Crypto Startup Bullish to Merge with SPAC in $9 Billion Deal
Bullish, a fast-growing crypto startup, announced in early July that it would be going public. It plans to merge with a special purpose acquisition company, or SPAC. The SPAC is Far Peak Acquisition Corp. Thomas Farley, the former head of the New York Stock Exchange (NYSE), will run Far Peak. The merger would give the combined company an approximately $9 billion valuation.
Bullish is a not-yet operational crypto exchange. It is a subsidiary of Block.one, a blockchain software firm led by Brendan Blumer. Bullish launched in May 2021 with the backing of billionaire investor Peter Thiel and hedge fund managers Alan Howard and Louis Bacon. The company will operate as an independent entity under the Block.one parent company.
Closing will take place at the end of 2021. Upon completion of the merger, Farley will assume the role of CEO of Bullish. Farley was the president of NYSE from 2014 to 2018. Prior to that, he served as President and Chief Operating Officer of the Intercontinental Exchange (ICE), an operator of exchanges for financial and commodities markets around the world. It will be interesting to watch his moves as CEO in light of his past work experience at NYSE. In his role at NYSE, he regularly interacted with financial regulators. In 2015, Farley oversaw NYSE’s minority investment in Coinbase.
Bullish Anticipates Position in Crypto Market
At the time of launch, CEO Brendan Blumer described Bullish as an exchange that will be well-positioned in the market. “The Bullish exchange will leverage blockchain technology and a new market architecture to revolutionize the high-performance trading landscape by transparently automating expensive third-party functions and turning them into yield-generating portfolio management tools to offer institutions and individuals better and safer access to the latest cryptocurrency investment strategies,” stated Blumer.
Bullish had $10 billion in funding to begin with. It plans to launch its crypto exchange later in the year. The company has a $75 million investment from SoftBank. It also has sizable funding from the crypto investment firm Galaxy Digital and global bank Nomura.
Private Pilot Program Coming Soon
Bullish will soon be starting a private pilot program. It intends to debut “a revolutionary, regulated cryptocurrency exchange” before the end of 2021. According to a press release, the exchange will provide “deep, predictable liquidity with technology that enables retail and institutional investors to generate yield from their digital assets.”
“We’re only in the first or second inning of the cryptocurrency market and I’m thrilled to be joining the Bullish team as we revolutionize the future of digital assets through cutting edge financial technologies,” said Farley.
Some are skeptical of Bullish’s decision to go public. The 29-year-old billionaire crypto investor Sam Bankman-Fried of FTX, thinks the real motivation to go public is to raise the value of the EOS blockchain that is associated with Block.one.
Crypto Regulators’ Increasing Scrutiny
Financial regulators in the United States and across the globe have increasingly been scrutinizing cryptocurrency transactions and imposing new regulations. In May, the U.S. Treasury announced regulations that would make any cryptocurrency transfers worth $10,000 or more reportable to the Internal Revenue Service (IRS). With the U.S. Securities and Exchange Commission (SEC) headed by Gary Gensler, who formerly taught cryptocurrency finance courses at MIT, further regulation seems imminent. Senator Elizabeth Warren recently wrote to Gary Gensler, asking the SEC if it will take actions to close regulatory gaps in the “opaque and volatile” cryptocurrency market. As chair of the SEC, Gensler is obligated to respond by July 28th.
The moves Chinese regulators have made are among the most closely followed due to the market’s size and recent crackdowns. In May, China banned financial institutions and payment companies from providing crypto-related services. On June 22, bitcoin prices dropped 10% after the Chinese government announced sanctions on trading and mining of bitcoin. The prices of other popular crypto, including ether and dogecoin, similarly plummeted upon release of the news. The government cited illegal money laundering and cross-border activities as among the reasons behind its decisions.
Bullish Undeterred by Bitcoin Valuation
Bitcoin currently is trading around $30,000. This is a dramatic fall from its April peak of nearly $65,000. Despite the recent fall in bitcoin prices and a wave of new regulations targeting crypto markets, many see crypto as having an enduring presence. Supporters of crypto see its potential to disrupt traditional financial frameworks.
“Digital assets are here to stay. The smartest engineering talent is going into digital assets; digital assets are solving very important problems. Anybody who tells you they know exactly how it’s going to turn out is lying or delusional, but in general, you’re going to see more and more interesting use cases, more and more dollars go into the space,” Farley stated.