OKX's IPO Bet

Setting aside the regulatory farce, OKX is actually more advantageous than the only successfully listed encryption exchange, Coinbase.

Written by: Prathik Desai

Compiled by: Block unicorn

Introduction

Mr. Kennedy made his fortune during Prohibition (the period from 1920 to 1933 when the sale, production, and distribution of alcoholic beverages was 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 took it upon himself to clean up Wall Street with a renewed enthusiasm, implementing rules that still govern the securities market today.

A similar story in the modern encryption currency field is the transformation of OKX 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) acknowledged processing over $1 trillion in unlicensed transactions involving American users, while knowingly violating anti-money laundering laws, agreeing to pay a hefty fine of over $500 million. Now, they hope to invite American investors to purchase company shares.

Nothing better indicates that "we have turned a new page" than voluntarily accepting the quarterly earnings call, disclosures, and filings required by the U.S. Securities and Exchange Commission (SEC).

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 crypto companies take a compliant route, investors will enthusiastically invest.

The stock price of Circle soared from $31 to nearly $249 in just a few weeks, quickly creating billionaires and setting a new benchmark for cryptocurrency IPOs. Even Coinbase, the largest cryptocurrency exchange in the United States, which has been listed for four years, has risen 40% in the past 10 days, trading close to 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 for years, testifying at congressional hearings and publishing transparency reports. Meanwhile, OKX recently admitted to facilitating $5 billion in suspicious transactions and criminal proceeds, and has had to make strong commitments not to repeat the same mistakes.

Different CEXs, Different Stories

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

When the encryption market goes crazy, such as in a bull market, they can make a lot of money. Both platforms offer basic services for cryptocurrencies: spot trading, staking, and custody services. However, their business development approaches are completely different.

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

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

OKX has chosen the rabbit strategy: act quickly, seize global market share, and consider regulatory issues later. From a business perspective, this strategy is 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. Along with their derivatives trading (they hold a 19.4% market share globally), the encryption trading volume handled by OKX far exceeds that of Coinbase.

The daily average spot trading volume of OKX is approximately $2 billion, while the derivatives trading volume exceeds $25 billion, and Coinbase's figures are $1.86 billion and $3.85 billion, respectively.

However, the increase in speed is accompanied by 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 "asking for forgiveness rather than permission," which has been effective until you have to seek forgiveness from the Department of Justice.

There is a problem: the income of the cryptocurrency exchange completely relies on people continuing to enthusiastically trade encryption. When the market is hot, the exchange makes a fortune. When the market cools down, income can drop significantly overnight.

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

OKX's $500 million settlement agreement has become a forced education that made them understand how the American financial market actually operates. They seem to have learned from their costly mistakes. They have hired former Barclays executive Roshan Robert as the CEO for the US, opened compliance offices in San Jose, New York, and San Francisco, hired 500 employees, and started talking about creating a "game-defining super app," which indicates that 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 that of Coinbase, or even higher.

Coinbase's market cap is approximately a multiple of its monthly trading volume, with an average monthly trading volume of $92 billion and a market cap exceeding $90 billion. OKX's monthly trading volume is $98.19 billion, which is 6.7% higher than Coinbase. Calculating by 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.

The regulatory burden on OKX 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 regulators have just banned the operations of OKX and several other exchanges.

If a "regulatory risk discount" of 20% is applied, OKX's valuation could be $68.7 billion. However, given 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 USD, 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 U.S. market, while OKX serves markets with surging cryptocurrency adoption: Asia, Latin America, and parts of Europe where traditional banking is still underdeveloped.

Dominance of Derivatives: OKX controls 19.4% of the global encryption derivatives market, while Coinbase's derivatives business is negligible. Derivatives trading fees are higher, attracting more experienced traders. Coinbase recently announced the launch of perpetual contracts, which means OKX will face fiercer 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 the publicly listed Coinbase.

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

Possible Issues

OKX faces significant risks that are different from typical IPO concerns.

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 a significant amount of revenue overnight.

Market cyclicality: The income of encryption exchanges fluctuates with trading activities. When the cryptocurrency market is calm, exchange revenue may plummet.

Reputation 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 vulnerabilities can destroy customer confidence overnight.

Our Viewpoint

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

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

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

Both strategies can be effective, but they attract vastly different investors. Coinbase is a prudent choice for institutional investors seeking regulated exposure to encryption. OKX may appeal to those investors who are optimistic about the future of cryptocurrency in terms of global adoption and complex trading products.

Circle proves that investors are willing to invest in clean encryption stories. OKX is betting that investors will do the same for them, even if they have a complicated past.

Whether OKX's reform image can resonate in the public market will reveal the true level of importance that investors place on growth and governance in the encryption field.