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Recently, cryptocurrency exchange Coinbase Global Inc. applied to the U.S. Securities and Exchange Commission (SEC) for an initial public offering, becoming the first publicly listed cryptocurrency exchange.
"Coinbase's listing brings more confidence to the industry. It allows everyone to see the benefits that compliance can bring. It also provides a target for traditional investors who want to participate in this industry." Liu Fei, CEO of BiXin Mining, told the media that the United States has already taken the lead in the world in many aspects such as Bitcoin mining, investment, DeFi innovation, exchanges, secondary market transactions, etc. It is the absolute center of the future digital currency industry, and all of these are dividends brought by supervision and compliance. Coinbase announces direct listing
What has attracted much attention from investors is that Coinbase chose a "direct listing" (DPO) instead of a traditional brokerage IPO (initial public offering). Coinbase announced that it plans to go public directly to become a publicly traded company. It is expected that the proposed listing will be carried out in accordance with the registration statement on Form S-1 filed by the U.S. Securities and Exchange Commission (SEC). Coinbase will launch a secondary trading market for the company's private shares on the Nasdaq Private Market.
Coinbase's "direct listing" event also swept the blockchain circle, and its effect was comparable to Canaan Creative's listing on NSDQ in 2019.
"First, the current stage of development of this industry is still too immature, and to a certain extent it still urgently needs to be recognized and accepted by regulatory authorities and the capital market; secondly, the decentralized 'direct listing' approach is also very appropriate in the context of the blockchain industry and is easy to resonate with." Blockchain entrepreneur Zeng Weimo told the media that the most significant advantage of direct listing is cost reduction and efficiency improvement. In the future, any corporate entity applying for listing may be able to achieve more efficient compliance requirements based on the openness, transparency and traceability of on-chain data, such as simplifying the review process and shortening the listing cycle, thereby alleviating regulatory pressure.
"Direct listing occurs because the time structure, operating process sequence and listing mechanism need to change. Considering the various changes in the capital market over the past decade, direct listing is also a natural evolution." Wang Yuehua, partner of Deding Innovation Fund, told the media.
"Direct listing is the trend of the future. Public companies do not need investment bank underwriting," said Liu Fei.
In fact, from Spotify last year to Slack this year, more and more high-tech companies are abandoning IPOs and instead entering the public market through direct listings.
In comparison, direct listing has all the bell ringing, listing and trading processes of IPO. However, the biggest difference between IPO and direct listing is that there is no "O" (Offering), that is, companies listed directly do not sell shares to the public, that is, there is no fundraising process. There is no restriction period (lock-up period) for original shareholders.
Since there is no roadshow pricing in a direct listing, only the original shareholders can sell the circulating shares to willing buyers based on the actual market price demand. "It can reflect the market more realistically, but the control over the price after the direct listing is actually lower," Wang Yuehua told the media.
"Since Coinbase already has a huge influence in the vertical field, its founding team and financial and other operating conditions are also excellent, so for its early investors, it will be beneficial to a certain extent." ByteLink CEO Du Chao told the media.
As the largest compliant digital currency trading platform in the United States, Coinbase currently has 9 product lines, covering the entire industry chain including investment incubation, coin listing, trading, payment, asset custody, etc. In this cryptocurrency bull market driven by institutions, Coinbase serves as a channel for USD deposits, and the price of Bitcoin has maintained a positive premium for a long time.
Data shows that by the end of 2020, the value of cryptocurrencies on Coinbase exceeded $90 billion, and the number of registered users exceeded 43 million. It is reported that Coinbase had planned to go public as early as 2018, but it was not smooth sailing and had occasional clashes with regulators. At the end of 2020, the U.S. Commodity Futures Trading Commission required Coinbase to close margin trading for compliance reasons.
"Considering the special nature of digital encrypted assets, I think its road to listing will inevitably encounter some setbacks," Du Chao told the media. The path to crypto asset compliance is clearer <br />Looking back at the past, from Bitmain’s IPO being denied, to Huobi and OK’s backdoor listings, to Coinbase’s current direct listing, the regulation and compliance issues in the cryptocurrency industry have long been a topic of concern in the industry, and have made positive progress thanks to discussions and promotion from multiple parties.
"Since the ICO chaos in 2017 was cut off, there are actually two market effects that have been clearly reflected: first, the traditional financial market order has indeed suffered a sudden disruption and challenge; second, it reflects that the regulatory mechanisms and relevant laws of countries around the world for the emerging blockchain industry are still seriously lagging behind." Zeng Weimo told the media.
