Shalini Nagarajan

Some crypto companies seeking to go public in the US have been held back by complex assessments led by the Securities and Exchange Commission (SEC).



Recounting plights of crypto exchange Bullish, stablecoin issuer Circle and online brokerage eToro, the Wall Street Journal <a href="https://www.wsj.com/articles/sec-scrutiny-blocks-some-crypto-firms-from-going-public-11674527071" target="_blank" rel="noreferrer noopener">highlighted</a> on Tuesday that each firm was unable to gain the required SEC approval.



They’d sought to go public via special purpose acquisition companies (SPACs) — existing “blank check” companies that merge or acquire other companies interested in assuming their public status.&nbsp;



The number of SPAC deals in the US exploded over the past few years, with 613 recorded in 2021 compared to 59 in 2019, per <a href="https://www.statista.com/statistics/1178249/spac-ipo-usa/" target="_blank" rel="noreferrer noopener">Statistica</a>. Going public via SPACs is generally <a href="https://advisory.kpmg.us/articles/2021/why-choosing-spac-over-ipo.html#:~:text=The%20main%20advantages%20of%20going,usually%20takes%2012%E2%80%9318%20months." target="_blank" rel="noreferrer noopener">regarded</a> as a speedier alternative to traditional initial public offerings.



While it hadn’t sought a SPAC deal, Galaxy Digital was similarly blocked by the SEC from listing on the Nasdaq, WSJ noted. Last April, a source told Blockworks that the listing process was taking <a href="https://blockworks.co/news/awaiting-us-listing-galaxy-digital-delays-purchase-of-crypto-platform-bitgo" target="_blank" rel="noreferrer noopener">longer than expected</a> (Galaxy stock already trades on OTC Markets).



So, what’s the hold up? It’s reportedly the number of questions posed to crypto companies by SEC regulators, who have so far found responses wanting.



Coinbase — practically the only pure-play crypto firm to go public (not counting bitcoin miners) — was reportedly sent three letters containing questions leading up to its April 2021 direct listing.&nbsp;



But Block.one’s Bullish was sent 10 letters in a review process extending beyond a year, WSJ said. Galaxy reportedly received one letter with more than 90 questions while Circle faced more than 100 questions. 



In eToro&#8217;s case, the SEC was said to have focused on the firm&#8217;s methods for accounting digital assets held by its users. &#8220;We continue to view becoming a public company as part of eToro’s future and will wait for the right opportunity to take this next step,&#8221; a spokesperson told Blockworks.



SEC chair Gary Gensler has <a href="https://blockworks.co/news/sec-under-gensler-crypto-power-grab-effective-protection" target="_blank" rel="noreferrer noopener">previously echoed</a> the stance of his predecessor Jay Clayton: regulators should consider most cryptocurrencies to be securities, and thus under the SEC&#8217;s purview. 



FTX’s collapse in November also seems to have exacerbated scrutiny. The SEC issued <a href="https://www.sec.gov/corpfin/sample-letter-companies-regarding-crypto-asset-markets" target="_blank" rel="noreferrer noopener">new guidance</a> that asked already-public companies to detail their risk exposure to the crypto sector. Circle <a href="https://blockworks.co/news/circle-kills-spac-plans" target="_blank" rel="noreferrer noopener">canceled</a> its SPAC deal in December. 



The lengthy review process has ultimately dampened efforts to generate capital via public offerings in a tough bear market, and further solidified the SEC as a major thorn in the industry&#8217;s side.



Updated Jan. 25, 2022 at 9:07 am ET: Added spokesperson statement.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">

Why Aren’t There More Public Crypto Companies? The SEC

Sebastian Sinclair

<div id="highlights-block_6209c0166f009" class="highlights">
 <ul>
 <li>Coinbase&#8217;s site and app reportedly shut down briefly on Sunday following an influx of interest from its Super Bowl ad, though the site and app are back online and functioning as normal </li>
 <li>Super Bowl ads featured an array of companies, from FTX, eToro, Crypto.com and more</li>
 </ul>
 
</div>



Coinbase&#8217;s platform and app were temporarily forced offline on Sunday after it debuted its $14 million ad during the Super Bowl.



The ad, which features a floating QR code box bouncing around the screen for 60 seconds, directs to a <a href="https://drops.coinbase.com/" target="_blank" rel="noreferrer noopener">promotional page</a> on its website offering new users signups $15 in bitcoin. The ultra-minimalist retro-styled ad evoked early computer or console games from the 1970s and &#8217;80s.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/eIUD_NE1BDo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe>



Shortly after the ad went live to hundreds of millions of homes in the US, Twitter users began reporting issues connecting to the exchange&#8217;s website and app. It is the first ad Coinbase has spun up for the sporting event.



