Galaxy Digital, billed as the “Goldman Sachs of cryptocurrency” is finally to go live. As of the first of August, the bank will start trading on Toronto’s TSX Venture Exchange.
Describing itself as a “multi-strategy investment firm focused on digital assets and blockchain technology,” Galaxy Digital is the brainchild of legendary hedge fund manager and Bitcoin bull Mike Novogratz. Unfortunately for Novogratz, its launch has not been as smooth as expected, with crypto prices in a slump and regulators needing extra reassurance.
Though Novogratz remains bullish on cryptocurrency’s long term potential, the delays have cost him and his investors in the short term. “I don’t think it’s a mistake,” he told Bloomberg, though if he had known that “the crypto markets were going to swoon as much” and that the process would be so drawn out, he “might have stayed private for another year or so and then gone public.“
Novogratz was unable to hold an IPO in the US due to the requirement that all companies looking to go public have at least two years of audited financials. In order to get around these regulations he decided to do it in Canada through a series of complicated manoeuvres.
First Galaxy had to merge with an existing member through a reverse takeover. This is a common route in Canada, particularly for companies in less established industries like cryptocurrency and cannabis. According to Novogratz there had been “a surge of companies that listed in Canada and they all traded really poorly” so regulators “got a little bit more nervous” and upped their scrutiny of any new companies.
Brady Fletcher, the managing director of the exchange, said that regulators needed to get to grips not just with the complicated company structure, but with cryptocurrencies in general. “There’s a layer of due diligence that goes into figuring out and understanding the business itself,” he said. While this “probably takes a little bit longer than entrepreneurs like Mike would like it to,” it was the only way to “maintain market integrity.”
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