Coinbase IPO: Everything You Need to Know

In short

  • Cryptocurrency exchange Coinbase has filed paperwork for an Initial Public Offering (IPO) with the SEC.
  • An IPO would mean that anyone could buy and trade shares in Coinbase.
  • In December 2020, crypto market analysis firm Messari valued the exchange at $ 28 billion.

In December 2020, cryptocurrency exchange Coinbase submit a draft Initial Public Offering (IPO) registration to the United States Securities and Exchange Commission (SEC).

If the SEC approved the filing, the cryptocurrency exchange in San Francisco would be the first cryptocurrency exchange to be listed on the US stock market.

An IPO would mean that anyone could buy and trade shares in Coinbase. That would attract many more investors to the industry. IPOs offer investors a stake in the company under the tutelage of SEC regulatory headwinds. It would also give Coinbase a lot of money, which they could use to hire staff, grow their crypto empire and beef up their technology.

Filing it from the Form S-1 with the SEC starts that process. The application is subject to SEC scrutiny.

The regulatory agency has acted against crypto companies in the past. He has persecuted several companies for running unregistered securities sales (so called ICOs in crypto-speak) and blocked applications for a Bitcoin exchange trading fund (ETF) on the basis that the crypto market tends to be manipulated.

Will the SEC, therefore, approve Coinbase’s IPO, given that its fate is so closely tied to the rest of the market?

Goldman Sachs is supposedly the Representative of Coinbase, which is listed to help convince the US Securities and Exchange Commission that public investors would be protected from being treated by sinister whales in the unregulated. cryptocurrency market.

Coinbase: the basics

Coinbase opened to the public in 2012. Supported by about half a billion dollars from venture capitalists, the crypto exchange grew and grew, attracting over 35 million customers to date (according to data from July 2020). In December 2020, the crypto market analysis firm Messari valued the exchange at $ 28 billion.

But what … is it?

Coinbase offers two services. The first, simply known as ‘Coinbase,’ is the cryptocurrency wallet and a brokerage service so popular with the public. On Coinbase, consumers can buy and sell crypto within Coinbase using fiat currency (ie ‘regular’ currency such as the dollar, sterling, or the euro). It’s brokerage, which means you technically buy and sell from Coinbase itself and sell it.

Then there is Coinbase Pro, a more advanced exchange where consumers can buy and sell cryptocurrencies from other consumers, similar to the dozens of other exchanges.

How does Coinbase make money?

To make money, Coinbase charges several different fees on its brokerage app. There are purchase fees, which are more expensive for smaller purchases, trading fees and transaction fees, the latter of which applies to those who wish to move money out of Coinbase.

These fees also apply to Coinbase Pro. It’s more expensive than its main competitor, Binance, but its selling point is its compliance with regulators. The US will not allow Binance to operate in the US; it does so under an independent company, Binance.US.

Coinbase also has a venture capital branch, Coinbase Ventures, which invests in companies such as CoinTracker, Compound and BlockFi.

When will the Coinbase IPO happen?

Given that registration is currently under review and in confidence, it is currently impossible to know when Coinbase’s IPO might take place or exactly how it will be structured.

In July 2020, Reuters it was reported that Coinbase could pursue the listing “later this year or early next year” (meaning 2021), before the company filed a Form S-1 in December 2020.

In a recent interview with FortuneCo-founder Fred Ehrsam argued that the company was “spiritually” built to go public through some kind of token offer – though there was debate over whether the SEC would approve such an arrangement.

What does the Coinbase IPO mean for crypto

Coinbase CEO Brian Armstrong. Image: Coinbase

Coinbase’s IPO offers investors and traders another way to play the booming cryptocurrencies market, but with the peace of mind of regulation by the SEC.

In this sense, investors gain access to a regulated company whose success tracks the crypto market without the need to hold certain tokens in custody. And unlike crypto buying, shares in Coinbase would pay dividends.

Coinbase has taken care to play nice with regulators. It is far from listing privacy coins because of the harsh attitude of US regulators against them; it has also refused to list controversial coins as Tie, the US dollar fixedcoin that is currently being investigated by the Attorney General of New York.

The timing of Coinbase’s introduction of Form S-1 last December is noteworthy. Around that time, the SEC was making headlines for filing a lawsuit against it Ripple over XRP cryptocurrency, claiming that XRP is synonymous with security, and that Ripple is issuing securities in unregistered sales.

Like many other exchanges, Coinbase has since suspended XRP trading on its platform. In Coinbase’s case, the exchange is likely to aim to achieve full SEC compliance in a short while to avoid any potential hiccups as its IPO weaves.

Coinbase is also looking to address a recurring issue that plagues it, and other exchanges: downtime during periods of cryptocurrency price volatility. Recent record trading volumes have driven traffic to the exchanges to new heights, putting their infrastructure under strain and causing disruptions. It is said that Coinbase plans to break its “monolithic” infrastructure into “discrete discrete services” for a better rating in the event of load surges.

FTX pre-IPO market for Coinbase

While the public needs to wait for the outcome of the SEC review before buying shares in Coinbase, customers on the FTX crypto exchange can skip the line with a pre-listing futures contract market for the shares.

FTX is once again collaborating with CM-Equity, a German capital markets company with which FTX partnered to launch token stock markets in October, to measure market compliance.

To buy an early stake in Coinbase, customers need to sign up for FTX and buy some of the US-dollar pegged stablecoin USDC, a coin operated by Center, a consortium that includes Coinbase and Circle.

USDC can be purchased straight from exchanges like Coinbase in exchange for fiat currency, or other cryptocurrencies, such as Bitcoin a Ethereum. The USDC can then be traded for Coinkase stock FTX token IPO.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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