Coinbase, the largest crypto exchange in the United States, has filed with the Securities and Exchange Commission (SEC) to become a publicly traded company through a direct listing (and not an initial public offering). Here’s what you need to know.
Coinbase is a San Francisco-based crypto exchange that first opened its doors in 2012. Founded by Brian Armstrong and Fred Ersham, the platform now has over 43 million users worldwide and has transacted more than $456 billion to date – per the latest filing with the SEC.Coinbase Is One Step Closer to Going Public. What Comes Next?Coinbase’s S-1 filing weas made public today, putting the crypto exchange one step closer to an IPO. GSR Markets President Rich Rosenblum explains what information can be gleaned from the S-1 and what investors can expect when Coinbase goes public.Volume 90%
The story so far
On Jan. 28, the exchange formally announced its plans to go public via a direct listing on Nasdaq, “pursuant to a proposed direct listing of its Class A common stock.” This confirmed rumors from a Reuters report that emerged in July last year that stated the company was interested in listing on the stock market.
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Initially, it was believed Coinbase would raise capital through an initial public offering (IPO); a process that involves creating new shares and employing the help of underwriters – usually banks – to help promote and market them to prospective investors. Instead, Coinbase has decided to pursue a direct listing, aka direct public offering (DPO), which essentially means cutting out intermediaries and only selling shares that already exist. No new shares will be created.
There are three distinct advantages of this route over an IPO:
- It’s much cheaper: Companies that already have a strong market presence don’t necessarily need the help of underwriters. A DPO dramatically reduces the costs of going public.
- The existing shares aren’t diluted: Because new shares aren’t created during direct listings, it means existing employee and investor shares aren’t at risk of being diluted once the company goes public. Dilution is where newly created shares enter the market and drive the price of the existing shares down.
- It’s much faster: By cutting out middlemen, there are far fewer regulatory hurdles to jump through before going public, including filing underwriter contracts with the SEC.
At the end of 2020, Coinbase filed preliminary documents with the SEC, signaling the start of a public listing process.
On Feb. 25, Coinbase’s Form S-1 was officially published by the SEC. Citigroup, Goldman Sachs and JP Morgan Securities were among the banks chosen by Coinbase to aid it through the listing process.
What symbol will Coinbase shares trade under?
Coinbase Class A shares will debut on the Nasdaq Global Select Market under the ticker COIN.
When will Coinbase COIN shares be listed?
Right now, no official listing date has been given. We’ll update this article as soon as it is announced.
Who will be able to buy Coinbase COIN shares?
Since COIN shares will be listed on the Nasdaq exchange, it means anyone who has an account with a brokerage that deals in U.S. stocks will be able to purchase COIN shares. Similarly, investors will also be able to purchase COIN shares on any mobile trading app that lists Nasdaq Global Select Market stocks.
It’s not yet known how many COIN shares will be available or what the price of each share will be.