Coinbase IPO: what you need to know

Equities

Coinbase, the largest cryptocurrency exchange in the world, is set to go public soon. It announced its intentions to go public in December 2020, but it won’t be pursuing the usual IPO process. Instead, following in the footsteps of Palantir and Spotify, Coinbase is going direct to market with a direct listing instead. 

We don’t know exactly when Coinbase will make its direct listing, but rumours indicate it’ll take place at the end of February or in early March 2021. 

Direct listing is non-traditional, but it’s in non-traditional spaces that Coinbase thrives. Cryptocurrency itself isn’t exactly traditional, and Coinbase has done its bit to aid growth of this so far non-establishment currency sector. 

“We believe a direct listing more closely follows the ethos of crypto and Coinbase because it democratizes access and opportunities for all investors,” wrote CFO Alesia Haas in the memo sent to employees, as reported by Fortune. 

Placing a valuation on Coinbase is a bit tricky at present, but it appears to have grown considerably alongside the massive price increases we’ve seen in cryptocurrencies recently. In 2018, when Coinbase held a Series E funding round, it was worth about $8bn. When it goes public, it could be worth as much as $75bn. Other estimates put Coinbase’s market cap at $50bn, with shares selling on Nasdaq’s private exchange for $200. 

Coinbase’s decision to pursue an IPO is a bit of a crypto milestone. Pro-crypto commentators believe it’ll help make the digital finance sector gain further legitimacy and help quieten skeptics, helping converge the increasingly related worlds of crypto and conventional finance. 

The IPO may also have a big impact on crypto prices, especially market leader Bitcoin. Its value continues to skyrocket but also pair back, substantially, as cryptos are inherently volatile. But institutional legitimacy and backing from such organisations as Deutsche Bank and BNY Mellon has historically helped push Bitcoin further. An IPO listing for Coinbase may had to the legitimacy institutional backing confers on digital currencies. 

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