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Coinbase, one of the most successful cryptocurrency companies, is headed for a public offering. The report by Reuters indicates the company is in the early stages of the possible listing. Coinbase follows in the same path as the other successful companies from Silicon Valley, like Robinhood and Stripe.
Coinbase’s listing is a significant boost to the cryptocurrencies. It would not only open them to more investors but also give the coins legitimacy. The company has already sought the services of lawyers and bankers moving forward. There are possibilities of a late 2020 or early 2021 listing.
Here is all you need to know about the possible Coinbase public offering;
Matters Arising with the prospects of Coinbase listing
The prospects of the Coinbase’s IPO are still in the lower stages. There are still several aspects that are not as precise. The company is also not forthcoming with the information about the listing.
These are some of the top concerns with the listing;
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Blockchain technology – Blockchain is one of the most critical technologies in the cryptocurrency. It is the underlying platform through which other cryptos operates. It is, however, still not clear whether Coinbase will go into an IPO with blockchain technology. The technology is secure and also has tokens that track and record transaction details. Still, as a new technology, blockchain requires SEC approval. This might prove to be a tall order given the SEC’s skepticism towards the blockchain. The SEC has had recent enforcement actions against Telegram and other tokens.
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Direct listing – the possibility of the direct listing has turned out to be one of the most sought-after information. Direct listing allows the existing shareholders to trade their assets in the open market. It eliminates the need for the wall street middlemen.Several top tech companies have gone the direct listing route of late. Slack and Spotify are some of the notable companies to use direct listing. The direct listing, however, does not stop the company from a later public offering. It boosts the prospects as traders would already know what to expect. The direct listing is appealing to Coinbase due to its high valuation and ample cash reserve.
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Symbol – Going into the listing, Coinbase does not have a definite mark. It currently seems like COIN will be the possible choice. It is still open to changes. Whatever it is, it will most likely revolve around Bitcoin.
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Timing – volatility remains a significant factor in cryptocurrencies. The coins have seasonal effects, which means the price is always changing. It is not clear whether Coinbase would wait for the high season to go live. Going live on a bear run means the platform’s value would debut on the low. The most active months on the crypto calendar tends to be in April and June. They might have to wait for early 2021 to use these high seasons.
Possible Impact of Coinbase’s IPO on Cryptocurrencies
The possible listing of Coinbase is one of the most important developments for the crypto industry. As the leading industry platform, successful listing means mainstream adoption.
The listing is likely to boost the crypto world. It will act as a catalyst for mass adoption.
Most investors are already conversant with the stock-exchange markets. A public listing would attract the attention of these investors.
The listing of Coinbase will also improve investor confidence. Every public listing requires SEC approval. The exchange commission requires the company to provide financial, tax, legal, and compliance details before approval.
Trading publicly would thus set crypto apart as a secure investment. With more investors, technology would draw more interest. It is likely to come with additional expansion and innovation.
The Possibility of low Impact after Listing
There is still a possibility of a lesser impact. This depends on the nature of offerings the platform prefers.
Reports indicate Coinbase is mooting for a direct listing. The listing is faster compared to the public offered. It does not involve any marketing and dealings within wall street to attract users. Also, trading publicly allows existing investors an easier way to sell the assets.
There is a concern with a direct listing. An easy exit strategy for existing shareholders can lead to a mass quitting. This can scare new investors looking to join the company. An analysis opines that some investors prefer buying shares from the exchange than directly. Coinbase might end up damaging its reputation through the listing.
Whatever the possible outcome, the listing is essential for Coinbase and the crypto world. Whatever the results, it will be impactful and will impact growth.
Does Coinbase Need an IPO?
The conversation on the listing route by Coinbase dominates that listing prospects. While every report indicates Coinbase is considering a direct listing, there is the possibility of IPO. Bloomberg reports that Coinbase is a typical company for an IPO. It, however, turns out that the company does not want an IPO.
An IPO involves creating shares for underwriters like investment banks to distribute in the market. A direct listing, on the other hand, renders the underwriters irrelevant.
With a valuation of $8 billion, Coinbase is likely to gain little from an IPO. It already has a massive following, with over 35 million users. It is a recognized and trusted brand that won’t struggle to attract users.
An IPO comes with considerable risks. The underwriters can consider underpricing the stocks to attract more sales. This is more for trading fees other than the company gains.
Direct listing allows Coinbase the express authority over its assets. It directs the pricing and other market mechanics.
Final Thoughts
Even though the prospects of Coinbase are still on the lower stages, they are great for the crypto industry. With over 35 million users and creating a brand, the platform will gain more from a listing.
The best way to go about it would be the direct listing. Coinbase has already got several legal and crypto minds to help out. Whatever happens, the listing will be impactful for the crypto world.