OKX's IPO bet

Author: Prathik Desai; Translated by: Block unicorn

Introduction

Mr. Kennedy made his fortune during Prohibition (the period from 1920 to 1933 when the sale, production, and distribution of alcohol were banned in the United States) by running a liquor business. After Prohibition ended, he became the first chairman of the Securities and Exchange Commission. It is said that President Roosevelt remarked about this appointment: "Let the thief catch the thief." Kennedy then enthusiastically cleaned up Wall Street and implemented rules that still govern the securities market today.

Similar stories in the modern cryptocurrency space include OKX's transformation from a regulatory outcast to a potential IPO candidate.

According to a report on Sunday, the cryptocurrency exchange OKX, located in Seychelles, is considering going public in the United States, just four months after agreeing to pay a $505 million fine to the U.S. government for operating without permission.

In February 2025, this global second-largest centralized exchange (CEX) admitted to processing over $1 trillion in unlicensed transactions involving U.S. users, while knowingly violating anti-money laundering laws, and agreed to pay a hefty fine of over $500 million. Now, they hope to invite U.S. investors to purchase company shares.

Nothing signifies "we have turned a new page" more than voluntarily accepting the U.S. Securities and Exchange Commission (SEC) requirements for quarterly earnings call meetings, disclosures, and filings.

Can a cryptocurrency company succeed on Wall Street? Circle has recently proven that it is possible. In the past few weeks, this USDC stablecoin issuer has shown that if a crypto company takes a compliant approach, investors will eagerly invest their money.

Circle's stock price soared from $31 to nearly $249 in just a few weeks, rapidly creating billionaires and setting a new benchmark for cryptocurrency IPOs. Even the largest cryptocurrency exchange in the U.S., Coinbase, has risen 40% in the past 10 days, trading near its highest point in four years.

Can OKX achieve similar success on the exchange?

The regulatory record at the time of Circle's listing was very clear. They have been wearing suits and testifying at congressional hearings for years, and publishing transparency reports. Meanwhile, OKX recently admitted to facilitating $5 billion in suspicious transactions and criminal proceeds, and had to make strenuous commitments not to repeat the mistakes.

Different CEXs, Different Stories

To understand OKX's IPO prospects, let's take a look at Coinbase, which is the only large cryptocurrency exchange that has successfully entered the public market. OKX and Coinbase have the same way of making profits: by charging fees for each cryptocurrency transaction.

When the crypto market goes crazy, like during a bull market, they can make a lot of money. Both platforms provide basic cryptocurrency services: spot trading, staking, and custody services. However, their business development approaches are completely different.

Coinbase has taken a compliance-first approach. They hired former regulatory agency members, established institutional-grade systems, and spent years preparing to go public on Wall Street. This strategy paid off, as they went public in April 2021, and despite the ups and downs of the crypto market, they now have a market capitalization of over $90 billion.

In 2024, Coinbase's average monthly spot trading volume was $92 billion, primarily coming from U.S. customers paying high fees for regulatory certainty. This is the turtle strategy: slow and steady, focusing on doing well in one market.

OKX has chosen the rabbit strategy: act quickly to seize global market share, and consider regulatory issues later. From a business perspective, this strategy has been very successful.

In 2024, OKX's average monthly spot trading volume was $98.19 billion, 6.7% higher than Coinbase, serving 50 million users across more than 160 countries. Including their derivatives trading (they hold a 19.4% market share globally), the crypto trading volume handled by OKX far exceeds that of Coinbase.

OKX's average daily spot trading volume is approximately $2 billion, while the derivatives trading volume exceeds $25 billion, compared to Coinbase's $1.86 billion and $3.85 billion.

However, the increase in speed comes with a rise in costs. Coinbase has established a good relationship with U.S. regulators, while OKX is actively seeking U.S. customers despite being banned from operating in the U.S. Their attitude seems to be "request forgiveness rather than permission," a stance that has been effective until you have to seek forgiveness from the Department of Justice.

There is a problem: the revenue of cryptocurrency exchanges completely relies on people's continued enthusiasm for trading cryptocurrencies. When the market is hot, exchanges make a lot of money. When the market cools down, revenue can drop significantly overnight.

