Galaxy Research Head: The Future Trajectory of the U.S. Crypto Market and Regulatory Landscape
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Galaxy Research Head: The Future Trajectory of the U.S. Crypto Market and Regulatory Landscape
The market expects a significant shift in the U.S. stance toward cryptocurrencies, supporting various industry areas such as stablecoins, token issuance regulations, taxation, and compliance reporting.
Navigating Web3 tides with focused insightsAuthor: Alex Thorn, Head of Firmwide Research at Galaxy Digital
Translation: Baishui, Jinse Finance
I recently discussed the intersection between public markets and cryptocurrency with the Galaxy Digital team, which led to an interesting insight—regulators are also on the verge of major changes.
Below is a guest article by Alex Thorn, Head of Firmwide Research at Galaxy Digital, explaining where we stand, what's changing now, and where he believes we're headed. I hope this serves as valuable information and perspective for everyone.
Below is Alex’s guest post:
Bitcoin has been the biggest winner of the election so far. Since November 5, Bitcoin—the world’s oldest and largest cryptocurrency—has surged 40%, and there are good reasons to believe further gains lie ahead.
Other crypto assets will benefit too. Investors expect a shift in the U.S. Securities and Exchange Commission’s (SEC) stance toward digital assets. Many have already written about how a relaxation or rollback of the SEC’s classification of digital assets as securities could support the crypto market and its stakeholders.
Less discussed is how public markets themselves will benefit from the U.S.’s new approach to digital assets. Since Coinbase’s direct listing in 2021, only Bitcoin miners and a few small SPACs have successfully accessed public markets. Gary Gensler, the current SEC Chair, took office on April 17, 2021—just four days after Coinbase’s direct listing—and since then, public markets have been effectively closed to crypto companies. But that is about to change. Public markets are about to get a taste of crypto.
Signs of this shift may already have emerged in recent weeks. Japanese cryptocurrency exchange CoinCheck announced it has received approval to go public in the U.S. via a SPAC. This would be the first crypto exchange to achieve a public listing in the U.S. since Coinbase, but it won’t be the last. SPAC shareholder Thunder Bridge IV (ticker: THCP) will vote on the merger this Wednesday, December 5, with completion expected around December 10.
Currently, U.S.-listed crypto-related equities include Coinbase, Bitcoin miners, balance sheet holders like MicroStrategy, and a range of fintech firms with crypto exposure such as PayPal and Robinhood. However, anticipated changes in the SEC’s leadership and posture could finally open public markets meaningfully to crypto companies, potentially leading to a significant expansion of the crypto equity landscape.
This broadening of crypto equities—including exchanges, brokerages, data firms, and infrastructure providers—is a win for both venture investors and public market participants. By my count, since 2018, at least 300 startups have raised $50 million or more in venture funding, with over 50 raising $100 million or more. Venture investors could help revive a fundraising environment that has stagnated over the past two years, while public market investors gain more avenues to invest in this growing industry.
Expanding access to public markets will also revitalize U.S. crypto entrepreneurship. The SEC’s current posture incentivizes venture investors to focus on complex token-based deals rather than traditional businesses, which may ultimately harm the broader crypto ecosystem. Certain equity-based startups—especially those directly handling digital assets, such as exchanges and brokerages—have largely moved overseas. But regulatory shifts and open public markets could spark a resurgence in U.S. entrepreneurial activity, bringing more jobs and capital formation back to America.
Bitcoin and crypto are not illegal in the United States, but over the past four years, banking and market regulators have worked to stifle their growth—or shut them down entirely. Jurisdictions such as the UK, Europe, the Middle East, Hong Kong, and Singapore have capitalized on America’s restrictive stance by establishing clear regulatory frameworks and attracting companies away from the U.S. But that era may soon be over.
The market anticipates a major shift in the U.S. attitude toward crypto, which could support a range of areas including stablecoins, token issuance rules, taxation, and compliance reporting. But don’t forget about public markets. For U.S. digital assets, this is a new dawn—and public markets may finally join the party in earnest.
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