Cryptocurrency is taking the world by storm. With growing interest from corporations, the general public, more services are coming up for easier facilitation of cryptocurrency exchange and trading. One such famous service is Coinbase. Founded in 2012, Coinbase is regulated and fully licensed under the US laws and allows usage in 40 states and territories in the country. The cryptocurrency exchange told in it’s blog post that it is coming out in public next year for investment. Coinbase IPO 2021 will be a gamechanger in the crypto industry.
If you didn’t know, you can buy crypto with your credit or debit card easily in top crypto exchanges in the US.
Coinbase Stock IPO is an important phenomenon for the whole cryptocurrency industry. It will set the precedent for future crypto companies to go public without impediments. Crypto enthusiasts and Stock IPO enthusiasts need to closely watch the Coinbase IPO date and Coinbase IPO Valuation to profit from Coinbase going public in 2021.
Before we jump into Coinbase IPO, let’s first understand the largest Cryptocurrency exchange’s history
What is Coinbase?
In short, Coinbase is a cryptocurrency exchange that is arguably a leader in its niche. Based in the US, this exchange is also available for users in 103 other countries with variable access to functionalities. Coinbase provides a platform for users to buy and sell cryptocurrencies. Initially, it was offering only buying and selling Bitcoin transactions but slowly it expanded to other popular cryptocurrencies and altcoins such as Ethereum, etc.
If you want to buy cryptocurrencies for the first time with your fiat money (USD etc.), Coinbase is the go-to option due to its robust security features and easy user interface. Since the processing times are a little longer in Coinbase, it is more suitable for people who want to buy cryptocurrencies for the first time.
But, Coinbase does not allow the option to store the cryptocurrency there. For that, you will need a separate wallet, which can be digital or inside a software. Coinbase also provides a wallet though, but it is advisable to choose cold wallet which is safer and link it to your Coinbase trading account. The behemoth Crypto exchange allows you to stake Crypto as well.
Coinbase has a patent on securing cryptocurrencies on hot wallet with high grade security. So, it’s wallets are not entirely unsafe. But, it’s better to store any long term crypto on a cold wallet like Ledger Nano
Coinbase has another important patent with which they implemented sending Bitcoin through email address. In this case, no miner fee has to be paid by sending it as off blockchain transactions in tandem with on-blockchain transactions. This is similar to batching in the non Crypto world.
Is Coinbase Going Public?
There was some speculation about Coinbase going public in 2020 itself. Coinbase even rejigged its board adding heavyweights like Marc Andresen and Gokul Rajaram and everyone was anticipating a quick IPO through direct listing. But, it got delayed due to some reason which we will never know.
I still think Coinbase is timing it right, being the first cryptocurrency exchange going public! On December 17, according to a blog on the company’s website, it has submitted a draft registration statement on Form S-1 with the US Securities and Exchange Commission (SEC). Once the review is complete by the SEC, it will result in Coinbase initial public offering. But as of now, the other details of the filing are confidential.
The effort of Coinbase S-1 filing is coming when Bitcoin prices are reaching an all-time high of close to $24,000 per coin.
Overall, the vision of Coinbase S-1 filing is to expand to more countries around the world. The exchange has more than 35 million users across 100 countries who can trade in 47 cryptocurrencies. Most of the revenue comes from the commissions it takes from crypto trading transactions.
The success story of Coinbase draws far and beyond. For instance, it raised a total of more than $500 million in equity to date from top investors. In 2018, Coinbase raised $300 million in Series E funding. Most of the money so far raised has been for increasing the global presence of Coinbase, include more cryptocurrencies, and add more features to attract investments from organizations and corporations.
Can You Buy Pre-Stock Coinbase IPO?
FTX listed futures ahead IPO of Coinbase. These contracts help traders predict what the price of Coinbase will be when listed on the stock exchange. Futures are an important tool in stock price discovery to test the market with demand and supply. The Coinbase IPO date will be in 2021.
At this time, the market capitalization of FTX is around $58 billion. The pre-IPO tokens by FTX is a part of its Tokenized Stocks product. At the time of writing, the tokens cost $231 and have seen more than $2 million raised in trade. People have been betting on the high opening IPO price of Coinbase due to its high growth and funding in recent times. FTX has claimed the tokens to be high risk, and it can stand a risk on the purchase with even the possibility of the CM-Equity not paying out within the deadline.
FTX is also known for launching a similar pre-IPO for Airbnb. When the company became public finally, the shares increased its price by more than two times.
To buy this pre-stock Coinbase IPO 2021, assuming it follows the same procedure as it did in the case of Airbnb, first sign up on FTX. After that, you will need to buy USDC, that is a stable coin pegged to the US Dollar. You can buy it with another cryptocurrency such as Bitcoin or from fiat currency through exchanges such as Coinbase. Once you have USDC, exchange it for the pre-IPO tokens of Coinbase.
One important point to note – the pre-IPO tokens of FTX is not available to purchase for residents in the United States. I know that’s a bummer!
Can You Make Money in Coinbase IPO 2021?