For example, in June 2024, the total trading volume of spot and derivatives on the exchange fell by over 50% from the peak of about $90 trillion in March.

OKX's $500 million settlement agreement has served as a forced education, making them understand how the U.S. financial markets actually operate. They seem to have learned from their costly mistakes. They hired former Barclays executive Roshan Robert as CEO for the U.S., opened compliance offices in San Jose, New York, and San Francisco, employed 500 staff, and started talking about building a "defining industry super application," which indicates they are seriously undertaking reforms.

Interestingly, whether investors will buy into this redemption narrative.

Valuation Game

Based on trading volume, OKX's valuation should theoretically be comparable to, or even higher than, Coinbase.

Coinbase's market capitalization is approximately a single multiple of its monthly trading volume, with an average monthly trading volume of $92 billion and a market capitalization exceeding $90 billion. OKX's monthly trading volume is $98.19 billion, which is 6.7% higher than Coinbase. Using the same multiple, OKX's valuation would reach $85.4 billion.

However, valuation is not just a mathematical problem; it also involves perception and risk.

OKX's regulatory burden may lead to a valuation discount. Their international business means that profits depend on a rapidly changing regulatory environment, as they have experienced in Thailand, where Thai regulators have just banned OKX and several other exchanges.

If a 20% "regulatory risk discount" is applied, OKX's valuation could be $68.7 billion. However, considering their global influence, dominance in the derivatives space, and higher trading volume, their valuation premium is justified.

Reasonable valuation range: $70 billion to $90 billion, depending on investors' emphasis on growth and governance.

Advantages

The investment appeal of OKX is based on several competitive advantages that Coinbase lacks.

Global scale: Coinbase primarily focuses on the US market, while OKX serves markets experiencing a surge in cryptocurrency adoption: Asia, Latin America, and parts of Europe where traditional banking is underdeveloped.

Dominance in Derivatives: OKX controls 19.4% of the global crypto derivatives market, while Coinbase's derivatives business is minimal. Recently, Coinbase announced the launch of perpetual contracts, which means that OKX will face more intense competition from mature and regulated players like Coinbase.

Leading in trading volume: Despite being a private company with recent regulatory issues, OKX's spot trading volume still exceeds that of publicly listed Coinbase.

Coinbase also has its advantages - a clean regulatory record and good relationships with institutional investors, who prefer predictable compliance costs over global growth stories with regulatory complexities.

Possible Issues

The risks faced by OKX are immense and differ from the typical concerns of an IPO.

Regulatory upheaval: OKX operates in dozens of jurisdictions where rules change rapidly. The ban in Thailand is just the latest example. Any major market could lose significant revenue overnight.

Market Cyclicality: The revenue of cryptocurrency exchanges fluctuates with trading activity. When the crypto market is calm, exchange revenues may plummet.

Reputational Risk: Despite reaching a settlement, OKX may still suffer serious reputational damage due to a regulatory scandal. Crypto exchanges are inherently high-risk businesses, and technical failures or security breaches can destroy customer confidence overnight.

Our Perspective

The potential IPO of OKX could be a compelling test to see if the public market will overlook the problematic background of this exchange.

Putting aside the regulatory farce, OKX is actually more advantageous than the only successful listed cryptocurrency exchange, Coinbase. They dominate in derivatives trading and have a global customer base.

Whether OKX has learned from its mistakes (expensive lessons are often remembered) may not be important. What really matters is whether public market investors are willing to pay growth multiples for a company operating in dozens of unpredictable regulatory environments. Coinbase has built a moat of compliance reputation in the U.S.; OKX has established a global trading empire and is now undergoing a compliance transformation around it.

Both strategies can be effective, but they attract completely different types of investors. Coinbase is a safe choice for institutional investors seeking regulated exposure to cryptocurrencies. OKX may attract investors who are optimistic about the future of cryptocurrencies in terms of global adoption and complex trading products.

Circle proved that investors are willing to put money into clean crypto stories. OKX bets that investors will do the same for them, even with a complicated past.

Whether OKX's reform image can resonate in the public market will reveal the true importance investors place on growth and governance in the cryptocurrency space.