In a first for the industry, popular cryptocurrency exchange Coinbase will go live on the Nasdaq stock exchange. This is a historic moment and experts believe it is a catalyst for even more listings going forward.
This year has already been a good one for the company. Following a phenomenal first quarter, the company generated over $1.8 billion in revenue within the first three months of 2021. By comparison, the company made $1.3 billion in revenue over the whole of 2020.
It is the first fully-fledged cryptocurrency-related company to make this move. The company ticker will trade as “COIN” on the stock exchange. The company was last valued at $90 billion. Nasdaq gave it a reference price of $250.
“The biggest IPO in history”
Don Tapscott, Executive Chairman of the Blockchain Research Institute has called the Coinbase IPO “the biggest IPO in history.”
“It’ll mint 1,000 millionaires who will reinvest their windfall into this industry accelerating the adoption of this tech. It’ll also be the first and only large cap company institutions will feel comfortable owning and they’ll buy it in droves,” he told BeInCrypto.
Tapscott also believes this could lead to more listings from other bigger organizations in the future.
“It’s a shot across the bow of Wall Street and it might not even be the biggest exchange out there,” Tapscott says.
“By listing on a major stock market index, Coinbase brings attention and investment to the crypto space from a range of new sources,” he explained and added:
“Traditional financiers can now point to Coinbase as an example of a properly vetted and publicly traded crypto asset company when reaching out to new market entrants whether those are limited partners, new investors, or other firms. With this attention, will come greater responsibility and regulation.”
Rachid Ajaja, CEO and co-founder of AllianceBlock, explains that the listing will also bring much-anticipated legitimacy to the cryptocurrency space.
“As the largest and most public-facing American crypto business, Coinbase’s listing brings further publicity and legitimacy to the entire industry. Coinbase acts as a gateway to crypto for many retail investors, and the goal for DeFi projects is to now convert that attention into users,” Ajaja shared with BeInCrypto.
Coinbase listing eyes mass adoption
Coinbase is entering uncharted territory. However, experts are looking at the positive outcomes this new era for the crypto community could bring.
“This could be viewed as the end of the beginning, or introductory phase of the evolution of the industry. Queue mass adoption!,” thinks COO and head of Polyient Capital at Polyient, Eric Kapfhammer.
Chairman of the European Blockchain Association, Michael Gebert, believes these changes will begin as more cryptocurrency institutions following suit. Gebert told BeInCrypto:
“The fact that Coinbase reached a valuation of around $90 billion in its final week of trading on Nasdaq’s private market will be a huge motivation for other crypto exchanges and market participants to adopt this strategy.”
Gebert states that the decision for Coinbase to list directly mitigates issues such as lock-up periods, “thus enabling insiders to sell their shares on the very day the company is publicly listed.”
“Since Coinbase is initially not able to issue any new shares, the equity ratio is safe from becoming diluted quickly with the effect that existing shareholders will not lose any of the company ownership percentages they are currently holding,” he said.
While only time will ultimately tell if this decision is right or wrong, Sheraz Ahmed of STORM Partners believes the move is a bullish one for the industry as a whole.
“Even though Coinbase is the first, I foresee that we will soon have many more companies of the likes going public over the next couple of years. The return of the bull market has brought a new wave of interest and money, and now with institutions finally here, the sky is the limit,” Ahmed says.
Cryptocurrency industry finally being recognized
Industry experts see the listing of Coinbase as a major turning point for the industry. The company has the opportunity to lead the market and create awareness within the traditional financial space.
Kapfhammer says that the listing will add credibility to the industry. Something that has been lacking over the years, especially in the eyes of traditional financial institutions.
However, with the rapid growth of the market over the last year, it is inevitably time for the industry to expand. In addition, everyone is keeping their eyes peeled to what happens on opening day.
“Many crypto supporters and investors are invested in the success of this IPO, and its effects will be felt across the sector. Will it be a success? In a sense, merely getting to this stage, a public listing stock, is an incredible achievement in itself,” says Kapfhammer.
With Coinbase taking the next step in global adoption, all industry participants will be waving their flags for the company, as it leads the way.
Capital markets will now need to realize and accept that cryptocurrency companies are here to stay. Kapfhammer sees the move as a step in the right direction for investment within other cryptocurrency companies down the line, leading to more adoption.
IPO symbolizes market maturity
The Coinbase listing signifies the first step in global acceptance for an industry that the capital markets have continuously criticized. Traditional finance has finally stood up and taken notice.
“You can expect maturation in the space, both in terms of investment flows, as well as the expansion and development of new services with the accompanying infrastructure,” Kapfhammer explains.
Some in the crypto community could see the listing as a sell-out to the established order. To this point, Ahmed explains that this isn’t the case.
“Although listing on a stock exchange sounds like the antithesis of disintermediating through blockchain technology, sometimes you have to master the rules before you can break them,” he says.
The ability for a cryptocurrency exchange to list on a major stock exchange is no small feat. Especially in a heavily regulated country such as the United States. The public listing is a significant milestone and victory for the market regardless of how the IPO performs.