The financial tech world witnessed a rocky start yesterday as Tether-backed Twenty-One Capital (TTO) debuted on the Nasdaq, tumbling 16% below its initial SPAC merger valuation. This marks a sobering moment for the cryptocurrency sector’s latest attempt to enter traditional markets through special purpose acquisition companies.
Twenty-One Capital, which processes payments using Tether’s USDT stablecoin, completed its business combination with Jupiter Acquisition Corp in a deal valued at $3.6 billion. Despite significant pre-listing enthusiasm from crypto enthusiasts, shares opened at $9.92 before sliding to $8.40 by market close.
“The market is still determining how to properly value crypto-adjacent businesses,” explained Howard Lutnick, CEO of Cantor Fitzgerald, during a Bloomberg interview. “There’s tension between traditional valuation metrics and the growth potential these hybrid fintech-crypto companies represent.”
The lukewarm reception comes amid broader challenges for SPAC-related listings. According to data from SPAC Research, nearly 65% of companies that went public via SPAC mergers in the past 18 months are trading below their $10 initial offering price. Twenty-One Capital now joins this concerning trend despite its high-profile backing from Tether, which manages the world’s largest stablecoin with a market capitalization exceeding $100 billion.
Paolo Ardoino, CEO of Tether Holdings, maintained optimism in a statement: “Short-term market reactions don’t alter our conviction in Twenty-One Capital’s fundamental business model. The company processes over $2 billion in monthly transaction volume with strong unit economics.”
Financial analysts point to several factors behind the disappointing debut. Goldman Sachs research highlighted institutional investor concerns about regulatory uncertainty surrounding Tether-affiliated enterprises. The SEC’s ongoing scrutiny of stablecoin operators creates an ambiguous compliance landscape for companies like Twenty-One Capital.
Transaction data revealed significant selling pressure from PIPE (Private Investment in Public Equity) investors who had secured positions at favorable pre-merger valuations. These early backers included notable crypto venture firms like Paradigm and Pantera Capital, whose partial exit signals potential unease about near-term growth prospects.
“We’re seeing a pattern where sophisticated investors capitalize on liquidity events while retail investors bear the downside risk,” noted Mary Callahan Erdoes, CEO of J.P. Morgan Asset & Wealth Management, at yesterday’s Financial Times Banking Summit. “The SPAC structure creates these inherent misalignments.”
Twenty-One Capital’s prospectus projected 85% revenue growth for 2026, a target that now faces heightened skepticism. The company’s business model relies heavily on Tether’s ecosystem adoption, which despite impressive growth, remains concentrated primarily within cryptocurrency trading platforms rather than mainstream commerce.
The Federal Reserve’s Financial Stability Report released last month specifically mentioned concerns about connections between traditional financial systems and stablecoin operations. This regulatory attention adds another layer of complexity for Tether-affiliated public companies.
Matt Levine of Bloomberg Opinion captured the market’s ambivalence: “Twenty-One Capital exists in a strange financial purgatory – too crypto for traditional investors, too traditional for crypto natives.”
Despite the challenging debut, some see opportunity in the price decline. Cathie Wood’s ARK Invest added a small position in Twenty-One Capital to its Fintech Innovation ETF, according to fund disclosures. Wood has historically embraced volatile entries into disruptive technology companies.
The company’s leadership team remains publicly undeterred. CEO Michael Ling, formerly of PayPal, emphasized operational metrics during investor calls. “We’re executing against our core thesis: facilitating faster, cheaper cross-border payments through stablecoin rails. Transaction volume grew 37% quarter-over-quarter regardless of market sentiment.”
Twenty-One Capital’s underwhelming debut reflects broader questions about cryptocurrency companies’ transition to public markets. Traditional valuation frameworks struggle to account for the regulatory risks, technological uncertainties, and growth trajectories of these hybrid entities.
As digital assets continue their gradual integration with mainstream finance, companies like Twenty-One Capital represent important test cases. Their performance will likely influence how future crypto-adjacent businesses approach public markets – whether through SPACs, direct listings, or traditional IPOs.
For now, investors appear to be approaching Tether-linked ventures with caution, demanding clearer evidence that stablecoin-powered payment systems can deliver sustainable competitive advantages and navigate an evolving regulatory landscape. The next quarterly earnings report, expected in February, will provide crucial insights into whether Twenty-One Capital can reverse market sentiment and begin building credibility as a public company.
