The digital currency boom has boosted the Coinbase trading platform to stunning heights. On Wednesday it made its debut on the Nasdaq, becoming the first major cryptocurrency company to go public in the US.
Coinbase's IPO is likely to be the biggest so far this year
It's one of the hottest IPOs of the year. Driven by the cryptocurrency bull market, Coinbase comes to Wall Street on Wednesday. It's the first cryptoexchange on the floor, and many industry hopes are pinned on the US's biggest digital currency trading platform.
The 9-year-old platform is well-positioned to succeed as it gained more than 13 million new customers in the first quarter of 2021. It posted revenues of $1.8 billion (€1.5 billion) in that time, nine times more than the same period last year. It has been boosted by the ongoing Bitcoin boom, the price of which has doubled to more than $60,000 since January.
Coinbase opened at $381 on Wednesday, up 40% from a reference price of $250 per share, making its implied value more than three times that of exchange operator Nasdaq.
Valued at $91 billion on its debut, Coinbase may end up being the most successful IPO of the year. It has more than 56 million users in more than 100 countries and after Binance and Huobi Global, two Chinese crypto exchanges, the marketplace is the third-largest in the world.
Stepping stone towards acceptance
The listing is a milestone on the way to wider acceptance of cryptocurrencies, says Charles Hwang, a cryptoexpert and blockchain professor at New York's Baruch College. So far, the sector has struggled to gain the trust of mainstream investors, regulators and the general public. "Many people still argue that this space has no intrinsic value," said Hwang. "This IPO might demonstrate to the markets that crypto is here to stay."
Coinbase had already applied for a so-called direct placement with the SEC, the American stock exchange regulator, in January. In contrast to a classic IPO, the securities are listed on the stock exchange without a prior pricing process. Such a process is much cheaper for Coinbase, as it does not have to use the services of investment banks. However, no new shares are thrown onto the market, only those from existing investors.