Crypto Exchange Coinbase Eyes Direct Listing, Hires Former Federal Judge

The largest cryptocurrency exchange in the U.S. reportedly seeks to go public as soon as this year.
Belinda ZhouJul 10,2020,06:55

U.S. cryptocurrency trading platform Coinbase Inc is confidentially preparing for its debut in the public markets, Reuters reported early Thursday.

The San Francisco-headquartered digital currency exchange would turn to the direct listing instead of a traditional initial public offering(IPO), sources close to the deal told Reuters.

Companies typically raise capital by listing shares on a public exchange through IPO and direct listings, while no new shares are created during the process of direct listings. Also, companies like Slacks and Spotify can avoid lockup agreements and don’t need to dilute existing shares through direct listings.

The debut of Coinbase was scheduled later this year, or early next year, which enabled the company to become the first major U.S. cryptocurrency exchange in the public market.

Despite no specific valuation was disclosed, Coinbase’s most recent $300 million private financings showed the company was valued at more than $8 billion on October 30 in 2018.

Founded in 2012, Coinbase is one of the most well-known crypto exchanges where 35 million customers can trade virtual coins, including bitcoin, ethereum, and XRP, in over 100 countries. The company reported more than $7 billion of assets in custody and recorded a transaction amount of over $220 billion.

“Anyone, anywhere, should be able to easily and securely access bitcoin,” the company wrote in its official website. “We see cryptocurrency as the future of money and a catalyst for creating an open financial system around the world,” Coinbase added.

The company received $500 million from investors like American hedge fund Tiger Global Management LLC, American venture capital firm Andreessen Horowitz, and Ribbit Capital.

However, the listing still needs to be approved by the Securities and Exchange Commission. The U.S. authority established some ground rules for digital tokens and classified some coins as securities to regulate accordingly.

Regulation matters for the mega-startup. Coinbase hired a former federal magistrate judge as well as Facebook Inc FB.N deputy general counsel Paul Grewal to serve as its new chief legal officer on Wednesday.

“Paul’s mix of experience in private practice, as a federal judge, and as a leading in-house lawyer makes him a phenomenal addition to Coinbase,” the company said in the statement.

Also, Coinbase was in talks with the main securities regulator to register as a licensed brokerage, according to the Wall Street Journal in 2019. Crypto is subject to SEC regulations and a potential change at the top of the regulator casts uncertainty of its fate.

Bitcoin was trading at $9,218.54, down 2% Thursday.