Popular San Francisco-based cryptocurrency exchange Coinbase is reportedly seeking to lists its shares publicly in a traditional stock market as early as this year or early next year.
This is according to a report by Reuters citing “three [unidentified] people familiar with the matter.” According to the Reuters sources, Coinbase is just only planning to list publicly and is in its initial planning stages which means that the plans are fluid and subject to changes and therefore there are no hard numbers and dates to report on.
For any securities listing in the United States, any company will need to register with the financial watchdog the Securities and Exchange Commission (SEC) and so far this has not happened. If it did, “it would represent a landmark victory for cryptocurrency advocates vying for mainstream endorsement,” according to Reuters.
Coinbase was valued at an eye-popping $8 billion in 2018 following its most recent funding round in which it raised $300 million in a private finance deal. This makes it one of the most valued cryptocurrency companies in the market attracting investments from some of the leading venture capitalists including A16z, PolyChain, Y Combinator, and Reddit co-founder Alexis Ohanian.
It is rather archetypal for Coinbase to seek extra funding from the public given its swanky cash position. However, it is hard to judge the financial position of a private company with the only available unofficial revenue figures stemming from its 2017 year in which it reportedly raked in about $1 billion in annual revenues.
2017 was the year in which bitcoin rallied from prices of $1k to a record high of $19k. The following year was considered a ‘crypto winter’ due to the market correction that was major coins lose more than 90% of their value. Reports also show that Coinbase posted revenue figures in 2018 half what they were in 2017. These are, however, not official reports from the company. The good news is that we will not have to wait for long to get the complete picture given that if the Reuters report is true, Coinbase should be filing the S-1 report with the SEC which will report its financial statements with the commission.
Further information from the Reuters informants shows that Coinbase is considering a direct listing on the public markets. A direct listing will see the company forego a bloc sale in which it will not be required to formally price the shares on the IPO date. This means that underwriters will not be able to underquote a share price to make the biggest return once the shares begin trading. It is a common practice in IPOs that often leads to companies raising less money from IPOs than they often intend to.
In other news, on Thursday, Crypto Economy reported that Coinbase had hired Facebook’s Deputy General Counsel Paul Grewal to head the exchange’s legal team as the replacement to Brain Brooks who left the company to join the Office of the Comptroller of the Currency.
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