Right now, Coinbase is in the pre-IPO stage where soon, investors can invest before the cryptocurrency goes public.
Of course, there are certain benefits of investing in pre-IPO although there is risk involved. Usually, the ROI is exponentially high on Coinbase pre-IPO price investments, that is, the people who had invested earlier can sell their shares for a higher price once the company publicly. Also, pre-IPO stocks are less subject to market volatility and world events. Third, the holding time for pre-IPO shares is lesser. At the maximum, you will only need to wait for two years, the deadline for the company to go public. Lastly, the success rate of pre-IPO stocks has been higher compared to historical data. It says that the dividends have increased by 25% every year from tech stocks.
You can certainly make money if the future of the company justifies the current rate of its growth. Once the company goes public, there is still high optimism for Bitcoin and other cryptocurrencies among experts. Since the goal of Coinbase is to expand to more countries and currencies, the demand for the coins will only increase while supply remains more or less constant. So, the projections involving Coinbase shares can be optimistic, but of course, there is an element of risk and uncertainty always.
The last months and weeks bought a lot of interest from big corporations for the cryptocurrency space. Citibank put a target price on Bitcoin for $318,000 and Guggenheim at $400,000. For the crypto bulls, Coinbase going public is another milestone, and it will be a way to gain access to a company responsible for Bitcoin going through a purple patch.
Coinbase Juggles Board Before IPO
In December 2020, before the news of Coinbase stock IPO, the CEO, Brian Armstrong announced an addition to the company’s board of directors. Kelly Kramer, the current retiring CFO of Cisco is the addition. He is richly experienced in the Silicon Valley and is also a board member of Gilead Sciences and Snowflake, the latter went public this year. Similar to this, the Coinbase IPO date will be early 2021.
The year 2020 has been great for Coinbase because the prices of Bitcoin crossed an all-time high of $20,000. But the juggle of board members does not end here.
Brian Armstrong said that Marc Andreessen who is the board observer now will become a full board member. It is a good sign that the Coinbase IPO date could be coming out anytime given that Marc has been a prominent investor in Silicon Valley and one of the drivers for the growth of big tech companies like Facebook.
As per Coinbase’s blog post, Kelly will replace Chris Dodds who is currently the Chair of the Audit and Compliance Committee. In another change in the board members, Gokul Rajaram, a veteran in Square and Google as well as an executive in DoorDash, will also become one of the board members.
Will Coinbase IPO 2021 Win Over Stock Market?
Coinbase, one of the most famous cryptocurrency exchanges just recently told via their blog post that they will be going public. The acceptance of their application depends on the review and approval from the Securities and Exchange Commission (SEC).
There are still some questions that have left the matter unclear. For example, the ‘cashing in’ of Coinbase from crypto transactions is different from the notion of peer-to-peer philosophy that Satoshi Nakamoto mentioned in the first white paper.
Some see this as a very capitalistic move that can enable Coinbase to make a lot of money. But some see it as a setback for people who believe in the concept of changing technologies behind how money and finances work.
But the general public might be eager to try out stock from a unique niche. Of course, Coinbase stocks could be subject to high volatility due to the nature of financial instruments it deals with. However, in the longer run, it could very well become a part of the seasoned and beginner trader’s portfolio. But for this to happen, more clarity is needed on how to get the stocks. Do they have to reach out to Morgan Stanley or other major stockbrokers to get a piece of Coinbase?
Traditional IPO versus Direct IPO: What’s the Difference?
For newbie investors, the difference between IPO and direct listing may not be clear. But it is quite simple to understand.
In the case of a traditional IPO, the company issues new shares at the time of going public. That means, they enable people to buy a part of the company in exchange for monetary investment by getting these new shares. In a direct listing, however, the existing investors and employees of the companies sell their shares directly to the public. Companies that go public through direct listing do not have the goal to raise additional capital.
In the case of a direct listing, there is not the concept of underwriters. Underwriters are folks working with investment banks that help sell the stocks of these newly listed companies. They add value to the company’s stocks by buying a large amount of them and selling them at a discounted value. But this process is becoming obsolete for traditional IPO companies because it takes time and cost for the companies. Now, investment banks use their reach and network to drive the sales of the stocks of the new companies.
Another key difference is that direct listing companies do not have a lock-in period. Such a period means that the people who buy new stocks cannot sell them within a specific period, known as ‘lock-in’. It is to reduce the over-supply in the market that reduces the value of the stock. In the case of a direct listing, shareholders can sell their shares right from the moment the company goes public. Transactions can only occur if some existing shareholders sell their shares, and someone else buys them.
Why Coinbase Wants to Go Public Through Direct Listing Coinbase IPO 2021?
One of the first reasons why Coinbase wants to go public through direct listing is that the stakeholders can sell their stocks without the initial lock-in period of 6 months. Another reason could be of great price for the shares. Traditionally, IPO places shares with corporations and companies that market the newly listed company. They may or may not be interested in the cryptocurrency exchange. But in the indirect listing, Coinbase accesses investors who could have a better perception towards cryptocurrencies, and it can drive up the stock.
