Coinbase cryptocurrency exchange files will go public
The cryptocurrency exchange Coinbase has filed with the Securities and Exchange Commission (SEC) to go public via direct listing. The filing for an IPO occurs at a time of heightened interest and prices in the cryptocurrency ecosystem. Bitcoin (BTCUSD) is up over 73% this year and recently surpassed $ 1 trillion in market cap. More importantly, major companies like Tesla, Inc. (TSLA) and Square, Inc. (SQ) as well as institutional investors gravitate towards cryptocurrency, using it as a hedge against macroeconomic volatility.
Coinbase, the largest cryptocurrency exchange in North America by trading volume, has a balance sheet reflecting recent volatility in cryptocurrency markets. The company posted net income of $ 322 million on revenues of $ 1.14 billion in 2020, a significant improvement over its 2019 figure of $ 30 million on revenues of $ 483 million.
Coinbase has raised more than $ 547.3 million from investors since launch, according to business intelligence platform Crunchbase. According to recent reports, it has been valued at over $ 100 billion in private markets. Coinbase is one of many tech companies that have decided to go public through a direct listing, in which no underwriters or new shares are created, in lieu of an IPO. The company will be listed on the Nasdaq and will trade under the ticker COIN.
Crypto markets have come of age
The Coinbase IPO represents the coming of age of the nascent crypto economy. Bitcoin, which launched over 12 years ago, has largely been positioned as the opposite of the existing financial infrastructure, with Coinbase its most prominent symbol. The company has a prominent place in the crypto ecosystem. It was one of the first cryptocurrency exchanges in the world and has more users – over 43 million according to its documentation – than Charles Schwab Corporation (SCHW).
Coinbase has also benefited from the identity shift for cryptocurrencies over the years. Various avatars are imposed on cryptocurrencies, from being a vehicle for retail transactions to a tool for expanding economic opportunities. Each of these shifts sparked news and increased interest in Coinbase and its products. Recently, price volatility in cryptocurrency markets has caught the attention of investors looking for profit in an era of low interest rates.
In this sense, Coinbase’s income is heavily dependent on the transaction fees generated from trading on its platform. The company’s documentation states that 96% of its income comes from trading fees. While retail traders still make up a significant proportion of Coinbase’s customers, the company’s investor base on its platform has expanded to include institutional investors. The growth of the cryptocurrency market in 2017 led to an influx of such investors to the company’s platform, as a result of which their number increased from 1000 at December 31, 2017 to 7000 at the end of last year.