Exchange of cryptocurrencies Coinbase has applied to the Securities and Exchange Commission (SEC) for a direct listing. The company’s IPO registration comes at a time when the cryptocurrency ecosystem is seeing significant attention and price growth. Bitcoin (BTCUSD) has increased by more than 73% this year, and its market value has just surpassed $1 trillion. More importantly, mainstream companies like Tesla, Inc. (TSLA) and Square, Inc. (SQ), as well as institutional investors, are gravitating toward cryptocurrency as a hedging tool against macroeconomic volatility.
Coinbase, the largest cryptocurrency exchange by trading volume in North America, has a balance sheet that reflects recent volatility in crypto markets. It made $322 million in net profits on $1.14 billion in sales in 2020, a considerable increase from its 2019 result of $30 million in losses on $483 million in revenue.
- Coinbase, a cryptocurrency exchange, has applied to become public through direct listing.
- The San Francisco-based firm earns 96% of its income from trading transaction fees.
- It earned $322 million last year, which was an increase above its losses of $30 million in 2019.
Coinbase has garnered more than $547.3 million in funding from investors since its inception, according to company research portal Crunchbase. According to recent sources, it was valued in private markets at more than $100 billion. Coinbase is one of a wave of digital businesses that have chosen to go public through direct listing – in which no underwriters are engaged and no new shares are issued – rather than an IPO. The firm will be listed on Nasdaq under the ticker code COIN.
Crypto Markets Come of Age
The Coinbase IPO is a watershed moment in the embryonic crypto industry. Bitcoin, which debuted more than a decade ago, has generally been positioned as the polar opposite of conventional financial infrastructure, with Coinbase serving as its most conspicuous emblem. The firm has a major position in the crypto industry. It was one of the world’s earliest cryptocurrency exchanges and has more users – more than 43 million, according to its report – than The Charles Schwab Corporation (SCHW).
Coinbase has also benefited from cryptocurrency identity alterations over the years. Various avatars have been assigned to cryptocurrencies, ranging from a retail transaction medium to a vehicle for economic emancipation. Each of these moves created attention and stirred up greater interest in Coinbase and its products. More recently, the price volatility of crypto markets has found favor with investors searching for profits in an era of low interest rates.
To that reason, Coinbase’s income is mainly reliant on transaction fees collected from trading on its platform. According to the company’s filing, trading transaction fees account for 96% of its income. While individual traders continue to account for the majority of Coinbase users, the company’s investor mix on its platform has expanded to include institutional investors. The 2017 surge in cryptocurrency markets drew an influx of such investors to the company’s platform, increasing their numbers from over 1,000 on December 31, 2017, to 7,000 at the end of last year.
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