Bitcoin took another step closer to universal acceptance last week, as Coinbase completed its first day as a publicly-listed company. The Nasdaq placed a pre-emptive reference price of $250 per share, but at market close each share was valued at $328. One of the world’s largest crypto-exchanges is now valued in the range of $85 billion.
In
Bitcoin terms – that’s about 1.54 million BTC.
The
company first announced its intention to go public at the beginning of the month, releasing a statement that it expected
its shares to be placed for sale on the Nasdaq Global Select Market under the
ticker symbol “COIN” on April 14, 2021.
Bitcoin
prices surged,
rallying to a new all-time high of ₹4,868,723 ahead of market open on
April 14th.
Breaking
Down the IPO
Okay
first off, one important clarification. Coinbase’s listing was not a
traditional IPO, but opted for a direct listing instead.
An
initial public offering means Coinbase would issue completely new shares for
sale, diluting the value of each individual share. Instead, it listed
approximately 114.9 million existing shares, approximately 44% of the company’s
equity.
The company’s SEC filing revealed that the exchange brought in a $322
million profit on revenues of over $1.2 billion in 2020, nearly doubling its
performance in 2019.
Approximately
96% of the company’s revenue came from transaction fees earned from trades on
its platform by institutions and individual users. Clearly, Coinbase goes where
Bitcoin goes and vice versa.
These
remaining revenues is generated via several lines of business:
·
Coinbase Commerce – Solutions that help online retailers accept
payments in crypto.
·
Coinbase Card – A relatively new offering, the company offers a
physical Visa debit card and partner app to spend crypto in the physical world
by converting crypto to U.S. dollars when used.
·
USD Coin (USDC) – Its very own stablecoin, built on Ethereum.
What
does this mean for crypto as a whole?
Publicly
listed companies are subject to certain regulations and disclosures, increasing
trust in what they do, and the sectors in which they operate.
Coinbase
is the first cryptocurrency company to publicly list, which could lead others
to follow suit. One successful public offering and massive valuation later, it
is that much harder to dismiss cryptocurrencies as fringe investments.
Just as with PayPal accepting crypto, Tesla accepting Bitcoin or Kraken Financial, the Coinbase listing is another major step
towards mainstream adoption of cryptocurrency.
However,
there are voices among the community disappointed with the move. They see the
listing as a step away from crypto’s original promise – putting people in true
control of their money.
The
Indian scenario
The regulatory
environment for crypto in India has seen massive swings in 2021. February
greeted us with news of a bill which sought to prohibit all private cryptocurrencies in India. Finance
Minister Nirmala Sitharaman followed with statements promising a “calibrated
approach” to cryptocurrency in March.
The
listing gives India’s crypto industry another point as it builds its case to
the government to reconsider its ban. Coinbase has plans to set up shop in
India as well, with ex-Google Pay engineering lead Pankaj Gupta at the helm.
Gupta announced plans to acquire startups and hire ‘hundreds’ of
employees, a job-creation angle that the government is sure to assess.
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