Following a rumor from Reuters on its July 2020 report, Coinbase formally announced going public via a direct listing on Nasdaq. The United States digital brokerage firm for cryptocurrency on Jan. 28 declared a “pursuant to a proposed direct listing of its Class A common stock.”
It was previously believed, Coinbase will raise capital through an initial public offering (IPO) to help promote and market them to prospective investors. Contrary to public opinion, the firm chose direct public offering (DPO).
The company’s decision to go for DPO instead of IPO will help them cut out intermediaries (underwriters, banks, etc). The process makes fundraising cheaper, faster and allowing selling shares that are already in existence.
Coinbase filed preliminary documents with the SEC at the end of 2020, signaling the start of a public listing process. The filling stated as follows;
“Coinbase Global, Inc. today announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions.”
The US SEC officially published the firm’s Form S-1 on February 25 where Citigroup, Goldman Sachs, and JP Morgan Securities were chosen to aid its listing process.
Coinbase is a San Francisco-based crypto exchange, it first opened its doors in 2012. It is a foremost cryptocurrency brokerage firm, founded by Brian Armstrong and Fred Ersham. From 2012, the platform now has over 43 million users worldwide and has transacted more than $456 billion to date.
What Coinbase DPO means for Bitcoin
First, it is interesting to note that Coinbase doesn’t have a physical address yet, it is listing on the public stock. By that, it opens ways for other companies to pull the trigger for innovation. While many countries like Nigeria and India are seen distancing themselves from Bitcoin and other cryptocurrencies, Coinbase is going public in the US stock exchange.
According to Prof Ndubuisi Ekekwe, Chairman of FASMICRO Group and the Lead Faculty in Tekedia Mini-MBA., SEC approval means market baptism for Bitcoin. He asked why his home country’s apex bank, CBN, will be placing a ban instead of regulation or building a legislative framework that will further strengthen cryptocurrency transactions.