One of the most prominent cryptocurrency exchanges negli Stati Uniti, Coinbase Global Inc, is headed for an initial public offering (IPO). Ahead of the filings, the company has traded on the private markets valuing the concern at $100 billion based on Nasdaq’s private auction results last week. The move into the public space of one of the largest cryptocurrency exchanges could lead to a future expansion of ICO trading.
What is an ICO?
An initial coin offering (ICO) is the cryptocurrency industry’s equivalent to an initial public offering (IPO). A company looking to raise capital by monetizing its equity will introduce a new coin to raise funds. Investors can purchase the offering and receive a new digital coin issued by the company. The new digital coin may have some utility in using the product or service or represent a stake in the company.
Coinbase is not the only cryptocurrency exchange that U.S. investors can use, but it’s one of the few regulated. Coinbase is regulated by the office of the currency controller, which reports to the Federal Reserve. Coinbase is also registered as a Money Services Business with FinCEN. Coinbase Inc. is regulated by the NOI. Security and Exchange Commission and incorporated in the state of Delaware.
Ahead of an IPO period shares will often trade on a private exchange. Secondo Bloomberg, shares of Coinbase traded on the private market between $350 e $375 per azione, giving the company a pre-IPO valuation of between $90 per $100 miliardi. Bloomberg reported that the private auction ended with shares trading for $350 per unità. The private market is important because it helps determine a range of the company’s price ahead of the IPO. While private trading is more restrictive, it does help provide a gauge of value.
A private trading auction helps bridge the gap between the valuation that Coinbase experienced in its last funding round and the IPO. In the case of Coinbase, the previous funding round was in 2018. This funding round put it at a valuation of $8 miliardi. Its been nearly three years since this funding, and the value of the company has increased substantially. A gennaio 2021, the company saw its valuation increase to around $50 miliardi based on privately traded shares on a private forum created by Coinbase.
A Nasdaq First
The initial public offering will be a direct listing as opposed to a classic IPO. This type of public trading means the shares will be traded on the exchange and will not go through an investment bank helping Coinbase raise capital. It also means that the holders of the shares will not have to have a lock-up period and will be able to sell their shares immediately. The Securities and Exchange Commission filings that the Class A stock carries one vote per share, mentre Class B has 20 voti per azione. The offering will be the first major direct listing, an alternative to a traditional IPO, to occur on the Nasdaq. All such previous listings were on the New York Stock Exchange.
How Will This Help ICOs
One of the issues with new coins is liquidity and relevance. If a major exchange like Coinbase introduces new ICOs, the public will likely feel that the introducing products are above board. Inizialmente, there were problems with ICOs. UN 2018 study, in the wake of the first run-up in cryptocurrency prices, showed that 81% of ICOs were scams. The same study showed that approximately 6% of the ICOs that were listed failed. A failure of an ICO means they raised money but not as much as required. In these cases, the investors were refunded their money. The misrepresentation of ICOs has created some public distrust, and the need to have an intermediary that is publically traded is precisely what the doctor orders. Another issue with ICOs that has plagued the industry in the past is accountability. ICO is that are tokens sold in an ICO don’t usually make the issuers responsible to the investors. Although an ICO issuer also raises capital, it’s not like an initial public offering or crowdfunding. Traditional ways of fundraising make companies accountable to their shareholders.
The Bottom Line
The initial public offering of Coinbase will provide a publically traded entity that focuses on cryptocurrency. A regulated exchange will provide the public with information on cryptocurrency trades and provide trust in the ICO process. New initial coin offerings will be scrutinized by Coinbase and allow the public to believe these products are not scams and represent a good faith effort by the seller than their product is legitimate.