Coinbase, Inc., the largest cryptocurrency exchange in the US, has set April 14 as the date for its IPO, after securing approval from the SEC. The company’s shares are expected to start trading on the NASDAQ stock exchange under the ticker symbol COIN. It will go for a direct listing, rather than taking the conventional IPO route, which would allow everyone with brokerage accounts to order the shares directly. The valuation is pegged at $68 billion.
The Crypto-economy
The California-based company, which operates a platform for trading in cryptocurrencies like Bitcoin, Ethereum, and Litecoin, was established in 2012. Led by chief executive officer and co-founder Brian Armstrong, it offers primary crypto-economy accounts to retail users. To institutions, the platform provides a one-stop-shop for accessing crypto markets, while ecosystem partners will get access to technology and services for building crypto-related applications. It features a complementary suite of products and services supported by advanced back-end technology that also facilitates the development and launch of new products and services.
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The management’s mission is to create ‘economic freedom’ through an open financial system supported by digital assets developed using blockchain technology. It bets on the potential of virtual currencies to emerge as an alternative financial system and to enter the mainstream in the coming decades. More strategic partnerships are in the cards to continue creating opportunities for customers to engage in crypto-based financial transactions.
A Game-changer?
The SEC approval is viewed as a significant move, considering both the apprehension surrounding cryptocurrencies and their growing acceptance. It is worth noting that traditional banks and institutional investors have started recognizing cryptos. Meanwhile, most of the risks associated with cryptocurrencies are applicable to Coinbase’s business, ranging from price volatility and demand fluctuation to security issues and regulatory hurdles.
Coinbase has facilitated transactions worth $456 billion since its inception about a decade ago through December 2020, supported by around 43 million verified users and 2.8 million monthly transacting users, which expanded consistently over the years. Assets worth $90 billion were stored across the platform during that period.
Impressive Numbers
The company reported a net profit of $127.47 million or $1.40 per share for fiscal 2020, marking an improvement from the $30.4-million loss recorded in the previous year. Driving the bottom-line, revenues more than doubled to $1.28 billion, with transaction fees accounting for the majority of it. The other revenue streams — subscription products and services – are catching up fast.
According to Armstrong, cryptos are playing a larger role in the financial system than they did initially and people are increasingly using virtual currencies to earn, spend and borrow, in addition to several other economic activities.
Read management/analysts’ comments on quarterly reports
“Companies are being funded, getting early customers, and will eventually go public, all on the blockchain. The crypto-economy is just getting started. It is not intended to replace the traditional economy, but instead be a complement to it, much like email was to paper mail. The crypto-economy offers a more global, free, and fair alternative to traditional economies that is native to the internet,” he said in an official statement.