- Companies delay IPOs due to high compliance costs and long timelines, often staying private nearly 20 years.
- Traditional IPOs can cost ~$300M, including legal, audit, and underwriting fees, limiting fast-growing firm access.
- On-chain IPOs could tokenize shares, enable faster settlement, reduce intermediaries, and expand global investor access.
Coinbase CEO Brian Armstrong said companies will eventually conduct IPOs entirely on-chain, replacing traditional listing systems. Armstrong said heavy compliance costs, long timelines, and outdated infrastructure have pushed companies to delay public listings and rely on private funding instead.
Regulation and Delays Keep Firms Private Longer
Armstrong said companies now stay private far longer than in previous decades. In the 1980s, firms often listed within five years. Today, many wait nearly 20 years before going public. According to Armstrong, regulatory expansion explains much of the shift.
He cited reporting and compliance rules introduced under laws like Sarbanes-Oxley. These requirements raised costs and complexity for public companies. As a result, startups increasingly rely on private capital markets.
This structure concentrates early investment access among venture capital firms and institutions. Consequently, public investors gain exposure much later in a company’s growth cycle.
High IPO Costs Drive Calls for Structural Change
Armstrong also pointed to the cost of traditional IPOs. He said a single public listing can cost roughly $300 million. Expenses include underwriting fees, legal services, audits, and regulatory preparation.
Additionally, the process can take several years. Armstrong said these delays restrict fast-growing firms. He added that the current IPO system no longer fits a digital economy. Therefore, he believes structural changes will become necessary over time.
On-Chain Listings Offer Faster Settlement and Access
Armstrong said on-chain IPOs could address many of these issues. Under this model, companies would issue tokenized shares on a blockchain. Trading and settlement would occur directly on-chain.
This approach could reduce intermediaries and shorten settlement times from days to minutes. Armstrong also said blockchain systems could improve global investor access. Smart contracts could automate compliance and recordkeeping.
However, he acknowledged challenges remain. Current securities laws do not fully support blockchain-based listings. Privacy protections and investor safeguards would also require regulatory updates.
