Coinbase Inc is preparing to go public as early as this year, which would make it the first major U.S. cryptocurrency exchange to do so, Reuters reported, citing people familiar with the matter.
The exchange will need approval from the Securities and Exchange Commission, and if it passes this hurdle, it will be a huge development for the cryptocurrency community.
“Coinbase seeking to IPO represents a major step forward not just for the company, but for the entire digital asset industry. If the SEC gives their blessing, then it validates the market in a big way," says Adam Traidman, CEO of BRD.
Crypto’s Wild West Status: The cryptocurrency space has been dubbed the “wild west” due to the lack of regulation.
This listing would bring significantly more transparency and disclosure requirements for Coinbase, says Seamus Donoghue, sales and business development at Metaco, a company providing crypto infrastructure.
The SEC has not been keen on approving crypto-related products such as the bitcoin exchange traded fund proposed by the Winklevoss brothers.
Is there a likelihood we could see the SEC approve a Coinbase IPO this year?
“I don't expect there would be any concerns from the SEC, as this is a growing and key industry player moving from the less regulated private markets to the highly regulated public markets. I expect the SEC would be a strong champion of such a move," says Donoghue.
Possible Milestone Ahead? Coinbase's IPO, if successful, would be the first U.S. public listing of a crypto-related company with a meaningful and active business, says Philippe Bekhazi, CEO of Stablehouse, a payment and FX exchange platform for stablecoin issuers.
“This will be an important milestone that will set a valuation benchmark for the space — however, it will certainly not be a simple journey. Coinbase is not the first global crypto giant rumoured to consider an IPO, and others have tried and failed in the past.”
The most notable is the application by Bitmain Technologies in China, which was later shelved in 2019.
Bekhazi anticipates that the majority of issues that Coinbase may face will come from auditing.
“What’s important to remember is that when reviewing an IPO application, the SEC will examine Coinbase first and foremost as a company, rather than the activities of the crypto industry as a whole. In this sense, a potential green light for a Coinbase IPO will be more a symbolic move, rather than a ringing endorsement of cryptocurrencies from the SEC,” says Bekhazi.
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