Ark Invest Says Circle, Kraken IPOs Possible Under Trump

Cathie Wood’s Ark Invest is optimistic about a more favorable environment for cryptocurrency in the US, tied to new policies under President-elect Donald Trump.

The asset manager is popular for operating the ARK 21Shares Bitcoin ETF (ARKB), which currently has $4.44 billion in net assets.

IPO Windows For Circle and Kraken, Ark Invest Says

In its latest newsletter, the asset management firm expressed optimism that Trump’s return to the White House could allow digital asset firms like Circle and Kraken to go public and achieve regulatory clarity.

“Among the possibilities are…the re-opening of the initial public offering (IPO) window for late-stage digital asset companies like Circle and Kraken…,” a paragraph in the newsletter read.

Circle, the issuer of USD Coin (USDC) stablecoin, confidentially filed for an IPO in January. However, in June, Barron’s reported that the US SEC had reservations about Circle’s core product, which could delay or impact the company’s listing.

The stablecoin issuer also moved its headquarters to the US in May. This was regarded as an effort to bolster market confidence.

According to Barron’s, however, the SEC raised concerns about stablecoin risks. The regulator continues to hold a cautious stance on these assets, especially as the market continues to grow.

Kraken, another major cryptocurrency exchange, has also been preparing for an IPO. In June, Bloomberg reported that the company raised $100 million in a pre-IPO funding round. This demonstrated strong investor interest and confidence in its future. Kraken’s public listing, however, would also depend heavily on regulatory support and legislative progress.

In the United States, multiple crypto mining firms and a prominent crypto exchange, Coinbase, are already listed on stock exchanges. Consequently, this establishes a precedent demonstrating that crypto firms can transition to becoming publicly traded companies in the country.

Favorable Crypto Policies Under Trump

Furthermore, Ark Invest joins the list of those who believe a Trump administration would favor pro-crypto policies. The asset manager believes that Trump’s crypto blueprint may provide significant tailwinds for the digital asset industry. Specifically, it would give it the support it has been waiting for amid ongoing regulatory challenges.

For Ark Invest, this optimistic outlook includes the possibility of long-awaited legislative reforms. Among them are the Financial Innovation and Technology for the 21st Century Act (FIT21) and the Clarity for Payment Stablecoins Act of 2023. Approving these legislations would set clearer guidelines and protections for digital assets and stablecoins in the US.

Ark’s positive outlook is influenced by its hope for a potential shift within the SEC under Trump. The firm noted that the end of current SEC Chair Gary Gensler’s “regulation by enforcement” approach could ease some of the pressures that crypto companies currently face.

Ark’s stance aligns with prominent industry voices who advocate clearer regulations rather than punitive measures. The general sentiment is that this would foster a more novel and competitive environment for US-based crypto firms.

Cathie Wood, a noted Bitcoin advocate, has consistently backed high expectations for cryptocurrency growth. Recently, she voiced her support for Wyoming Senator Cynthia Lummis’s proposal to establish a US strategic Bitcoin reserve. This followed an idea President-elect Trump also endorsed during his campaign.

Wood has also made ambitious projections in the past, including a forecast that Bitcoin could reach a valuation of $3.8 million by 2030. In her opinion, all it would take is for institutions to allocate “5% of their portfolios to Bitcoin.”

Many see this price target as aspirational. Nevertheless, Wood’s support reflects her long-term confidence in Bitcoin and the broader cryptocurrency ecosystem.

Ark Invest’s vision of a more crypto-friendly US regulatory environment highlights its belief in the economic and technological potential of digital assets. If Trump’s administration delivers on these expectations, it could indeed mark a turning point for major players like Circle and Kraken. This would enable them to take charge of bringing digital assets into the mainstream American financial system.