto, it sends a different signal about the speed-to-market at legacy financial firms. This week's news was Morgan Stanley's head of digital asset markets, Andrew Peel, taking leave to launch a new tokenization firm out of Switzerland. Peel had been driving crypto adoption at Morgan Stanley since 2018, and in a LinkedIn post, he wrote, Despite the volatility, I've always had strong conviction that Bitcoin and other quality crypto assets would become relevant for traditional finance. The success of the spot Bitcoin ETFs and the U.S. regulatory shift has more than validated that belief. The block followed up with Peele stating in a message that, quote, as RWA's move on chain, Tradfai will follow.

Building the infrastructure and products to move them there is how we realize the future of on-chain finance. Traditional finance capital will seek the returns of defy opportunities. Tradify institutions will increasingly leverage and interact with defy technology. Regulation and technology will evolve to support the shift. We don't know any further details about why Peele is stepping away from Morgan Stanley or exactly which part of the stack is new start-up will target. But on face value, this sort of seems like a signal that Tradfai is not building fast enough

to capture the full benefit of the pivot to crypto rails. Keeping on this theme, Crypto Prime broker Falcon Falcon X has partnered with Global Bank's standard chartered to scale their institutional services. Falcon X said in a statement that, quote, Standard Charter will provide a comprehensive suite of banking services to FalconX globally, further strengthening the platform's offering for institutional clients. Initially, the partnership will see Falcon X integrate Standard Charter's banking infrastructure and improve cross-border settlement for global clients. They also plan to expand their offering to a larger group of entities, including asset managers, hedge funds, token issuers, and payment platforms. The expansion is set to begin in Singapore with ambitions to later spread across Asia and into the

U.S. and Middle East. Standard Chartered, meanwhile, has been ramping up their crypto business significantly this year. In April, they inked a deal with OKX to hold crypto and tokenized fund collateral off platform for institutional investors. As well as gaining access to global banking rails, this partnership could help Falcon X access more capital to lend to their institutional clients. We discussed in a recent show how crypto funds have been struggling through a credit drought since 2023, and this deal could be a way to ease access to capital. Beyond anything else, it's a gigantic global bank hooking themselves into crypto rails. Crypto copyrighter Vincent PCO wrote, Standard Chartered sees the crypto market hitting 10 trillion by 2026, and they're acting on it. TradFi

and Crypto Integration accelerating. Lastly today, an update on 21 Capital. Corporate Bitcoin accumulation continues to be one of the big stories of the year. And one of the initiatives announced recently was 21 Capital, a joint venture between Tether, SoftBank, and Cancer for Gerald, with Strike CEO Jack Muller's at the helm. They're still awaiting a public listing via SPAC with no clear timeline on when the stock will begin trading, but Tether is not waiting around, contributing another $450 million worth of Bitcoin to the vehicle last week. According to new disclosures, Tether bought over $4,800 BTC at $95,000 each last Friday. 21 Capital already has over 36,000 Bitcoin in their treasury worth roughly $3.7 billion. That means they'll enter the markets

as the third largest Bitcoin Treasury company behind Micro Strategy and Marathon. Mollers has said the goal is to accumulate as much Bitcoin as possible and they're well on their way. The JV intends to launch with 42,000 Bitcoin already secured, so they've still got another $600 million to buy between now and whenever they get the green light. From there, the plan is to run the Sailor Playbook, issuing convertible debt to fund more Bitcoin purchases. The JV is also well positioned to experiment with other Bitcoin-focused financial instruments through Cantor Fitzgerald's investment banking arm.

Now, there are still a wide range of opinions on this growing trend. Investor Chris Millis wrote, the craziest thing about the flood of all these new Bitcoin treasury companies entering the market is that literally 99% of the world has zero idea what is happening, and yet it's the biggest thing to happen in finance ever. Marty Bent of 1031 Capital believes there's a better way, writing highly profitable operating businesses that roll profits into Bitcoin is way more exciting than pure play Bitcoin treasury companies. There's never been a better time to start a business that finds product market fit and cash flows quickly with two to three people. Bitcoin plus AI

will be the most powerful combined force of this decade. If you're not leveraging both in your business, you're making a big mistake. Meanwhile, there are plenty that are starting to get the cold sweats over Bitcoin Treasury companies, with Bitcoin Isaiah tweeting, I'm just glad we finally know what this cycle's bubble will be. 2017 was ICOs, 2021 was NFTs, 2025 is Bitcoin Treasury companies. Scott Melker is thinking the same thing, writing, I hate to even think this because I'm a huge fan, but Bitcoin Treasury companies raising debt to buy Bitcoin could be the next bubble. And Peter Schiff couldn't help himself, tweeting, the only thing more ridiculous than buying Bitcoin is buying shares of a Bitcoin Treasury company who sold business purposes to acquire Bitcoin. If you want to buy Bitcoin,

then buy Bitcoin. If you want to invest in the stock market, buy a company with an actual business. Bold words from someone who runs a fund whose sole purpose is to hold gold. For now that that is going to do it for today's breakdown. Appreciate you listening, as always. And until next time, be safe and take care of each other. Peace.