US SPAC Crypto 1 Acquisition Corp. closes IPO, says Hong Kong crypto firm not its target

Crypto 1 Acquisition Corp., a U.S.-incorporated blank check company, has completed its initial public offering (IPO) with gross proceeds of US$230 million, according to a company statement released Friday.

Fast facts

• The company’s units commenced trading on the Nasdaq Global Market under the ticker symbol “DAOOU” on Dec. 7.

• Acting as a special purpose acquisition company (SPAC), Crypto 1 will be primarily focused on the digital assets industry, including crypto exchanges, payment systems including wallets and decentralized finance (DeFi).

• However, Crypto 1 notably said in the statement that it would not pursue any mergers or business combinations with any entity incorporated, organized or has principal business operations in mainland China, which bans crypto trading, as well as Hong Kong — which, under the one-country two-systems regime, still reigns as one of Asia’s crypto hubs.

• SPACs are known as blank-check companies set up for the purpose of raising money through an IPO. It is then used to eventually acquire or merge with a target company, which can go public without the paperwork of a traditional IPO, a practice that’s also referred to as backdoor listing.

• Going public via a SPAC deal is nothing new for crypto-related companies. For example, Singapore-based digital assets group Diginex, which operates crypto exchange EQONEX, went public in October last year via a SPAC merger.

• Just last month, Griid Infrastructure, a U.S.-based Bitcoin mining company, said it is going public through a merger with Adit EdTech Acquisition Corp., in a SPAC deal that would value the combined company at about US$3.3 billion. In October, U.S.-based Bakkt, a cryptocurrency custodian and trading platform, went public on the New York Stock Exchange, also through a SPAC merger.

• “Most fintech firms go public in the U.S. because of the country’s clear regulatory regime, deep liquidity in its capital markets and the ability for sellers to find a buyer quickly without losing money,” Raymond Hsu, co-founder and CEO of Cabital, a Hong Kong-based cryptocurrency wealth management platform, told Forkast.News in an emailed response. “But I don’t think Hong Kong is going anywhere in the short and medium term. Hong Kong continues to be a major hub for traditional finance, law, trade and fintech.”

• Malcolm Wright, advisory council chair of Global Digital Finance, an industry group, told Forkast.News that it’s important to recognize that some of the largest crypto firms are not publicly listed or have no intention to be.

• “[Hong Kong Exchanges and Clearing Ltd.] proposed in September to introduce Hong Kong-based SPACs that might support more options for both SPAC listings and their acquisition targets,” Wright said. “As this financial services sector evolves and we see investors seeking the best opportunities from around the globe, it may be that Hong Kong can continue to develop as the Asia hub for financial technology innovation.”