Upon a successful DPO, Coinbase will be the first crypto exchange to go public.
The largest exchange in the US Coinbase is going public through a “direct public offering” (DPO) rather than an initial public offering (IPO). Unlike the IPOs, which go through third-party brokers, the DPO will allow Coinbase to cut the cost of making its market debut and being available to investors. Also, the DPO process is usually faster than an IPO and is generally attractive for growing companies.
Coinbase Plans for Going Public
Over the past months, the IPO market has been bubbling, with several firms going public through initial public offerings. CNBC noted 2020 as the busiest year in the IPO space, with 2018 new listings. Considering the information provided by IPO tracker Renaissance Capital, 2021 could be a more buy year for the IPO market. As of the 30th of March, Renaissance Capital said that there were already 95 new listings.
As more companies move to go public, cryptocurrencies have also been recording new milestones. Bitcoin and altcoins have been seeing record highs due to several factors, including increasing institutional interest in digital coins.
Amid the bubbling IPO market and rise in institutional demand for crypto, The Ticker Tape revealed that Coinbase is planning a DPO on the 14th of April. The exchange is expected to list on Nasdaq under the ticker, “COIN.”
Upon a successful DPO, Coinbase will be the first crypto exchange to go public. Coinbase’s filing with the US Securities and Exchange Commission (SEC) states that the exchange has more than 56 million users globally. Also, Coinbase has performed transactions worth over $456 billion.
Additionally, Coinbase gained $1.8 billion in revenues in 2021 Q1, compared with $1.3 billion recorded for the whole of 2020. The record-breaking report came at the same time exchanges are seeing large volumes of crypto transactions. Apart from institutions showing interest in cryptocurrencies, digital assets have also gained more popularity among retail investors.
On the 5th of June, the combined crypto market hit a $2 trillion market cap for the first time ever. The new milestone came just after the crypto space recorded $1 trillion market value for the first time in ten years in early January.
DPO vs IPO
Unlike IPOs, where there are underwriters, DPOs give companies more control over their terms of offerings as they are not working with any third party.
As Coinbase goes public through a DPO, the company will be able to sell only existing shares and not issue new ones. Selling only existing shares makes the price movement to be less volatile. In addition, DPO allows stakeholders to convert their stakes into sellable stocks. Also, the DPO gives everyone access to Coinbase’s shares at the same time. Examples of companies that opened to public trading via DPOs are Slack Technologies (NYSE: WORK) and Spotify Technologies (NYSE: SPOT).