• OpenSea’s IPO positioning uncertain due to SEC scrutiny and market volatility
• NFT market faces challenges, with declining valuations and regulatory uncertainty
• Wider crypto industry still sees IPO pipe growing

Non-fungible tokens companies like OpenSea are facing an uphill battle in their path toward the public markets, as the category faces investor and regulatory scrutiny.

OpenSea, the New York-based peer-to-peer marketplace for crypto goods and non-fungible tokens, has been on advisory radar for an initial public offering, though recent regulatory scrutiny and market volatility are raising doubts about a public markets route for both the company and the non-fungible token (NFT) space, according to market participants.

The company has been monitored for an IPO in late 2025 in the past few months, according to two advisors who cited conversations with external firms. But hopes are dimming for a near-term exit, as well as the feasibility of listings in the same space.

The U.S. Securities and Exchange Commission has recently threatened to sue OpenSea; the company’s CEO Devin Finzer acknowledged it had received a Wells notice “threatening to sue us because they believe NFTs on our platform are securities.” A Wells notice is a formal declaration that SEC staff intend to recommend an enforcement action.

The company, under an ‘OpenSea 2.0’ banner, started restructuring its business early this year, with layoffs affecting up to half of its workforce.

The company had previously secured USD 100m in its second post-seed capital raise, with the firm netting a valuation tag of USD 1.5bn, though its valuation is said to have decreased following that round.

OpenSea has attracted several notable investors such as Andreessen Horowitz, Coatue, CAA, Michael Ovitz, Kevin Hartz, Kevin Durant, and Ashton Kutcher.

Sector challenges

A technology consultant said NFTs remain a “small, niche” market and a hard sell. “They had their moment, but they haven’t seen a resurgence like other crypto assets like Bitcoin and Ethereum,” he said.

This is still an emerging industry, he conceded, adding that years from now this product will become more mainstream.

According to CryptoSlam, a data aggregator and analytics platform, NFT sales recorded a USD 374m monthly volume in August, a downward trend that culminated in its lowest monthly sales of 2024. This marks the first time digital collectibles recorded a volume below USD 400m this year. In addition, once-popular bored ape NFTs have dropped 93% in value.

When looking at the panorama of listed companies, OpenSea’s most immediate peer is Gaxos.AI [NASDAQ:GXAI], formerly called the NFT Gaming Company, a digital gaming platform offering proprietary games as well as games developed and published by third parties.

A sector banker said that, as a result of these industry dynamics, it is not easy for these companies to present themselves as attractive IPO candidates. “The hype of two years ago is gone; trading volumes may change, but investor skepticism is hard to overcome,” he said.

It’s a tough environment for companies that rely solely on NFTs, especially with regulatory uncertainty and profitability concerns. Still, there may be potential for companies that have diversified their business models beyond just collectibles. If a company is integrating NFTs into broader sectors and blockchain infrastructure, it has better chances of attracting interest.

“The key for any NFT-related business going public is to show real utility, I would say, and clear path to sustainable revenue,” the banker said, adding that buyside interest could see a return if institutional adoption grows or if NFTs find more practical applications, such as in real estate or intellectual property rights.

OpenSea has somewhat diversified with a variety of blockchain products like Ethereum, Polygon and Solana, making them less dependent on a single ecosystem, he added. Another example of this pivot is NFL legend Tom Brady’s non-fungible token (NFT) startup venture Autograph, which last year reportedly shifted its strategy to fend off a wider downturn in the digital asset market by shifting to a broader focus which helps celebrities foster loyalty with their fans.

The road is a long one. One investor found OpenSea over-valued when analysing its growth trajectory and cited disparities between potential liquidity value and its last financing round. Another investor said that he would not be comfortable investing in OpenSea, or the NFT space at IPO.

Another company, Ultimax Digital, planned to go public but withdrew its IPO on 31 March 2023; the company develops video games and a marketplace for selling NFTs. Meanwhile, Dapper Labs has raised more than USD 650m and there’s been IPO speculation around its options.

The banker said that the NFT market has been evolving quickly, and platforms like OpenSea, derivative of the wider crypto infrastructure, are especially tied to the wider sentiment; the digital collectible market, and the hype around NFTs, have been in decline, this banker said. Companies have struggled due to inflated promises and speculative bubbles. In addition, NFT creators and platforms are now focusing on rebuilding trust by creating real utility for tokens, as well as expanding in areas like gaming and real-world asset tokenization.

Regulatory scrutiny has also increased, as the CEO’s notice showcased, as the SEC has started investigating whether NFTs constitute unregistered securities.

OpenSea did not respond to a request for comment.

Crypto stands more of a chance

NFT-focused OpenSea, a subset of blockchain technology, is distinct from cryptocurrencies like bitcoin, primarily deals with digital ownership and collectibles rather than currency trading.

After a tumultuous year, the cryptocurrency sector by contrast to NFTs is showing signs of recovery, with interest in equity capital markets and initial public offerings slowly returning, this news service previously reported. Last year, the crypto market faced significant headwinds due to regulatory crackdowns, market volatility, and the collapse of several high-wattage platforms like FTX and Terra Luna; now clearer guidelines and adoption by established financial institutions point to a rosier outlook.

Several candidates are lining up.

Boston, Massachusetts-based Circle Internet Financial, the company behind stablecoin USDC, said last January that it had confidentially filed for a US IPO as part of plans to become a publicly traded company. It has been reported that the US SEC has raised concerns too over the status of USDC, with worries related to the risks associated with it and other stablecoins potentially being classified as securities under US law.

Other candidates on a 2025 roadmap include Genesis Digital Assets, a major Bitcoin mining company, as well as crypto exchange Kraken. Both candidates are seeking to raise pre-IPO funding rounds before the end of the year.