Clear Street Prepares for Public Listing

Clear Street, a New York brokerage that rose to prominence during the surge in crypto-treasury adoption, is gearing up for a public listing. The company is expected to be valued between $10 billion and $12 billion. Goldman Sachs is slated to lead the offering, although one source indicated that the deal might not be priced before January, according to a report by the Financial Times.

Founded in 2018, Clear Street gained significant attention as public companies began leveraging equity and debt markets to finance substantial Bitcoin purchases. This strategy was notably popularized by Michael Saylor’s firm, Strategy, which made BTC accumulation a core corporate objective. Strategy has acquired 650,000 BTC through numerous offerings, with Clear Street underwriting several of these transactions. The brokerage also underwrote deals for Trump Media and Technology Group, which had outlined plans to raise billions for its own Bitcoin treasury. According to its published figures, Clear Street has managed approximately $91 billion in combined equity, debt, and M&A transactions this year, including deals associated with crypto proponents Anthony Pompliano and former U.S. presidential candidate Vivek Ramaswamy.

Investor Takeaway

Clear Street is entering the public market on the strength of a boom it helped facilitate. Its IPO comes at a time when the BTC-treasury model is experiencing its first significant challenges, creating a divergence between the brokerage's current momentum and the future prospects of its primary client base.

Challenges Facing the Crypto-Treasury Model

The timing of Clear Street's IPO is noteworthy, as its main revenue stream is showing signs of strain. Bitcoin's value has declined by approximately 30% since early October, impacting equity-linked treasury firms that previously relied on rising token values to justify aggressive capital raises. Strategy shares have seen a decline of about 60% over the past six months. A growing number of smaller treasury firms are now trading below the market value of their BTC holdings. This discount hinders their ability to issue new stock to purchase more Bitcoin, which was the core mechanism driving the strategy during the bull market phase.

Galaxy Research has characterized this shift as a "Darwinian phase" for the sector. The firm observed that the mechanics that once amplified these companies' gains have now reversed, intensifying their losses. "For treasury companies whose equities had been serving as leveraged crypto trades, the shift has been intense," the firm stated, adding that "the same financial engineering that amplified upside has magnified downside."

Clear Street's Sustained Momentum

Despite the pressure on treasury firms, Clear Street's underwriting volume remains robust. The firm's business encompasses a variety of equity and debt issuances, and it has cultivated a strong pipeline during a year marked by a surge in U.S. listings. The Financial Times reported that approximately 316 companies have gone public in the United States this year, raising about $63 billion, the highest figure since 2021.

The crypto sector has been a significant contributor to this trend. Last month, Grayscale Investments filed an S-1 for a listing on the New York Stock Exchange. BitGo submitted its listing documents in September, and Gemini, operated by the Winklevoss twins, also made its Nasdaq debut after filing its Form S-1 with the SEC. This wave of activity provides Clear Street with a market opportunity that was not present in 2022 or 2023. The brokerage's connections to prominent crypto issuers enhance its visibility, even as the BTC-treasury model experiences a slowdown. Investors will need to evaluate whether Clear Street's underwriting momentum can persist if treasury firms reduce their issuance activities.

Investor Takeaway

Clear Street's IPO success will depend on its ability to compensate for a cooling treasury cycle with its broader deal flow. If treasury firms scale back their operations, the brokerage will increasingly rely on mainstream equity and debt markets to maintain its valuation.

The Path Forward to the IPO

The filing process is currently underway, and the pricing of the offering will be influenced by market demand for crypto-related entities. Goldman Sachs will lead the offering, but the timeline remains adaptable. If the January pricing guidance is maintained, Clear Street will join a growing number of crypto-adjacent firms entering the public markets amidst mixed investor sentiment.

The company's pitch to potential investors is likely to emphasize its role in rapidly expanding issuance cycles, its infrastructure development, and its capacity to capture market activity beyond the crypto treasury space. The critical question is whether the surge in 2024 underwriting volume represents a sustainable trend or a peak associated with a waning strategy. For the present, the brokerage is preparing to gauge public market appetite at a juncture characterized by both enthusiasm and caution, a fitting environment for a firm that has thrived during the most aggressive corporate Bitcoin accumulation cycle to date.