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Coinbase, one of the most popular regulated cryptocurrency exchanges and depositories, is expected to be valued at more than BP this week.
The company, which has become the most popular regulated cryptocurrency exchanges and depositories on the web, is anticipated to enjoy a blockbuster debut on the Nasdaq on Wednesday.
It was most recently valued at $91.5bn – higher than BP’s current market capitalisation of $84bn. However, that price tag is predicted to inch closer toward $100bn on Wednesday, possibly even beating that of Facebook which was valued at $104bn when it went public in 2012.
In the first three months of the year Coinbase made $730m in profit on revenues of $1.8bn, bolstered by Bitcoin’s rise. The exchange lured 13m new users in the first three months of 2021. Brian Armstrong, Coinbase’s chief executive, says that the company has been profitable since 2017.
Some investors remain sceptical as to whether Coinbase, and the nascent cryptocurrency industry, signifies a new world order or whether the company’s success is a blip fuelled by a frothy market, US government underwriting and the younger generation who has had more time on their hands to invest their Covid-19 stimulus money in novel ways.
As almost all of Coinbase’s revenue is generated from transactions, Wall Street analysts are waiting to see whether the volatility of cryptocurrency means the company is in for a bumpy ride.
In the company’s Initial Public Offering prospectus, Mr Armstrong slammed the banking system's “high fees, delays, unequal access, and barriers to innovation”.
He said: “If the world economy ran on a common set of standards that could not be manipulated by any company or country, the world would be a more fair and free place and humans would accelerate... the crypto economy offers a more global, free, and fair alternative to traditional economies that is native to the internet.”
Despite this, Mr Armstrong is keen to move away from simply taking a cut on customers’ trades and wallets toward becoming something of a bank on its own. It already offers a debit card in the UK that allows customers to spend their crypto at retailers which take Visa.
Despite its healthy balance sheet, this desire to replicate a financial system has led critics to accuse Coinbase of becoming a contradiction in terms, one which could ultimately cause its downfall. For many, the attraction to Bitcoin or other digital coins is their fragmented nature, separate from the central banking system and “decentralised”.