Regulatory compliance is always an unavoidable reality. Judging from the developments in the past few years, the scale of crypto assets that meet compliance requirements has been growing around the world; local regulatory laws and regulations have been further accelerated and strengthened; and participating institutions have also paid more and more attention to regulation and compliance.
"In the field of cryptocurrency, exchanges are at the head and core integration point of the industry chain. The fact that exchanges can comply with regulations and "directly list" also shows that the entire blockchain industry is tending to and accelerating the development of compliance in the future. This is a relatively core context." Zeng Weimo believes that whether from the "direct listing" of Coinbase this time or the opening of the registration system of China's Science and Technology Innovation Board in 2019, the entire financial market access system is moving towards a more open and more inclusive innovation path, which is also the general trend. In the future, there will be more direct listings or new listing models, such as ITO (Initial Token Offering), but the core premise of all these financial market innovations is to embrace compliance and supervision.
Du Chao believes that from the perspective of future development trends, on the one hand, the market value of compliant products and platforms such as Circle, LedgerX, eToro, Bitfury, and Bakkt will be greatly improved; on the other hand, products such as DEX will develop due to market reasons, but will also make supervision more difficult. In addition, communication between countries and regions will be strengthened, policy coordination and mutual recognition will be accelerated, and the scope and scale of pilot projects will be further increased.
With the accelerated development of blockchain technology, the scale of digital assets continues to expand, and the investment demand of institutional investors has increased. More and more governments have begun to review and issue digital asset trading licenses, such as the licenses issued by Singapore and Hong Kong in recent months. This has also allowed investors to see a change in governments from rejection to wait-and-see, and from wait-and-see to supervision.
"For crypto assets, regulation and compliance are necessary 'infrastructure'. We believe that further integration of the crypto asset industry into compliance supervision will accelerate governments around the world to adopt more relaxed and open policies toward crypto assets," Wang Yuehua told the media.
"The future trend is already very clear, and industrial transformation has begun to accelerate. In recent months, we have seen many traditional investment institutions, including listed companies, begin to include Bitcoin in their investment portfolios, and the compliance path for encrypted assets has become clearer." Xu Kun, director of the China Blockchain Application Research Center, told the media. Will leverage traditional financial funds to enter the market
Coinbase is headquartered in San Francisco. According to Crunchbase data, Coinbase has raised a total of $547 million since its establishment in 2012. In October 2018, the company's Series E financing valuation was as high as $8 billion. Some researchers believe that Coinbase's potential valuation is $28 billion based on Coinbase's business and transaction data.
"Coinbase's listing will benefit the entire blockchain industry, and will further promote digital encrypted assets to the public and to the center of world attention. Especially under the background of the epidemic, the Sino-US trade war, the over-issuance of currencies in various countries, the possible shortage of high-quality assets in the US capital market after the listing of Chinese stocks, and the digital currencies of central banks of various countries entering the substantive stage." Du Chao told the media.
Undoubtedly, as a landmark event in the development of the industry, Coinbase's listing has a strong reference value for policy making in various countries and the development layout of various institutions. "Coinbase may become an access point for the interconnection between traditional securities trading markets and emerging trading platforms; it will play a good role in stimulating innovation in the field of digital encrypted assets." Du Chao told the media.
"Coinbase's direct listing is definitely good for the industry, indicating that the business model of the crypto asset industry itself can be recognized by the traditional capital market, and it also means that the value of crypto assets has been further recognized by the mainstream market." Xu Kunxiang believes that Coinbase's listing is definitely a milestone event for the entire industry. It can not only gain support from a wider range of investors, but also have more transparent information disclosure, thereby prompting more traditional institutions to pay attention to the crypto asset industry, and also provide a model for other crypto companies to raise funds and go public. "I believe that after Coinbase, more crypto companies will soon enter the mainstream capital market."
If Coinbase is successfully listed, it means that the US Securities and Exchange Commission has fundamentally recognized the trading of crypto assets as a legal asset. This recognition will drive more exchanges to seek compliance. After compliance, the old money in the traditional market can invest and trade in crypto assets under the premise of security supervision and legal protection.
"This change is huge because it leverages the funds of traditional finance, and it is not just an indicative recognition. As a company listed under the US legal framework with the largest compliant trading volume in the industry, Coinbase will drive the volume of the entire market and further boost the volume of the entire crypto asset. This is a positive encouragement for the entire crypto asset industry, and it is of great significance to all participants in the crypto asset industry." Wang Yuehua told the media. (Chain News) |
