The mobile phone icon for the Coinbase app is shown in this photo, in New York, Tuesday, April 13, 2021. Coinbase is going public at a time when chatter about cryptocurrencies is everywhere, even at the United States Federal Reserve. (AP Photo/Richard Drew)
Cryptocurrency exchange Coinbase is set to debut on Nasdaq on April 14 in one of the most anticipated events of the year on Wall Street that has seen a great deal of excitement over bitcoin's record-breaking run.
Coinbase is the first company devoted entirely to cryptocurrency to enter the US stock exchange and will be listed under the symbol, what else but COIN.
The Nasdaq on the night of April 13 set a reference price for the company at $250 per share. Taking into account the shares in circulation, stock options and restricted shares, Coinbase's overall valuation will begin at $65.3 billion, making it the biggest US stock market entrant since Uber in 2019.
Nearly 115 million Coinbase shares will be put on the market.
What is Coinbase?
Founded in 2012 in San Francisco by Brian Armstrong and Fred Ehrsam, the Coinbase app allows users to buy and sell about 50 cryptocurrencies, including the popular bitcoin and ether.
The firm, in its first-quarter results released in early April, said it has an estimated 56 million users and a little more than six million people making transactions each month.
Coinbase has benefited from bitcoin's meteoric rise over the year, with the crypto asset's price rising from $6,500 in April 2020 to a record-high of $62,575 on April 13, 2021.
The world's biggest cryptocurrency has more than doubled in price this year amid growing mainstream acceptance. Major firms including BNY Mellon, Mastercard and Tesla are among those to have embraced or invested in cryptocurrencies.
Other virtual currencies—such as ether, Litecoin or Stellar Lumens—have also surged.
As a result of the bitcoin's massive success, Coinbase's revenue increased almost tenfold in the course of a year to $1.8 billion in the first quarter, according to group estimates.
The firm's profit increased 25-fold, in the range of $730 to $800 million.
While anybody can "mine" for new bitcoins, to do so requires giant data centres, which has led to platforms such as Coinbase providing a way of trading in cryptocurrencies.
The success of Coinbase has also pushed some rivals to go public. Recently, the head of the California-based cryptocurrency exchange platform Kraken told CNBC that he hoped to take his company public next year.
Coinbase has opted for a direct listing, which does not allow it to raise new funds but does offer current shareholders—founders, employees and historical investors—the opportunity to sell their stocks on the market.
Others who used this method for Wall Street debut include Spotify, Slack, Palantir and Roblox Wall Street debuts.
Coinbase was recently charged by the US Commodity Futures Trading Commission (CFTC) of "reporting false, misleading, or inaccurate" information about cryptocurrencies and manipulating the market between 2015 and 2018.
Without admitting wrongdoing, Coinbase paid a $6.5 million fine and was forced to push back its listing date on Wall Street.
Another downside to Coinbase is its commissions, which the company uses to earn money. These levies are higher than some of its rivals, particularly Binance, which was founded in China.