Coinbase plans to use the direct listing procedure instead of the traditional initial public offering – the securities of existing stockholders of the exchange will enter the market.
Coinbase cryptocurrency exchange has begun preparations for entering the US stock market. A company may be listed on one of the local stock exchanges at the end of 2020 or at the beginning of 2021, the Reuters news agency reported citing sources familiar with the situation.
Firstly, Coinbase has to get the approval of the US Securities and Exchange Commission (SEC). If the regulator allows Coinbase to be listed, the company will become the first cryptocurrency exchange whose shares are traded on the public stock market.
Reuters’ sources emphasize that the company may change its plans. Coinbase has not yet submitted an application for an offering to the SEC, however, the exchange is already negotiating to hire investment banks and law firms.
A Coinbase spokeswoman told Reuters that “the company is not commenting on rumors and speculation.” SEC representatives declined to comment.
According to Reuters, the company, whose value after the last round of financing exceeded $ 8 billion, plans to go public using the direct public offering (DPO) instead of the traditional initial public offering (IPO).
In the case of DPO, the company does not conduct roadshows, which means it significantly saves on the placement procedure. However, the main difference between DPO and IPO is that the company does not issue new shares – the securities of existing shareholders enter the market. To enter the stock market, the DPO procedure was used, for example, Slack corporate messenger and Spotify streaming service.
Coinbase president, Asiff Hirji, said at the end of 2018 that the issue of entering an IPO is at the very end of the exchange’s list of priorities, but the company is aimed at restructuring revenue.
He said that despite the fact that no IPO is planned in the near future, the exchange is aimed at changing the revenue structure. At the moment, revenue is increasing due to transactions, but soon everything will be different.
Recall that two weeks ago it became known about the plans of another cryptocurrency exchange to become a public company. South Korean Bithumb has also begun preparations for entering the stock market. Bithumb intends to conduct a placement in the local market, as the underwriter, it chose the Samsung Securities broker.