The mishap calls into question Coinbase&#8217;s stability during times of large site traffic. The platform shut down on several occasions over the last two years, following erratic trading and subsequent dips in bitcoin&#8217;s price.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/hashtag/Coinbase?src=hash&amp;ref_src=twsrc%5Etfw">#Coinbase</a> how can you drop this ad and then for the app to crash <a href="https://twitter.com/hashtag/SuperBowl?src=hash&amp;ref_src=twsrc%5Etfw">#SuperBowl</a> <a href="https://t.co/FAbvRnudsK">pic.twitter.com/FAbvRnudsK</a>&mdash; Vanessa 🗺 (@rurisan) <a href="https://twitter.com/rurisan/status/1493014031338283008?ref_src=twsrc%5Etfw">February 14, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The issue, which lasted just minutes, has since been resolved, and users can now access the website along with the promo page which features messages including &#8220;Less Talk, More Bitcoin&#8221; and &#8220;WAGMI.&#8221;



At press time, Coinbase was experiencing issues with Google Pay and directed customers to use alternative payment methods, according to its <a href="https://status.coinbase.com/" target="_blank" rel="noreferrer noopener">status page</a>.



While the influx of interest briefly forced the platform&#8217;s website and app offline, Coinbase&#8217;s Chief Product Officer Surojit Chatterjee <a href="https://twitter.com/surojit/status/1493031594109538304?s=20&amp;t=oBBf-y2Mt1rbTDVx0aOKyw" target="_blank" rel="noreferrer noopener">tweeted</a> Sunday that Coinbase had experienced &#8220;more traffic&#8221; than it had &#8220;ever encountered,&#8221; resulting in engineers having to throttle traffic.



&#8220;We are now back and ready for you,&#8221; Chatterjee said in his tweet. &#8220;Humbled to have been witness to this.&#8221; 



<h3>Other industry Super Bowl ads</h3>



A variety of industry participants were also present during the ad breaks at the Super Bowl.



Comedian, writer, director and actor <a href="https://en.wikipedia.org/wiki/Larry_David" target="_blank" rel="noreferrer noopener">Larry David</a> was featured in an ad for crypto derivatives exchange FTX, comparing the platform to famous inventions throughout history:



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/BH5-rSxilxo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe>



As part of the campaign, FTX promised four viewers who retweeted <a href="https://twitter.com/FTX_Official/status/1493028625825869828?s=20&amp;t=hP1VQ1TpqS0ifQXLlZWzKg" target="_blank" rel="noreferrer noopener">the official tweet</a> of the ad will win 7.54 bitcoins — the commercial aired at 7:54 pm ET.



The Crypto.com exchange featured a skit with basketball star Lebron James imparting wisdom to his younger self:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">In his moment of truth, <a href="https://twitter.com/KingJames?ref_src=twsrc%5Etfw">@KingJames</a> called it. Fortune Favors the Brave <a href="https://twitter.com/hashtag/FFTB?src=hash&amp;ref_src=twsrc%5Etfw">#FFTB</a> <a href="https://t.co/Snhpit3vnh">pic.twitter.com/Snhpit3vnh</a>&mdash; Crypto.com (@cryptocom) <a href="https://twitter.com/cryptocom/status/1493033811105378307?ref_src=twsrc%5Etfw">February 14, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Championing &#8220;social investing,&#8221; eToro&#8217;s ad depicted a swarm of flying retail traders set to a cover of &#8220;Fly Me To the Moon&#8221; — the classic 1950s ballad by <a href="https://www.songhall.org/awards/winner/Fly_Me_To_The_Moon" target="_blank" rel="noreferrer noopener">Bart Howard</a> made famous by <a href="https://www.youtube.com/watch?v=mQR0bXO_yI8" target="_blank" rel="noreferrer noopener">Frank Sinatra</a> during NASA&#8217;s Apollo moon missions. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/7O4rP3qwlfo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe>



Canadian exchange Bitbuy <a href="https://cms.blockworks.co/exchanges-compete-to-grab-super-bowl-spotlight/" target="_blank" rel="noreferrer noopener">ran an ad</a> with its own sports star, Kyle Lowry, while <a href="https://www.youtube.com/watch?v=LcmAlpIp3oM" target="_blank" rel="noreferrer noopener">Facebook</a> and <a href="https://www.youtube.com/watch?v=ljMvZbYDl2E" target="_blank" rel="noreferrer noopener">TurboTax</a> marketing buys also touched on crypto.



Last year, Super Bowl LV generated $434.5 million of in-game ad revenue, with an average price of around $6.5 million per 30-second segment. For every dollar spent for the coveted prime time slots, an average return on investment of $4.60 was received — more than four times the initial spend, according to data by provider <a href="https://www.kantar.com/north-america/inspiration/advertising-media/2021-super-bowl-generated-435-million-dollars-in-ad-revenue#:~:text=Super%20Bowl%20LV%20saw%20a,%245%20million%20the%20previous%20year.&amp;text=Automotive%20continued%20to%20lead%20the,million%20less%20compared%20to%202020." target="_blank" rel="noreferrer noopener">Kantar</a>.



Macauley Peterson contributed reporting for this story.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your email every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
 
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
<hr class="wp-block-separator">