Mike Belshe has worked in crypto since the industry’s early days, founding his firm BitGo back in 2013. He is a strong believer in the power of blockchain to transform finance yet, when the time came to take BitGo public this year, Belshe found the entire IPO process is built entirely around legacy practices. On the latest edition of Fortune’s Crypto Playbook vodcast, which you can enjoy on Spotify, Apple, and YouTube, Belshe shared the experience of going public — and how he thinks it could be improved.
“The technology can start to change how we take [companies] to market, and maybe more interestingly, it can break up just having the large incumbents that currently run the IPO processes to other more innovative types of markets that may be very different,” said Belshe.
The current IPO process typically involves banks lining up wealthy investors to buy a company’s newly-public stock at an agreed upon price in hopes of gaining a “pop” when the stock begins to trade among retail investors a short time later.
Belshe made the case that this is not necessarily the most efficient form of price discovery for a new asset, and that other models such as Dutch auctions or direct listings likely work better, but that Wall Street tends to look down on such alternatives. He also observed that the process of listing stocks for the first time is similar to when blockchain projects issue new tokens.
“The IPO process is actually pretty similarly unwieldy. It’s the same basic thing. You’re taking a token, or in this case, an equity, and you’re making it available on markets, and it starts out as a thin market. So it’s got all the properties that thin markets have, which is that they are more volatile and things like that,” said Belshe.
In the future, Belshe hopes that regulators and Wall Street will be able to tap into blockchain technology, which offers new ways for companies to issue equity directly and with fewer middlemen.
During the vodcast, Belshe also reflected on the journey of BitGo, which began as a Bitcoin custodian, but now provides a wide range of crypto services for institutions. He believes that, in time, firms like his will become the digital asset equivalent of centuries-old icons like State Street, JP Morgan and Bank of New York.
Belshe, who has seen numerous crypto booms and crashes since founding BitGo more than a decade ago, also weighed in on potential causes of the current crypto downturn, and what it means. You can listen to the entire episode — plus Leo and Jeff’s rundown of other big crypto news this week — on Spotify, Apple, and YouTube
