A major American crypto currency exchange Coinbase can go to the US stock market before the end of this year or early next. On 9 July, reported Reuters citing three sources close to the company. While Coinbase will likely refuse to spend IPO and direct listing, instead of assuming the issue of new shares the sale of securities of the original investors. Listing kriptolodzhika still must be approved by the Commission on securities and exchange Commission (SEC), but if successful Coinbase will be the first crypto currency exchange, whose shares are traded on the stock market. As the company is preparing for listing, who else is going to go public and whether to wait for the wave of IPO from CryptoStream, understood DeCenter.
According to sources Reuters, although preparations for the listing of the Coinbase is in full swing, it is not final decision: plans and timelines of the company on the stock market can change. While the stock exchange has not applied for registration, but is already in talks about bringing investment banks and law firms. The press service Coinbase refused to comment on «rumors or speculation,» the SEC also declined to comment.
But beyond the rumors there’s some circumstantial evidence that Coinbase is preparing for listing. So, in may of this year, J. P. Morgan, one of the largest investment banks in the world, began to provide services Coinbase and Gemini. Then the representatives of the Bank hinted that the organization will be able to benefit from future IPO Coinbase. A July 8 Coinbase in his blog announced the appointment as General counsel former Vice President Facebook Sex Grewal to manage relationships with financial regulators. He should «pave the way for the next stage of making the crypto industry.» Coinbase previously denied preparing for an IPO, but noted that it is working on restructuring income.
Also on 14 August, Coinbase plans to hold its first investor Day meeting of management of the stock exchange with investors during which the company talks about his work and plans, and investors ask questions about the activities of the site. Due to the ongoing pandemic, the event will be held online. Representatives did not specify whether the investor Day with the rumors about the preparation for the listing, noting that the purpose of the meeting is to provide «a broader understanding of cryptocurrencies and blockchain» among the participants. However, usually such meetings are held prior to listing on the stock exchanges.
One of the sources told Reuters that Coinbase is considering a direct listing (Direct Public Offering, DPO) instead of the more traditional initial public offering (IPO).
The main differences between the direct listing from the IPO:
The company creates new shares and sells securities that are already on the OTC market (OTC) — the initial investors of the company, its employees and top management.
No new funding — they are involved through private investment in public equity.
No underwriters, who help in the organization of filing and transactions, as well as the first to buy issued shares. Typically, the underwriters are the investment banks. Their absence means that the Issuer does not need anyone to share the proceeds from listing.
Lower costs — in preparation for the IPO, the company spends more money on auditing, the drawbacks, the work of consultants, lawyers, preparation of documents, preparation of road show for investors, support of transactions, issuing securities and so on. With the direct allocation of these costs is not. The underwriters charge a Commission per share, which may vary from 2% to 8%. This means that a significant portion of the capital raised through the IPO, is to compensate intermediaries, sometimes reaching hundreds of millions for the IPO.
There is no lock period (Lock up) — the current investors and employees can immediately put their shares for sale. In the case of IPOs they could bring paper to the market within six months.
Direct listing is a convenient way for investors to withdraw their investments in the money. However, he does not exclude a later public offering of shares. It can also make trades more successful. After all, this is the most economical way to provide users with a Coinbase access to company shares, while retaining its legal structure. This method of going public is becoming more and more popular in recent years, especially among technology companies. For example, recently a direct listing held Spotify and Slack.
Direct listing — predictable choice for Coinbase. Recall that the exchange is one of the largest and oldest cryptoplasm on the market. It was founded in 2012, has more than 35 million users in 32 countries. Also, now Coinbase is one of the most regulated markets in the world that allows her to work legally in the United States. According to Crunchbase, since its founding in 2012, the company raised a total of $547 million from 55 investors.
How big capitalization Coinbase is not clear today. Financial statements of the exchange closed, which is typical for private companies. However, according to media reports, in 2017, its revenue amounted to about $1 billion in 2018 and $520 million in 2019 — $488 million and a profit of $146 million In October 2018 after the next round of funding, Coinbase was valued at $7.7 billion.
No matter which method of listing choose Coinbase, the market is in any case will see its financial statements: information about income, expenses and how the company coped with the UPS and downs of the market. And this is a big step for the industry, not differing financial transparency.
Coinbase is not the only cryptomnesia, which wanted to enter the stock market. In recent years, this trend is observed more clearly.
Mining company. In 2017 on the Toronto stock exchange released a canadian mining company Hive.
Last October, the Chinese mining giant Bitmain has applied to the SEC with the financial support of Deutsche Bank. However, at the beginning of this year, cryptomeria canceled plans to go public — according to rumors, this is due to inspection of the Ministry of justice of its activities.
