A brief discussion on OKX’s US stock listing: CEX’s new turning point and OKB’s future

Original source: BroLeonAus (X: @BroLeonAus )

Today, the news that OKX will be listed in the United States has spread widely in the circle, and OKB has risen by 10 points at most. After reading it, everyone’s opinions include:

1. Good news for OKX to expand its market share

2. Good news for OKB’s rise

3. Good news for @star_okx, further freedom of wealth

4. Open up new paths for other CEXs and projects that have not been recruited

5. Signals of the bull market reaching its peak

Hmmm, I dont agree with some of the opinions, but some are interesting. I originally wanted to read the opinion of reporter @Yueqi_Yang in the main text of her story, but unfortunately it costs several hundred dollars to subscribe, so forget it. It would be a big event for the industry if OKX can really go public on the US stock market. I will do some research myself and write as I like.

First of all, congratulations to @star_okx (note: founder of OKX) for finally realizing his layout after so many years. From buying Shell Cloud Chain in Hong Kong stocks many years ago to later preferring CEX to abandon a large number of C-end users to comply with regulations and reduce the empowerment of OKB, and even abandoning his own martial arts at the critical moment of the wallet war and agreeing to comply with regulations, we can see his determination. Many things are difficult to understand in the short term. For example, OKX was very aggressive in listing coins and new IPOs, but suddenly became extremely conservative. Isnt this driving away its own C-end users? (Today, under the reporters tweet, there are still people laughing at OKX for no longer being one of the top three CEXs) But now you can understand many of their past decisions by using the thread of listing on the US stock market. From wild growth to entering mainstream finance, many times it is impossible without a heroic move.

In a word: Star took great pains to recruit the amnesty, and the mysteries of a large number of previous mysterious operations began to be revealed.

If it goes public, what are the highlights?

1. Where is OKB headed?

Take OKB as an example. If OKX wants to be listed in the United States, OKB is very likely to become useless or even marginalized (so why is it rising today? Maybe it’s because there are no other more relevant targets for this positive news). Why has OKB rarely been empowered to issue new shares like BNB in the past two years? A big reason is that it will enhance the securities attributes and easily fall into the judgment framework of the Howey Test (securities identification standard).

Regulatory perspective: SEC is extremely sensitive to platform coins

In the eyes of the U.S. Securities and Exchange Commission (SEC), most platform coins may be deemed as unregistered securities, and OKB is no exception.

مثال:

• BNB: In the lawsuit filed by the SEC against Binance, it was clearly stated that BNB is a security.

• FTT: After the collapse of FTX, FTT was also designated as an illegal security by the SEC.

• Before its listing, COINBASE voluntarily gave up issuing platform coins to avoid potential legal obstacles.

Therefore: If OKX wants to be listed in the US smoothly, OKBs securities risk is a huge obstacle. Now I feel that I am in a chicken rib state where I dare not push and cannot cut. I personally speculate that the subsequent strategy of OKX towards OKB is likely to split the business structure and give the operating rights of OKB to non-US entities independently, as an equity token/decentralized public chain GAS for the international market. I asked a few friends, and some of them felt that OKB would even be hollowed out to a certain extent and become an abandoned legacy, and even after OKX successfully listed, it would deliberately downplay the existence of OKB.

I agree with another point of view: $OKB may be retained, but try to remove the strong binding relationship with CEX and meet the needs of decentralization, such as OKXs public chain.

Final conclusion: I am not likely to invest in $OKB at this stage, and I have to be careful about shorting it because the coin is too centralized. Unless the market misunderstands the logical relationship and listing OKX = good for OKB, generating fomo, I would not dare to do so.

2. What are the fundamentals of OKX’s listing?

I checked the article written by @Roshan_OKX, the head of OKxs US business, in April this year. They have officially opened registration to US users and will promote it nationwide later this year.

The main concept is cryptocurrency super app, which provides deeper liquidity, lower transaction fees and more advanced trading tools. It is worth mentioning that OKXs wallet will also be opened at the same time. Compared with the advantages of CEX and the current mainstream CEX in the United States, the wallet is indeed the best at present. ( Portal here )

If the company is successfully listed in the future, looking at the stock fundamentals will actually mean looking at the companys core profitability.

I checked Coinbases business revenue, which mainly comes from the following aspects (based on its financial reports in recent years):

1. Transaction Revenue — The largest proportion, accounting for about 70% of Coinbase’s total revenue (even higher during the bull market)

2. Subscription and service income Staking, custody, Earn, USDC interest, etc. ~ 20-35% (increasing year by year)

OKXs revenue is mainly distributed in the following core modules:

1. Transaction fees (covering spot, leverage, and derivatives) – the main source of income;

2. Deposit and withdrawal fees (supporting multiple fiat currencies) – stabilize the fiat currency channel income;

3. Staking/DeFi commission (Web3 service) — the future is promising;

However, OKX’s killer feature, the wallet, does not charge for swaps. If the US market becomes more sophisticated, and the model of charging for each swap is started (Rabby Wallet currently charges 0.25% for each swap), it will be a very substantial and stable income. In addition, OKX has previously obtained compliance licenses in its global layout, and listing on the US stock market can constitute a positive addition to its fundamentals, because it can significantly increase the capitalization value and market trust (amplifier) of OKX’s licenses in other parts of the world.

Now we can see the hidden clues of @star_okxs layout, which are indeed very good. If the stock is listed and the valuation is not too exaggerated, I would like to buy it.

3. Can the successful listing of OKX break the ice for other CEXs?

I think the answer is: very likely! It is almost certain to play the role of breaking the ice and opening the floodgates.

The successful listing of OKX will be the first time that the traditional financial regulatory system has substantively recognized the legal business model and risk control capabilities of a large CEX. This is equivalent to sending a strong signal to the entire industry: CeFi is not an original sin, and compliance can be listed. Compared with Coinbase, a native American CEX that is inherently expensive, OKX represents a grassroots CEX that has grown wildly from the cryptocurrency circle, a CEX dominated by Chinese, and a more native cryptocurrency generation.

Regulatory agencies such as the US SEC, CFTC, HK SFC, and Singapore MAS will pay close attention to the structure, risk control framework, and information disclosure methods of OKXs listing. If OKX succeeds, it will be a verification of the route, especially for exchanges such as Binance and Bybit that have huge global scale but have not yet achieved public capitalization. If OKX performs well after listing (such as high market value, good liquidity, and stable financial data), the secondary market will revalue the CEX track. At that time: investment banks will take the initiative to arrange listing paths for Binance, Bybit, and even Bitget. (Of course, the compliance costs will be very high, and I don’t think many CEXs are willing to accept this price at present) and some hedge funds and pensions will also begin to deploy CeFi equity to promote the formation of a closed loop of primary financing-listing exit-re-fundraising.

To sum up

1. OKB may not benefit from OKXs US listing, so investment needs to be cautious

2. If OKX is successfully listed, its business fundamentals will be strong in the US market, especially its wallet business. In addition, its overseas license layout in advance, the stock price valuation should not be underestimated.

3. If OKX succeeds, it will become an ice-breaking event in the history of CeFi – it will not allow Binance and Bybit to go public immediately, but it will open a path for the market and regulators to take seriously the capitalization possibility of CeFi for the first time.

The process of cryptocurrency becoming a regular army is accelerating, a new great era!

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