Another advantage, direct listing provides for Coinbase is the ease of acquisitions using the stock.
Next, there is a limitation when it comes to a traditional IPO in inclusion and distribution. For example, if Coinbase took this route, only about 10% of the stocks would be available for investors. However, this limitation is not the case in the direct listing.
The direct listing also provides radical transparency to investors. For example, when Spotify had taken a similar route, around 19,000 people were investing initially, more than even a traditional IPO launch.
Will Coinbase IPO Happen Through offering Cryptocurrencies on Blockchain?
Once the news had been out of Coinbase offering its IPO, there have been numerous speculations. One, that it will follow direct listing, a model similar to what Spotify followed when it went public. Two, Fred Ehrsam said that Coinbase IPO 2021 could happen through digital tokens on the Bitcoin. But, it is yet to be seen if the SEC will allow that due to the already strict regulations existing in place for cryptocurrencies.
Coinbase IPO 2021 Valuation
It has been exciting times for crypto enthusiasts as one of the biggest exchanges, Coinbase announced that it has filed to go public. To capture this hype and interest, FTX, a crypto–exchange released Coinbase pre-IPO contracts. Even though there are uncertainties in the Coinbase IPO 2021 pricing, the Coinbase pre-IPO contracts have been surging steadily. For instance, in 24 hours, the contracts have been up by 85%. According to Parafi Capital, the trade of pre-IPO contracts of Coinbase reveal Coinbase IPO valuation to be close to $70 billion. That is around 20% of the total market value of BTC and the entire value of the Ethereum market in the world currently.
Another research company, Messari estimated the Coinbase IPO valuation to be around $28 billion. Whatever the Coinbase IPO valuation turns out to be, this will be a starting point and a good base for future cryptocurrency firms when they go public. Coinbase has been in the business because it gains revenue from every trade made through the platform. They get the money irrespective of the price of the cryptocurrencies traded, whether it is high or low.
Coinbase Filed Draft Registration S1 Form with US SEC For Coinbase IPO 2021?
Throughout the middle of this year, there were rumors of Coinbase going public. Some sources earlier said that the crypto exchange is in talks with investment banks and lawyers for the sale.
But on December 17, 2020, the company confirmed the rumors on its blog post. Coinbase has submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission. Once the regulatory authority approves the application subject to market and other conditions, it will come out to the public. Some experts predict this to happen either during late 2020 or early 2021. The blog post did not reveal any further detail of the Coinbase S-1 filing.
There are already some crypto miners and Bitcoin holding companies on the market, but Coinbase S-1 filing will be the first of its kind, so directly connected with cryptocurrencies. People will also know the inner workings of the cryptocurrency exchanges and their traction through this public offering.
This announcement comes when Bitcoin prices are at an all-time high thanks to increasing interest from individual investors and corporations alike.
Why Coinbase IPO 2021 Matters?
One of the most popular exchanges today for the cryptocurrency will create history once the SEC accepts their S-1 form application. It is a milestone in the crypto-world because of two reasons:
Firstly, Coinbase will get a lot of investment from individual buyers through this public offering. The exchange will use this capital to expand to other countries and currencies which have not yet seen the powers of Bitcoin. That will also enable Coinbase to be the first-player in these markets and dominate among future competitors.
Secondly, this signals the acceptance of Bitcoin and other cryptocurrencies. Once Coinbase comes out for the public, they may trust the digital asset more, thus bringing in more investments.
Coinbase IPO 2021 is also probably not going to take the traditional IPO route. I see a lot of unverified information that it’s going to take the direct listing route avoiding underwriters. It will be great to see how the IPO industry transforms in the near future if all companies only want to go public through direct listing or SPAC.
Will Other Crypto Companies Follow Coinbase to Provide Initial Public Offering?
According to John Griffin(University of Texas), the Coinbase IPO 2021 will increase the adoption of crypto. He says that companies that successfully go through the IPO process after a lot of scrutiny from regulators. After it gets regulator nod, investors often emerge out thinking of it as a more secure and tested form of investment.
It can bring in more entrants into the market which previously focused only within the boundaries of their product/service. A Coinbase IPO 2021 can validate the crypto asset among the general public and lead to more adoption.
Many investors and crypto-enthusiasts call this a massive event, and a checkpoint for the blockchain and cryptocurrency industry. Coinbase IPO 2021 could be the starting point to see a flood of other crypto companies going public.
Take Away – Coinbase IPO 2021
Overall, Coinbase IPO 2021 is a landmark achievement for the blockchain industry. After years of making it through criticism and scrutiny, Coinbase is finally going public. It will not be long before the public considers the cryptocurrency asset class as mainstream. And then, more companies will come out to the public to offer their shares.
Coinbase IPO can be a pioneer to set a model and ease the regulations in the US and other countries. This hallmark IPO will make it more streamlined and friendly to the crypto enthusiast. It will be exciting to see how Coinbase IPO price and Coinbase IPO date in the coming year.