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Coinbase Will Go Public Via Direct Listing Not IPO

Coinbase, the largest crypto exchange in the US, has announced that it plans to list on the stock market through a direct listing instead of a traditional initial public offering (IPO).

In July last year, Coinbase filed its registration documents with the United States Securities and Exchange Commission (SEC), but did not specify that it would choose a direct listing instead of the traditional initial public offering processes.

The popularity of direct listings has been gradually rising, with several consumer-based technology firms such as Spotify Technology SA have used direct listings to go public. Therefore, it is not surprising to see that a firm like Coinbase opting to take this route to public markets.

Other several firms have chosen this path. For example, after delaying to observe its late-2020 IPO market and private capital funding, Roblox Corp online video game firm has also revealed its plans to go public via a direct listing.

With direct listings, firms can skip elements of the traditional initial public offering by removing the need to price and sell a block of new equity. Instead, a firm just lists its shares, which then become available for trading. However, not all firms have an adequate profile for such a method to prove attractive, and the direct listing firm loses its ability to raise new primary capital. The richest and best-known firms may find direct listing more attractive.

Why Crypto Exchanges Want to Go Public

One of the major reasons why crypto businesses seek to go for public listings is a change in circumstances in their markets. Coinbase’s announcement comes at a time when interest in cryptocurrencies has increased during the COVID-19 pandemic. Investors have found such digital assets attractive as the US dollar weakens. Bitcoin skyrocketed its value past $40,000 this year and currently trading at $33,000 per coin. Institutional and recently retail investors are credited to have driven the latest price surge. This implies that there is more liquidity in cryptocurrency markets compared to the bull run witnessed in 2017, therefore making them less susceptible to wild swings.

Macroeconomic instability, as well as the integration of cryptocurrencies into public and private ventures, have also led to the rise of Bitcoin price. Furthermore, the capabilities and infrastructures for cryptocurrency exchanges have advanced, thus making it possible for them to incorporate a wider variety of trades and customers.

For cryptocurrency businesses such as Coinbase, such developments imply potentials for greater revenue generation. Coinbase, founded in 2012, has over 35 million customers in more than 100 nations trusting the exchange to use, buy, sell and earn cryptocurrencies. The firm has over $25 billion in assets on the crypto platform and over $320 billion in total volume traded.

Image source: https://finance.yahoo.com/news/cryptocurrency-exchange-coinbase-picks-direct-203908918.html

Coinbase Going Public via Direct Listing on Nasdaq to be Expected as SEC Publishes Registration Statement

Coinbase cryptocurrency exchange is officially going to be listed on NASDAQ as a publicly-traded company.

Through the Form S-1, the company has revealed important details related to its finances, ahead of Coinbase shares being released into the market. Coinbase expressed via its Form S-1 statement that it intends to list its Class A common stock on Nasdaq under the ticker symbol “COIN.”

Coinbase’s filing with the SEC for a direct public listing via a registration statement on Form S-1 was previously confidential and only disclosed to the SEC. However, it has now been made public, with the Securities and Exchange Commission publishing it. This indicates that Coinbase’s move to become a publicly listed company is going to be an eventuality.

The crypto exchange has been attempting to go public for a while, and its intentions to do so was made known seven months ago. With the publication now however, an overview of Coinbase’s financial performance and how it intends to use its funds has now been revealed.

The filing enclosed details on how the company performed in 2020. Coinbase did surprisingly well, in part thanks to the surge in price of Bitcoin. Coinbase generated $1.2 billion in revenue in 2020, ending the year with a profit of $322 million. This was the first time the company has turned an annual profit. Although it managed to generate a net income of $322 million in 2020, Coinbase disclosed that it incurred a loss of $30.4 million in 2019.

Additionally, the filing reported that 43 million verified users were registered to Coinbase at the end of 2020. On a monthly basis, 2.8 million transactions were processed, and Coinbase’s asset under management (AUM) came up to a total of $90 billion. In its life span as a cryptocurrency exchange, Coinbase has handled $456 billion worth of transactions.

Coinbase revealed that since 2012, when it was founded, the company has been putting cryptocurrencies on its balance sheet. It intends to continue doing so, despite the volatility of cryptocurrencies being pinpointed as a potential risk factor. The filing read:

“All of our sources of revenue are dependent on crypto assets and the broader cryptoeconomy. There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our busines, operating results, and financial condition would be adversely affected.”

