Coinbase Goes Public
A Volatile Day for Coinbase
Coinbase (COIN), a cryptocurrency exchange, started trading on the Nasdaq yesterday. The stock began trading at $381. Shortly after markets opened, the price shot up to $429 before falling to about $328 at the end of the day.
Coinbase chose to list its shares directly instead of hiring investment bankers to sell the IPO to institutional investors. The startup is the first major cryptocurrency company to go public. Brian Armstrong co-founded Coinbase in 2012 and holds a 20% stake in the company.
Regulators May Be Coming for Crypto
Coinbase’s public debut comes at a complicated time for cryptocurrencies. Digital currencies are becoming more mainstream, but some investors are concerned that lawmakers around the world may soon pass more regulations on how cryptocurrencies can function. Governments want to ensure cryptocurrencies are not being used for money laundering, terrorism financing, and other elicit activities. US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde are among the government officials to raise concerns about crypto.
The US government is already taking steps to increase oversight. Lawmakers recently proposed a rule that would require individuals who own cryptocurrency in digital wallets to undergo an identity check for transactions of $3,000 or more. Some crypto executives are concerned this could reduce demand for digital currencies.
A Direct Listing on the Nasdaq
Coinbase is among a growing list of companies to go public through direct listings, but the first major one to select the Nasdaq. Slack Technologies (WORK), Palantir Technologies (PLTR), and Roblox (RBLX) went public via direct listings on the New York Stock Exchange. Coinbase said the decision was partly due to the fact that the Nasdaq offered Coinbase the ticker, “COIN”. The Nasdaq’s ability to provide a private market for shares and offer investor relations services also helped win Coinbase over.
The Nasdaq is home to a number of large tech companies. It has hosted other direct listings, but never one of Coinbase’s size. Coinbase’s market debut is the first test of the Nasdaq’s ability to handle major direct listings.
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