Wall Street Banks Plot Their Crypto Future in Bet on IPO Boom
(Bloomberg) -- After staying on the sidelines, some of Wall Street’s biggest banks are plotting how to win more crypto business, betting President Donald Trump’s embrace of the industry unleashes a wave of IPOs, share sales and convertible bonds.
Morgan Stanley, which hadn’t been a major presence in the space, is now courting potential clients for initial public offerings, according to people familiar with the matter. At Bank of America Corp., senior executives in the investment bank are discussing a potential push into facilitating deals for digital asset firms. Royal Bank of Canada is looking to do more business after working on its first crypto deal late last year, said one of the people, who asked not to be identified discussing private information.
Banks are seeking deeper ties with crypto companies to avoid missing out on deals spurred by a more relaxed regime under Trump, the self-proclaimed ‘crypto president.’ Gemini, the cryptocurrency firm backed by the billionaire Winklevoss twins, is the latest to consider an IPO as soon as this year along with Bullish, a cryptoasset exchange operator with backers including billionaire Peter Thiel. Circle Internet Financial Ltd. and crypto exchange Kraken have long-held aspirations of becoming publicly traded.
Representatives for Morgan Stanley, RBC and Bank of America declined to comment.
As a candidate, Trump pledged to make the US the “crypto capital of the planet” and since taking power, he’s sought to overhaul rules that chilled activity under President Joe Biden. Within days, Trump issued an executive order on digital assets and the US Securities and Exchange Commission launched a task force on crypto headed by Hester Peirce, a longtime advocate for the industry. White House crypto czar David Sacks said he’s studying the feasibility of the new president’s ambitions to create a national Bitcoin reserve.
Delayed IPOs
That may help unlock a wave of IPOs delayed for years amid the government crackdown on companies in the industry. Banks were also deterred by the scrutiny, with some asked by regulators to pause or hold off on planned or ongoing crypto activities and to provide additional information.
To date, the capital raising business by crypto firms — from IPOs and equity offerings to convertible bonds — has gone to a fairly regular gamut of lenders, though the largest investment banks have been selective. The highest-profile publicly-traded company in crypto remains Coinbase Global Inc., with Goldman Sachs Group Inc., JPMorgan Chase & Co., Allen & Co. and Citigroup Inc. working on the much-hyped direct listing in 2021.
Jefferies Financial Group Inc. is also active on crypto deals, advising Bullish on its potential listing along with JPMorgan. It’s also among banks working with Figure Technologies Inc. — the financial technology firm co-founded by former SoFi Technologies Inc. head Mike Cagney — on an IPO, Bloomberg reported in late 2023. Moelis & Co. and Cantor Fitzgerald are among firms active in the space as well.
While Morgan Stanley wasn’t on the Coinbase transaction, the bank did help the cryptocurrency exchange sell convertible bonds last year. The company is eager to be part of any future IPO wave should it materialize, one of the people said.
In July, Morgan Stanley was hired by IREN to help it evaluate “monetization opportunities in the AI data market,” it said at the time. IREN operates data centers that service Bitcoin mining and AI cloud services.
Late last year, RBC helped arrange a convertible bond sale by crypto mining firm Core Scientific Inc. The bank has seen an increase in Bitcoin and crypto issuers coming to market since the election, according to its website. The Canadian lender, which had taken a more conservative approach to crypto, is beginning to ramp up efforts but will be selective about the clients it picks up, one of the people said.
Banks are drawing up their lists of potential crypto IPO candidates amid broad optimism for the sector, which drove the largest and oldest digital token Bitcoin to a record high earlier this year. And signs of lenders’ renewed interest are cropping up elsewhere — in one case, an HSBC Holdings Plc senior FX strategist now has an expanded title of head of digital assets research as well.
At Bank of America, conversations about crypto in the firm’s investment bank are heating up as it prepares for more deal activity, with the lender eager to grab a slice of the hundreds of millions in fees those deals could generate, according to some of the people. The bank’s Chief Executive Officer Brian Moynihan said during a CNBC interview earlier this year that banks “will come in hard on the transactional side,” if regulation is established.
“We know how to enter the field,” Moynihan said. “From the transactional side, I think you’ll see the bank industry make moves.”
--With assistance from David Pan, Christine Dobby and Katherine Doherty.