This is not exactly a bombshell. All prominent Silicon Valley startups like Stripe and Robinhood have plans for an IPO at some point. However, in the case of Coinbase, any eventual IPO will be more fascinating than most, considering how it has become an effective standard-bearer for both the still-emerging cryptocurrency industry and Bitcoin.
Irrespective of when Coinbase formally announces its IPO, here are some questions the finance industry and potential investors should be asking:
Will the IPO of Coinbase Involve a Blockchain?
Blockchain creates a tamperproof ledger across many computers and is one of the most significant novel technologies of this century. This is precisely why Bitcoin is a disruptive currency, further underpinning all other major cryptocurrency projects.
Blockchain can also record and monitor ownership via digital tokens – in other words – the perfect tool for issuing shares in a new company.
Fred Ehrsam, the co-founder of Coinbase recently stated that the firm is spiritually reaches the public through some token offering, and many of its employees would disheartened if it follows a garden variety Wall Street IPO. However, any blockchain offering, even a hybrid one, would rely on the SEC’s blessing. Given the long-standing skepticism of the agency toward cryptocurrency, that could be a tall order.
Will Coinbase do a Direct Listing?
Coinbase, as told by described by Alex Wilhelm (a Silicon Valley Watcher at TechCrunch) as an archetype for a direct listing. This process comprises current shareholders of a startup selling their shares to the public, in contrast to the organization working with Wall Street underwriters to issue novel blocks of shares.
Wilhelm hints that, similar to other recent firms to pursue a direct listing (notably Spotify and Slack), Coinbase has a similar profile in that it has ample cash reserves and a high valuation. A direct listing would also be better for cryptocurrency fans, a large number of whom despise the conventional IPO processes and Wall Street in which the well-connected get first bite at a stock of the company.
What Will the Ticker Symbol of Coinbase be?
The coin would be an obvious choice, which would invoke the name of the startup while also nodding Bitcoin. A more cryptic choice could allude to the pseudonymous founder of Bitcoin – Satoshi Nakamoto or the overall blockchain tech.
Will an IPO Generate the ‘Coinbase Effect’ for the Wider Crypto Markets?
The term ‘Coinbase effect’ refers to the price boost that many cryptocurrencies listed on Coinbase. Likely, the effect occurs because Coinbase is the primary gateway to crypto for numerous buyers.
Given the status of Coinbase as the de facto leader of the crypto industry, a successful IPO could produce a coattail effect that amplifies the price of Bitcoin, along with other cryptocurrencies. Contrastingly, cryptocurrency prices could tank if Coinbase flubs its IPO.
Will Coinbase Try to Time the Crypto Market?
As noted by veteran crypto-journalist Laura Shin, Coinbase may take into consideration the state of the broader cryptocurrency market in deciding when to go public.
Bitcoin, along with other cryptocurrencies are notoriously volatile, and despite a formidable rally in the late spring, trading activities and prices have been in a slump. An ongoing bear market in cryptocurrency prices could prove a drag on the initial stock price of Coinbase, leading the company to put off an IPO until more favorable conditions surface.
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