January 29, 2021

Coinbase to go public via direct listing, shunning IPO

By Robert Scammell

Digital currency exchange Coinbase has announced that it plans to go public via a direct listing, shunning the traditional initial public offering (IPO) model.

The San Francisco headquartered firm enables people to buy and sell cryptocurrencies such as bitcoin, which is currently enjoying a bull run that recently took it as high as $41,000.

In December, Coinbase filed a confidential S-1 form with the Securities and Exchange Commission (SEC). However, Coinbase is yet to make its financials public.

“The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions,” the company said in a blog post on Thursday.

Launched in 2012, Coinbase is the largest cryptocurrency exchange in the US by trading volume.

Its public listing may come at a good time for the currency exchange and digital wallet. Bitcoin’s latest rally has renewed public interest in cryptocurrencies, a digital currency based on blockchain technology.

US government financial stimulus cheques and increasing institutional investment in bitcoin have been attributed to the cryptocurrency’s rising price. Payments platform PayPal’s move to accept cryptocurrencies has also helped fuel mainstream interest.

Coinbase chooses direct listing

Coinbase has raised at least $547.3m in venture-backed funding during its eight-year history.

Its decision to file for a direct listing reflects a growing trend among tech companies looking to go public. It avoids the need for commission-charging underwriters and avoids share dilution.

However, without intermediaries, the onus is on the company to ensure the shares sell, making it risky for companies that have not built up a sufficient reputation to attract investors.

Earlier this month online game company Roblox said it planned to go public via a direct listing in February.

Coinbase and Roblox are following in the tracks of Spotify, Slack, Asana and others in sidestepping an IPO.


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