In November last year, another mining company and the main competitor Bitmain — Canaan — held an IPO on the NASDAQ and raised $90 million At the start of the campaign cost $9–$11, now down below $2.
At the end of this June, Chinese manufacturer of ASIC miners Ebang attracted during the IPO of $101 million at a valuation of $685 million After the listing, the company plans to launch its own stock exchange and mining pools.
The crypto currency exchange. In March this year the Australian crypto currency exchange INX, registered in Gibraltar, after two years of preparation, filed documents with the SEC for the IPO in new York. The company hopes to raise $130 million and is working on getting Regulations from the Department of financial services new York. The money raised from the IPO will be used to Finance new crypto currency exchange INX and the new platform security-token INX Securities.
In the same month, the Swedish stock exchange BTCX announced the IPO in the third quarter of this year. The company was founded in 2012 and is one of the largest cryptoplasm Scandinavia.
At the end of this June of its decision to list announced and a large South Korean Bithumb, selecting Samsung Securities as the underwriter. This will be the second attempt by the exchange to go on exchange in the past year, the site tried to make a listing in the US through a deal a reverse takeover, but this did not happen. The company now hopes to hold its placement in the local market. I heard a rumor Bithumb internal problems and doubts about market attractiveness. Also Bithumb trying to challenge the bill from the National tax service of Korea for $69 million for transactions with foreign customers.
Cryptomeria. In November last year, the California scriptbank Silvergate Capital collected through IPO of $40 million on Nasdaq at a valuation of $229 million and plans to raise $52 million Request for listing, the company filed in November 2018, before submitting the documents also on the Hong Kong stock exchange.
At the beginning of this July, the credit blockchain-service BlockFi also said about preparations for the listing in the second half of 2021. To do this, the company is looking for a person for the post of chief financial officer, had 15 years of experience in the financial and stock markets, as well as negotiating with potential investors about additional funding round.
For several years rumors about listing Ripple and Binance. In January of this year at the summit of the world economic forum in Davos CEO brad Garlinghouse said that soon the IPO will become more common in the crypto industry. He also hinted that Ripple itself will be one of the public companies before the end of the year. «In the next 12 months you will see an IPO in crypto and blockchain space. We are not going to be the first, but do not want to be. So I think we will be in touch with leaders… Is a natural evolution for our company,» he said at the forum. Since 2012, Ripple has raised approximately $300 million investment from a dozen investors. During the last round of investment last year the company was valued at $10 billion.
I think investors look forward to the possible return of their investments. If the company is preparing for listing, it is likely that it expects better market conditions and a new round of bull market for XRP. However, IPO does not guarantee success. For example, IPO is hardly a Ripple broke up the price too long falling tokens of the company.
The movement to IPO marks a radical shift in how cryptocurrency companies attract capital. An obvious departure from the primary supply of coins (ICO) and other non-traditional ways to get funding. But a few years ago they seemed to be the main way of collecting capital for bitcoin industry. However, tainted reputation and problems with regulators have forced most companies to abandon them. Now startups that are configured for long legal game, clearly prefer listing on a stock exchange or direct funding.
The trend in the listing of important publicity, not just raising capital. To IPO the company needs to provide public access to financial statements and legal information, as well as regularly report on profits and value assets. Therefore, the public status and trade stocks in the stock market is a way to cause me maximum confidence.
Of course, we should not expect that the listing on the stock exchange will become a widespread standard for cryptomery — it is not for everyone. So, most startups in the industry simply will not be able to fulfill all the requirements of the regulators and to pull the associated listing costs, and decentralized platforms possess the wrong structure. But for mining companies the listing is the only way to access the liquidity of the public market.
If the SEC gives go-ahead for listing Coinbase, a key player in North America, exit exchanges on the stock market will be another step towards legitimizing and acceptance of cryptocurrencies. First of all, it will give a signal to institutionalism that the regulator is «reconciled» with the new asset class. It also drew attention to the industry and would, at least indirectly through shares, the market of new investors (for example, in U.S. unskilled retail investors do not have access to investments in nonpublic companies). Moreover, the market would also receive detailed information about the state of Affairs in one of the main exchanges in the market. And Coinbase listing would influence the influx of new funding, increasing liquidity and opportunities for development.
Given the scale of Coinbase, the company’s entry into the stock exchange could have a positive impact on the market as a whole. I think most of the major cryptomery already ready to rise on the stock markets, but wait until regulators provide more clear requirements for industry. Application Coinbase, is also likely to accelerate the adoption of clear legislation regarding cryptocurrencies.