Coinbase, one of the most popular cryptocurrency exchanges in the world is preparing for a first-of-its-kind listing on a stock exchange with an initial valuation of $8 billion according to three anonymous sources that revealed this information to the New York Times. As a result of this listing, Coinbase will become the first cryptocurrency exchange to be listed on a major stock exchange.
This move has been in the pipeline for a while and faced several regulatory hurdles along the way including overtures by the Securities and Exchange Commission (SEC) because there was no precedent for a move like this. The step still needs a landmark final approval from the SEC and it is expected that the sector will see a considerable boom as a result of it.
Regarding the Initial Public Offering (IPO) of Coinbase or even a direct listing approach, there is little to no information available. The company has been in talks with big brokers and investment firms for a long time but nothing is known for sure. Many of the top such financial institutions are looking to take the company public because of its landmark significance, however no firm yet has secured their goal of representing them and nothing on this matter has been revealed by the anonymous sources themselves.
The SEC has so far showed mixed signals for the cryptocurrency industry and therefore its approval remains a major hurdle for the Coinbase IPO/ Direct Listing. The regulatory body famously shut down several cryptocurrency Exchange Traded Funds (ETFs) in the country back in 2018 and 2019 and so far hasn’t given a license to any one of them. Also, other regulatory bodies have clamped down on cryptocurrencies as well including the Commodities and Futures Trading Commission (CFTC). However, considerable lobbying has been done within the government by the cryptocurrency advocates to request the government to adopt a more pro-crypto stance to keep up with increasing international competition and ensure fair play.
Previously, the SEC has declared that some cryptocurrencies are securities and are therefore under the jurisdiction of the regulator. However, Coinbase took this as an opportunity instead and is now looking to legitimize the trading of top cryptocurrencies with their IPO/ Direct Listing. It is also believed that this move will eventually result in renewed institutional interest in cryptocurrencies which will increase their long-term worth and potential.
The company hasn’t made up its mind on several matters relating to the listing because apparently it is looking for an approval from the SEC to start further negotiations. An IPO results in a blockbuster performance but the stock comes under considerable pressure as well. On the other hand, Direct Listing doesn’t require a company to sell its shares during the listing and is therefore more suited for companies looking to list under the radar so to speak.
The New York Stock Exchange and several big banks like BBVA have already invested in the cryptocurrency exchange a while back. All in all, a big payday might be expected for all of the big early bird investors in the exchange.
Image source: pixabay.com
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