Coinbase could be the first major player in the cryptocurrency industry to go public in the US, reports have claimed.
The company is yet to announce its intentions to go public, but has apparently been in talks with investment banks and law firms in what would mark a milestone for the crypto market.
Cryptocurrency exchanges and related businesses have been in limbo in the US for the past several years, as banks have largely shunned the industry and the Securities and Exchange Commission (SEC) has not issued regulatory guidance on the majority of digital coins. A stock market listing for Coinbase would lend legitimacy to other companies built around cryptocurrency and potentially pave the way for future IPOs.
Before it can go public, Coinbase will need approval from the SEC. Coinbase has not yet filed an application with the agency and the SEC has been silent on the question of whether Coinbase will be allowed to proceed.
Notably, Coinbase isn’t planning to enter public markets through an initial public offering (IPO). Instead, it expects to use a direct listing in which it will not issue new shares.
A direct listing would reward existing shareholders, since there is no lock-up period in which they are barred from selling their Coinbase shares. In addition, this route avoids watering down the value of existing shares with a new issuance.
Coinbase was last valued at $8 billion during a private financing round in 2018, and the crypto market has only grown since then. Coinbase added more than eight million users from 2018 to 2019 and the marketplace recently surpassed 35 million total accounts. Coinbase currently operates in the US and more than 100 other countries around the world.