In what could be the year’s most important IPO (initial public offering), Coinbase will make history as the first company trading cryptocurrencies enters the NASDAQ stock ticker as “COIN.” Coinbase will be the first company that specializes in cryptocurrencies—Bitcoin, etc.—to launch an IPO. The company has a valuation in excess of $100 billion and has begun trading in a direct listing, rather than a traditional IPO.
Said Jeff Sica, founder of Circle Squared Alternative Investments, “I see this as a bridge between the disruptive decentralized cryptocurrency market and the traditional market. This (direct listing) IPO will bring cryptocurrency to the forefront, take away some of the obscurity, and allow people to invest in what I believe is going to be a very, very significant presence as an alternative currency in the future.”
The difference between a direct listing and a traditional IPO is that in a direct listing the company enters the stock exchange with no new shares offerings. Also, a direct IPO offers outstanding shares with no bank or underwriter backing. Traditional IPOs, on the other hand, rely on intermediaries—banks, underwriters, etc.– who expedite the company’s entry into the stock exchange, and charge commissions.
Coinbase opted for direct IPO into the market and won’t issue new shares or raise new capital. Coinbase didn’t need underwriting and avoided the share dilution and waiting (lockup) periods accompanying the direct IPO process. With its high capitalization, it didn’t need the safety net to ensure it can sell shares.
Coinbase is a US-based cryptocurrency management platform with global offices. It has over 43 million subscribers. It provides varying levels of support for a variety of worldwide cryptocurrencies—a total of 59 –in the US, Canada, the UK, EU and Singapore.
Rather than navigating the esoteric world of investing or crypto-mining digital currencies like Bitcoin, Coinbase clients can use a single platform and open a portfolio of cryptocurrency investments to:
- View their portfolio through a Coinbase app
- Automatically increase their cryptocurrency investments over time
- Buy, sell, and manage their cryptocurrency securely in the cloud at any time
The Coinbase platform offers users secure transactions through two-step verification — enter a password and receive a one-time additional pass key — along with fingerprint logins, as well as standard encryption protection. If Coinbase is ever breached by hackers, its U.S. dollar balances are FDIC insured.
Coinbase has generated over $3 billion in total revenue since its inception. In 2020 the company reported earnings of $1.14 billion, a rise in 139% from 2019 after it lost $30 million when the cryptocurrency market dipped. The company earns its keep by investing the money deposited by its clients. Coinbase also charges fees that include percentages for purchases and other transactions as well as 55 cents for withdrawals and $10 for wire transfers.
With its stock trading at just over $393 per share in mid-April, as Coinbase went public, traders reported that demand for its stock has surged along with the price of the benchmark cryptocurrency Bitcoin that reached an all-time high of nearly $65,000.