Coinbase, the first crypto unicorn, is going to be listed in Nasdaq as a public company.
After a lot of rumors during 2020, Coinbase confirmed it is filing to be listed in American stock exchanges. The first announcement came on December 17th, 2020. It only stated they had submitted a draft statement to the Securities and Exchange Commission (SEC).
By then, Bitcoin had recently surpassed the $20,000 mark for the first time, breaking its ATH and starting a rally that wouldn’t stop until almost tripling the price.
At first, experts assumed Coinbase would conduct an Initial Public Offering (IPO), since the initial notice didn’t give much information. However, the company later notified they’d go for a Direct Public Offering (DPO).
The difference between these two types of fundraising is that, while IPOs create new tokens for the listing, DPOs work with the shares already existing. This way, the stock avoids the risk of being diluted if the market price is lower than the estimated price.
Coinbase also notified the shares will be Class A, meaning that owners have more voting rights inside the company. The markets will list the asset under the ticker COIN.
Coinbase is one the biggest cryptocurrency exchanges in the US and one of the few that obtained a BitLicense in New York.
Who can buy Coinbase shares?
Coinbase shares will be listed in Nasdaq, the second most popular stock market in the US, after the New York Stock Exchange. Hence, any person with a brokerage account in America can buy them. Also, anyone with a trading app listing Nasdaq Global Market will be able to buy COIN.
However, we still don’t know when they will be available, or what the price would be. According to Mira Christanto, a researcher for Messari, in December:
Depending on market conditions and the continued positive momentum of crypto, Coinbase may list at the high-end valuation of $32 billion, though we believe $28 billion is a fair valuation.
Forge’s CEO, Kelly Rodriques, said Coinbase’s trading activity doesn’t give much clues on what the price of each COIN could be. In the prospectus, Coinbase only discloses two sales during 2020.
“The lack of trading activity does create a situation where the company and its advisors have significantly less ability to set a market-driven reference price”, stated Rodriques. However, he also said that supply was limited because shareholders aren’t willing to sell. During the bull market, Coinbase’s value kept growing, making sales unprofitable.
What does this mean for the cryptocurrency market?
It’s not a secret that most Wall Street investors’ hands are itchy for cryptocurrencies. Many said that the latest price rally took place thanks to institutional investors. Whether that’s true or not, big firms have shown a lot of interest in Bitcoin.
JP Morgan, one of the biggest US banks and a long enemy to Bitcoin, recently said investors could allocate 1% of their assets in BTC. This bank is one of the Coinbase advisors, along with Goldman Sachs and Citigroup, as stated in the prospectus.
According to Jesse Spiro from Chainalysis, the main deterrent for Wall Street firms is the lack of regulatory clarity. If funds fear Bitcoin could cause them problems, they won’t invest and hold it in their portfolio.
With a Coinbase stock, however, they can invest in the crypto market without actually acquiring cryptocurrencies. Ouriel Ohayon, CEO of Bitcoin wallet ZenGo, said that this is a milestone for the industry and a new stage of economic legitimization”.
COIN assets, in this sense, can play a double role. For traditional finance, they will be a way to participate in the crypto ecosystem and test the results. For crypto finance, it might increase confidence in the assets and generate more sales.
Although the market seems to have stabilized at $45,000-$50,000, COIN debut and price behavior could drive BTC up again.
Previous flirting of blockchain and stocks
Nasdaq and blockchain had previous encounters in the past, but without a serious face.
Back in 2017, during the last price craze, an iced tea company changed its name to Long Blockchain Corp. The company, previously called Long Island Iced Tea, saw its price rise by 500%. They claimed to have shifted their products from tea to blockchain tech, but in reality never did.
A market crash later, the company stock kept being traded on OTC markets until February 2021, when the SEC delisted its shares.
Natural Resources LTD, an israeli gold and iron mining company, decided to change picks and shovels for GPUs and ASICs in December 2017, driving its price up by 5,000%. Due to that, Israel Securities Authority (ISA) decided to prohibit crypto ventures from participating in local stock markets.
The mining company, which changed its name to Blockchain Mining LTD, turned its eyes to Nasdaq.
Bakkt on NYSE
Bakkt Holdings, a derivatives market that focuses mainly on trading bitcoin futures, will go public on NYSE. The listing comes as part of a merging agreement with VPC Impact Acquisition Holdings. The union is valued at around $2.1 billion.
Bakkt Holdings was launched by Intercontinental Exchange (ICE), an operator linked to NYSE, in 2018. It leveraged on the popularity of bitcoin futures created the previous year. In December 2017, CME Group launched the first BTC futures, contributing to the bull market that year.
We can’t be sure how Coinbase going to Nasdaq will impact the price of Bitcoin. However, if we take into account that analysts claim the latest crash was due to a mistake, it will probably go up again.
Anyway, even if its price does not boost now, this confirms that traditional markets definitely moved from the criminal bitcoin narrative to a more welcoming one.
Disclaimer: this article does not represent an investment advice.