Coinbase’s Direct Listing Reference Price Set at $250 per Share by Nasdaq

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The Nasdaq US stock market has given Coinbase a reference price of $250 per share ahead of its planned direct listing today on Wednesday, April 14.

The valuation puts Coinbase, the largest US crypto exchange, at $49.19 billion – ahead of its historic stock debut today. The reference price as set by Nasdaq stock market reflects recent private market trades and input from investment bankers (such as Goldman Sachs). However, the reference price does not indicate where the stock price of the crypto exchange will start trading at on the public stock market.

In other words, the reference point is not an offering price that investors will use to purchase shares of the crypto company, but rather it is a benchmark for performance when the Coinbase stock begins trading on the stock market today.

Coinbase shares are set to begin trading under the “COIN” symbol. Sell and buy orders collected by the Nasdaq from broker-dealers would determine the opening public price of the stock.

The reference point is normally a conservative estimate derived by using public information and market sentiment.

The reference price given by Nasdaq is 27% lower than what Coinbase traded in the private secondary market at $343.58 per share in the first quarter of this year.

If shares of Coinbase trade hands at or above the reference price, then the crypto exchange would be valued at more than six times the $8 billion the firm was worth in its last private fundraising in 2018.

What Coinbase Going Public Means

Late January this year, Coinbase announced plans to go public through a direct listing rather than a traditional Initial Public Offering (IPO). This implies that instead of raising funds by selling new shares to a group of institutional investors, the company would allow existing stakeholders to begin selling immediately at a market-driven price.

Coinbase Global Inc. wants to become the first major crypto exchange to go public in the US. The crypto exchange is expected to go public today at a staggering valuation of around $100 billion. That is more than the highly honoured New York Stock Exchange and Nasdaq Stock Market combined – for a firm that did not even exist 10 years ago.

If everything goes as planned, today’s direct listing on Nasdaq would cement Coinbase’s position as a huge figure in the US cryptocurrency scene and a potential example for other exchanges who wish to follow in its footsteps and go public, amid a new era of digital money.

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Iris Energy Bitcoin Mining Firm Files for Direct Listing on US Nasdaq

Iris Energy Bitcoin mining company, headquartered in Australia, has filed with the US Securities and Exchange Commission (SEC) for a direct listing on the Nasdaq stock exchange for this year.

The Sydney-based firm launched by former Macquarie bankers brothers Will and Daniel Roberts expects the debut to happen in the fourth quarter of 2021, the filing with the SEC states.

However, such timing is the only provision as the planned listing is subject to regulatory reviews, including market and other conditions.

Iris’s latest plan comes amid recent reports revealing that the mining company had considered going public via a SPAC deal. In May, the firm weighed options for special purpose acquisition companies and approached many blank-check companies for the deal. The firm also raised $50 million to finance the expansion of its mining equipment.

However, Iris shifted away from such plans and raised adequate funds before submitting a draft proposal for a direct listing on Nasdaq. Last month, the firm raised $200 million in a private funding round to prepare for a potential US listing.

Iris’s business model involves setting up its computer firepower in energy markets with a surplus of renewable energy.

Iris uses renewable energy to conduct its Bitcoin mining operations. The crypto firm has a mining facility in British Columbia, Canada, with 9 megawatts (MW) operational mining capacity. In its latest ongoing plan, Iris wants to scale its operational mining capacity to 30 megawatts (MW) this year.

Looking for Listing on US Exchanges

If the plan goes well, then Iris will be listed on the US public stock market.

Meanwhile, Iris has joined the list of crypto mining companies seeking to go public in the US. Several Bitcoin mining firms seek to go public overseas, and the US stock exchanges appear to be warming to these miners.

Quite a several crypto-related firms are planning to sell shares, thus giving investors a new way to bet on digital currencies. Some have already raised billions of dollars to facilitate such plans.

In June, three major Canadian crypto mining companies were approved for listing their shares on the Nasdaq.

Such new listings from international exchanges come about a year after major Chinese crypto firms were approved for listing in Nasdaq, including China’s Ebang crypto miner, which started trading on the Nasdaq in June 2020.

Canada’s crypto miner Bitfarms Limited started trading on Nasdaq on June 21st 2021. During the same month, another Canadian cryptocurrency mining firm, HIVE Blockchain Technologies, obtained approval from Nasdaq to list its shares on the popular exchange.

Canada’s crypto miner Hut 8 Mining also received approvals to list on the Nasdaq in June this year.