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Business & Finance

First Crypto Bank Going Public on Toronto Stock Exchange

If I knew what I know now, knew the crypto markets were going to swoon as much, and it was going to take so long, I might have stayed private for another year or so and then gone public. But I don’t think it’s a mistake CEO, Galaxy Digital

Cryptocurrency based merchant bank, Galaxy Digital, will start trading on the Toronto stock exchange today, despite cooling investor interest and falling prices this year. It is one of the earliest banks in the crypto space to achieve such a listing. Many eyes are watching to see what will become of the relationship between legacy financial institutions and digital assets.

Galaxy Digital first crypto bank

Galaxy Digital is the first crypto bank formed by the former Goldman Sachs macro trader, Michael Novogratz, who launched the bank in November 2017, exactly a month before the top-ranked bitcoin hits its all-time high almost $20,000. Based in the Manhattan, United States, bank took a $134 million hit in the first quarter and reported a net loss of $103.3 million on trading, with $13.5 million on digital assets and $85.5 million of unrealized losses on those assets.

Canadian Crypto markets public companies have traded poorly and crypto in general, has traded soft up until recently. The private markets for ICOs, for private equity transactions are raging bull market, tons of money is pouring into venture capital funds, Silicon Valley has become Crypto Valley. CEO, Galaxy Digital

The lengthy listing time came from the fact that Galaxy Digital chose to undergo a reverse takeover by merging with a TSX-listed shell company. Regulators examined the deal closely, going so far as to push back the final approval for listing from April to August. Crypto markets have been unkind to any investor who might’ve jumped-in during late 2017. Canadian regulators kept the company from listing for eight months, and in the meantime, bitcoin lost roughly half its value. Since the company sold shares in a private placement in January, the price of bitcoin has fallen by roughly 50%.

The reverse takeover

In Canada, the crypto mining companies have employed that process for years. More recently, the reverse-takeover route has become popular with marijuana producers and cryptocurrency startups. When Galaxy filed for approval, regulators gave the firm extra scrutiny, pushing back its trading debut from April to August.

There was a surge of companies that listed in Canada and they all traded really poorly, I think the regulators got a little bit more nervous and said, Hey, wait a minute, let’s make sure we know what we’re seeing here.

Regulators were used to what was known as reverse takeovers to get a listing, an uncertainty, Galaxy Digital was taking advantage of, in order to get a seat but when cryptocurrency is involved, that apparently was enough to get a place in the stock market.

There’s a layer of due diligence that goes into figuring out and understanding the business itself, which probably takes a little bit longer than entrepreneurs like Mike would like it to, but for us that’s how we maintain market integrity, We’re excited about the upcoming listing and Galaxy is a great story. Bradly Fletcher, MD TSX

Listing of Galaxy on TSX

Galaxy’s founder, Mike Novogratz, a former Wall Street macro trader, who made hundreds of millions of dollars buying and selling Bitcoin and Ether. He became one of the crypto’s most prominent champions in Wall Street when he decided to turn the business, he’d started in his family office, into a full-service merchant bank for the blockchain and crypto community. It would trade virtual currencies, invest in related companies, manage investment funds and advise clients on deals.

Galaxy sold shares at $5 in a private placement in January, weeks after Bitcoin peaked. The firm, which is based in New York, is finally set to start trading today on the TSX Venture Exchange, through a separate vehicle, Galaxy Digital Holdings Ltd., under the GLXY ticker. Novogratz said that eventually, he intends to seek stock listings in Frankfurt, London, and Hong Kong.

Unfortunately, the Canadian capital markets aren’t roaring anymore,I have faith that they will come back, We’re going to be a global company; we want to be globally traded.

Galaxy is full service, trading digital assets, managing funds, giving financial advice, and investing in ecosystem businesses, Novogratz said that he hopes the firm will be cash-flow positive by year-end and predicted it will be profitable on a net-income basis by the second quarter of 2019.

Muhmmad Furqan

Furqan is a financial markets expert. A regular trader of cryptocurrencies and hold some investments in Bitcoin, Stellar, IOTA and OST. Contributes with latest industry insights. Contact the editor at editor.opinions@blockpublisher.com

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