LONDON (Reuters) – Coinbase Global Inc., the largest cryptocurrency exchange in the US, will be listed on the Nasdaq on Wednesday, marking an important milestone in the journey of virtual currencies from niche technology to core assets.
Listing is by far the largest cryptocurrency company, the San Francisco-based company said last month that private market transactions valued the company at about $ 68 billion this year, up from $ 5.8 billion in September.
It is the latest discovery for the acceptance of cryptocurrencies, a class of assets that only a few years ago had been avoided by ordinary finance, according to interviews with investors, analysts and executives.
“The listing is significant in that it marks the growth of the industry and its acceptance into regular business,” said William Cong, an associate professor of finance at SC Johnson College of Business at Cornell University.
Bitcoin, the largest cryptocurrency, hit a record high of $ 63,000 on Tuesday. It has doubled over the past year as large investors, banks from Goldman Sachs to Morgan Stanley and household companies such as Tesla Inc, are hot for emerging assets.
Coinbase’s direct listing – meaning it did not sell any shares before its market launch – is likely to speed up the process, Reuters interviewees said, by raising awareness of digital assets among investors.
“This is a very positive thing for bitcoin itself, because it demonstrates the bridge that was built from an esoteric arena, to the left of the field, full of cowboys, to ordinary finances,” said Charles Hayter of the data company CryptoCompare.
However, some institutional investors have expressed caution about the long-term outlook for Coinbase and the crypto sector.
Swiss asset manager Unigestion has said it is cautious about the hype around cryptocurrencies and as a result will not buy Coinbase shares.
“We think there’s a lot of frenzy and exuberance in everything that seems to be crypto,” said Olivier Marciot, a portfolio manager at Unigestion, which oversees $ 22.6 billion in assets.
“Hedge funds and retail will probably be the early birds in these new stocks – probably buying them quite a bit – which should not be a clear indication of how they will be in the long run.”
KEEPED AT BITCOIN?
Other experts said the risks include exposing Coinbase to a highly volatile asset that is still subject to uneven regulation.
Founded in 2012, Coinbase boasts 56 million users globally and assets estimated at $ 223 billion on its platform, representing 11.3% of the market share of cryptographic assets, according to regulatory documents.
The company’s latest financial results highlight how revenue has grown steadily as trading volume and prices increase.
In the first quarter of the year, as bitcoin more than doubled in price, Coinbase estimated revenues of over $ 1.8 billion and net revenues between $ 730 million and $ 800 million, compared to revenues of $ 1.3 billion for the whole of 2020. .
“The correlation with bitcoin will be very high after the stock stabilizes after listing,” said Larry Cermak, research director at the encryption website The Block.
“When the price of bitcoin falls, it is inevitable that Coinbase’s revenue and the inherent share price will fall.”
There are also regulatory risks, others said, as Coinbase increases the number of digital assets that users can trade on its platform.
Coinbase suspended trading in major XRP digital currencies last year after US regulators charged blockchain company Ripple with a $ 1.3 billion unregistered offer. Ripple denied the allegations.
“Given the expansion of assets covered by Coinbase, it is almost inevitable that other listings will come into play,” said Colin Platt, chief operating officer of the cryptographic platform Unifty.
Coinbase declined to comment.
Reporting by Tom Wilson and Anna Irrera Editing by Nick Zieminski