Bitcoin Exchange Coinbase files for initial public offering

The file positions San Francisco-based Coinbase as one of the first major IPOs of 2021, in what is expected to be another big year for listed companies.

There are a small number of small crypto-based companies that operate publicly in the U.S. and abroad, but none the size of Coinbase, which was recently valued at about $ 8 billion. It is the largest U.S.-based cryptocurrency exchange by trading volume and one of the largest cryptocurrency exchanges in the world.

The presentation of Coinbase’s IPO comes just one day after Bitcoin surpassed $ 20,000 for the first time in its twelve-year history. The value of the digital currency has almost tripled in 2020.

In a brief blog post, the company said it confidentially submitted a draft registration statement to the SEC, which would take effect after a review by the commission. He also said supply would be subject to market conditions and other considerations.

Bitcoin has started to gain general acceptance this year. Investors such as Paul Tudor Jones and Stanley Druckenmiller and companies such as Massachusetts Mutual Life Insurance Co., or MassMutual, have revealed bitcoin holdings in recent months. Other companies like Square Inc.,

PayPal Holdings Inc.

and Robinhood Markets Inc. they have opened their platforms to cryptocurrency trading.

This has helped Bitcoin become one of the best performing assets of 2020, although the market is still small in relative terms.

In fact, Coinbase faces another hot trend in the capital markets: IPOs have raised more than $ 160 billion this year on U.S. stock markets, surpassing the heights of the dot-com boom in 1999. investors take advantage of hot stocks: DoorDash Inc

shares rose 86% on the initial trading day earlier this month. Airbnb Inc.

the shares doubled a day later.

Coinbase declined to comment.

The presentation of Coinbase is the culmination of the long development of both the company and the cryptocurrency industry, moving from an anarchist experiment of alternative money to a widespread asset class that has attracted hedge funds, mobile money providers and insurance companies.

Coinbase, founded in 2012 by Brian Armstrong and Fred Ehrsam, has become one of the most recognized names in the cryptocurrency industry. It currently has about 35 million users, more than Charles Schwab Corp.

platform.

From the beginning, the company’s focus was on the grain of the small group of enthusiasts involved in bitcoin. When most sought to build a platform that set aside banks and government control, Coinbase consciously tried to build a company that would attract major investors and merge with the existing financial system.

Coinbase’s other goal was to make Bitcoin accessible to people who were not coders or had a technical inclination. The platform has a simple user interface, but most importantly it is responsible for asset custody. This is a key point in Bitcoin, which is full of stories of individual investors losing their “keys” to their digital wallets and permanently losing access to Bitcoin.

While Coinbase is generally assumed to be a profitable company, it has never disclosed any profit or revenue figures. A public presentation should shed light on the company’s operations and the degree to which Bitcoin is a profitable industry for companies that have created support services there.

A public offering could be a big payday for the company’s founders and owners. Coinbase has raised $ 547 million in the private market and was valued at $ 7.7 billion in 2018, according to Crunchbase. Its investors include Andreessen Horowitz, Union Square Ventures, BBVA Ventures and USAA.

At first, Coinbase tried to cooperate with regulators. In 2017, he was awarded a “Bitlicense” by the New York Department of Financial Services to operate his stock exchange in New York. It is licensed to operate in 44 U.S. states and the District of Columbia. Its platform is accessible in more than 100 countries outside the US

This decision helped the company grow, but it was a double-edged sword: Coinbase participated in a multi-year struggle with the Internal Revenue Service, which in 2016 demanded access to all accounts. Coinbase user. After two years fighting the court order, Coinbase finally provided access to a reduced number of accounts in 2018.

The company has also been embroiled in other controversies this year. In September, amid nationwide protests over police brutality and institutionalized racism, Armstrong posted a blog post saying the company would not participate in social or political issues, but would remain focused solely on building products. . It offered rewards to employees who disagreed; about 60 left the company.

Write to Paul Vigna to [email protected]