In a way, Coinbase is the example of the cryptocurrency industry. It has adopted – not fought for – the regulation that sets it apart from most cryptocurrency exchanges, while the company’s business app has been praised for its ease of use. When JPMorgan Chase decided earlier this year to expand traditional banking services to US cryptocurrency companies – a move that set a precedent – it began with Coinbase and Gemini, another US-registered exchange.
So last week’s report that Coinbase filed a draft IPO registration with the Securities and Exchange Commission wasn’t much of a surprise, but it was good news nonetheless – And not just because the Messari research firm said the 35 million client company could be worth $ 28 billion.
“It is a tremendous event”Vladimir Vishnevskiy, director and co-founder of the Swiss asset management company St. Gotthard Fund Management AG, told Cointelegraph, not only in the US. but also in Europe, because “the IPO will provide an indication of how the markets are prepared to value such companies.”
Stephen McKeon, professor of finance at the University of Oregon and a partner at Collab + Currency, told Cointelegraph: “Coinbase will be the first crypto company to be listed on a major US stock exchange, “and as such, its IPO” will be a significant event for the industry.“- provided, of course, that the offer goes as intended.
Meanwhile, Edward Moya, a senior market analyst at forex trading firm Oanda, told Cointelegraph: “It seems to be perfectly in sync with the adoption of traditional Bitcoin markets, the high demand for cryptocurrencies, and growing institutional interest after the breakthroughs.“.
Even so, like other so-called unicorns, Coinbase will now face a “major test,” added Moya, simply because the IPO market has become so popular of late. Actually, Some are already calling the market a “Tech Bubble 2.0” and comparing the frenzied listings of Internet companies during the dot-com bubble in the late 1990s.
“”There is a lot of hot money in the markets right now“Vishnevskiy confirmed and, given the strong appetite for IPOs, I expected the offer would be oversubscribed. According to McKeon”Grayscale and Bitwise funds’ premiums suggest there is a huge appetite for cryptocurrency in the stock markets, which should result in a warm welcome to Coinbase stocks“He added:
“IPO activity is cyclical, shuttling between hot and cold markets. We are currently in the middle of one of the hottest IPO markets in recent years. Along with Bitcoin at its all-time high, this is a moment – very in time for Coinbase to get on.” to go to the stock market. “
Because of the monetary incentives associated with Covid-19, the global economy is full of liquidity and there are few investment opportunities. Bond yields are close to zero. In this environment, public demand for shares in high-growth innovative technology companies such as Coinbase is strong.
Business interruption concern
Is there anything that could derail the process? “”When an unforeseen circumstance occurs, such as widespread media coverage of a new (or mutated) contagion, it can make market observers very risk averse and less likely to file for bankruptcy. initial public offeringCharles Bovaird, vice president of content for Quantum Economics, told Cointelegraph.
Additionally, Coinbase has repeatedly shorted out during periods of high demand, as Bovaird recalled. In 2017, when the SEC rejected the Winklevoss Bitcoin (BTC) ETF and BTC prices subsequently fell, many investors, including Bovaird, were unable to trade through Coinbase. This could be a factor in investor sentiment during an IPO as capacity issues continued to plague the exchange in 2020.
“Coinbase has a public image problem that needs cleaning up and that may not be easy,” added Moya.. The New York Times reported in November that some of Coinbase’s black employees had raised concerns about discriminatory treatment, and in 2020 employees were also “discouraged from discussing causes or guidelines internally and addressing activist causes at work” – All of this could create leadership problems for potential investors. Moya said to Cointelegraph:
“Next year, businesses will have to adapt to diversity and inclusion, and by the time Coinbase can do that, they may miss the opportunity to take full advantage of this opportunity.”
Vishnevskiy disagreed that Coinbase had an image problem and said the company would be considered one of the “safest crypto trades” if it went public. “”Interest in Europe is likely to be more subdued than in the US, “which is the norm given the more conservative investment trends of European investors.” I can confirm, however, that I already know some family members from offices in Europe that are interested in an assignment, “he told Cointelgraph.
Bovaird added that as an investor, he would not be concerned about human resources policy or whether employees are allowed to hold political talks, adding. “”I care if I can’t use your website to buy (or sell) bitcoin whenever I wantEven if institutional investors prefer a “laser-staring” CEO like Coinbase’s Brian Armstrong, Private investors, who were instrumental in the current “frenzy” in the IPO, might think differently.
Bring in the new attendees
Would a public Coinbase listing attract more users to crypto? “This could encourage the adoption of cryptocurrencies”John Griffin, James A. Elkins Centennial Chair of Finance at the University of Texas, told Cointelegraph that companies that survive the IPO will be scrutinized for months by regulators, analysts, and investors Institutional – often coming out with a safer and battle-tested investment, at least in the minds of some investors. By comparison, “Check out WeWork,” suggested Griffin, “failed a public listing exam and fell apart.”
Digital assets and IPOs have developed at almost a record level in 2020. “This event could bring a number of new entrants into the room who previously only focused on IPOs,” said Vishnevskiy. According to McKeon, risk appetite for both areas is very similar, adding, “A Coinbase IPO would further validate cryptoassets as an asset class for the general public, which is likely to lead to greater adoption.” However, a successful Coinbase IPO shouldn’t solve all of the industry’s problems. As Griffin Cointelegraph said:
“This is definitely a step towards the legitimation of cryptocurrencies and a move towards traditional markets. A big problem is that exchanges like Coinbase are subject to official control. [otros] Exchanges that drive prices may receive little scrutiny. This means that the market is still manipulable. “
Overall, however, most observers saw a Coinbase IPO as a sign of achievement for the cryptocurrency and blockchain industries. One remembers the failures of other public listings of crypto projects like Bitmain and BitConnect, as well as the long awaited but not yet seen Ripple IPO. “”Some failed because of notoriety, others because of a difficult regulatory environment in the US.“said Moya, who then added that anything that sparks interest in cryptocurrencies is a welcome development for the industry.
The IPO is a major event and, according to Griffin, “it shows that Coinbase’s path to work in the regulatory process is financially viable”. Meanwhile, John Sedunov, associate professor of finance at Villanova University, told Cointelegraph:
“A Coinbase IPO would take a new step away from traditional cryptocurrency markets. I don’t think this will get you across the finish line, but it will help continue the process of improving cryptocurrency accessibility for investors and potential investors User “.