The largest cryptocurrency exchange in the US, Coinbase, announced Thursday that it had filed confidentially with regulators to go public. It did not specify whether the exchange plans to go with an initial public offering (IPO) or other listing routes.
The day Coinbase divulged the information, the Bitcoin price also hit a new record of $23,800.
As per the official announcement, Coinbase Global, Inc. has confidentially submitted a draft regeneration statement on Form S-1 with the Securities and Exchange Commission (SEC), which is currently under the process of review.
Thanks to the Coinbase IPO, the acquisition price of a bunch of crypto companies is about to go way way higher
— Barry Silbert (@BarrySilbert) December 17, 2020
The news of the San Francisco-based exchange going public is significant for the cryptocurrency market. Coinbase has long been rumored for a public listing for one of the best-known companies in the industry. Jake Chervinsky, the General Counsel at Compound Finance, said,
“If it wasn’t obvious, this is huge news.”
“Sure, there are other publicly-traded companies in the USA with a stake in crypto, but none remotely like Coinbase. The fact that a crypto exchange is suitable for public listing sends a massive signal of legitimacy to the finance world.”
On the list of factors that make bitcoin significantly more attractive in 2020 than it was in 2017: we’re in a much better regulatory position now.
In these three years, we gained tons of credibility with policymakers & raised an army of advocates fighting for bitcoin’s future.
— Jake Chervinsky (@jchervinsky) December 17, 2020
Founded in 2012, Coinbase has been slowly growing its suite of tools, catering to both the retail and institutional investors.
The company is “spiritually” built to go public via an offering that involves digital tokens on a blockchain, said Coinbase co-founder Fred Ehsram in a recent interview with Fortune.
During the company’s last fundraising round for $300 million in 2018, Coinbase was valued at nearly $8 billion, which in the current hot crypto market, has now swelled to $28 billion on the back of an estimated 13,000 retail customers a day and custodying $25 billion of customer funds across 35 million customers. Mira Christanto of crypto data provider Messari noted,
“Following Coinbase’s IPO announcement, we value the company at $28 billion. Coinbase is one of the most prominent exchanges with $1 billion daily volume in Dec-20.”
This this offering will draw an incredible amount of interest.
Imagine there’s many institutional investors that see the writing on the wall that cryptocurrency is real, but still want a more familiar way to play it – i.e buy the picks and shovels https://t.co/6NJV3mfzCv
— Ryan Watkins (@RyanWatkins_) December 17, 2020
This IPO will be an opportunity to cash out not only for the early shareholders, including CEO Brian Armstrong and the backers, venture firm Andreessen Horowitz, Y Combinator, and Greylock Partners but also for the employees the means to start their startups. MacroScope, involved in institutional trading and asset management, said,
“Getting major flashbacks right now to Amazon’s IPO in the 1990s, when I was a trader on a big sell-side desk. Feels very similar in several ways including industry backdrop and public sentiment, the latter of which included a huge amount of skepticism and scorn.”
Besides legitimizing the crypto industry, the Coinbase IPO is expected to present another opportunity to jump on the cryptocurrency bandwagon. Some feel this “watershed moment” may even clear how the SEC can approve a Bitcoin ETF.
However, the crypto market wants Coinbase to go public early in the bull run and not run the risk of the top the market.