Clear Street Prepares for IPO Amid Crypto Treasury Model Concerns

Clear Street Eyes $10-12 Billion IPO Valuation

Clear Street, a New York-based brokerage, is reportedly preparing to launch an initial public offering (IPO) with an anticipated valuation ranging from $10 billion to $12 billion. According to a Financial Times report citing sources familiar with the matter, the IPO could materialize as early as next month, with Goldman Sachs positioned to lead the offering.

Clear Street's Ascent in the Crypto Treasury Realm

Founded in 2018, Clear Street gained significant traction as numerous publicly traded companies embraced the “crypto treasury” strategy. This strategy involves raising capital through equity or debt markets and allocating the proceeds to acquiring substantial quantities of Bitcoin (BTC). Popularized by Michael Saylor’s MicroStrategy, which has amassed 650,000 BTC through various stock and convertible offerings partly underwritten by Clear Street. The firm also served as an underwriter for Trump Media and Technology Group, which has indicated intentions to raise billions to establish its own Bitcoin treasury operation. Clear Street’s website states the company has underwritten approximately $91 billion in combined equity, debt, and mergers and acquisitions (M&A) transactions year-to-date, including deals for prominent crypto advocates Anthony Pompliano and former U.S. presidential candidate Vivek Ramaswamy.

Crypto Treasury Model Under Pressure

Clear Street's IPO aspirations emerge at a time when the crypto-treasury model that propelled its growth is exhibiting signs of stress. Bitcoin's price has declined by approximately 30% since early October, while MicroStrategy's share price has plummeted 60% over the past six months. Many smaller crypto treasury firms are now trading at discounts to the value of their Bitcoin holdings, diminishing their ability to issue new stock to finance further BTC purchases – the very mechanism that fueled the model during the bull run. A recent report by Galaxy Research suggests that Bitcoin treasury companies are entering a “Darwinian phase” as the fundamental mechanics of their once-booming business model erode. “For treasury companies whose equities had been serving as leveraged crypto trades, the shift has been intense,” Galaxy said, adding that “the same financial engineering that amplified upside has magnified downside.”

Crypto Companies Rush to Go Public

According to the FT, approximately 316 companies have listed in the US this year, raising around $63 billion, the highest total since 2021. Last month, crypto asset manager Grayscale Investments filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) to list its shares on the New York Stock Exchange, joining a growing cohort of crypto companies going public this year. In September, crypto custody firm BitGo also filed for a US listing. During the same month, Gemini, operated by the Winklevoss twins, made its Nasdaq debut, roughly three weeks after submitting its Form S-1 to the SEC.