Coinbase, one of the top cryptocurrency exchanges, has been working stealthily towards its public listing. While the company seeks approval from the Securities and Exchange Commission (SEC), it appears to be making preemptive plans.
Going With the Nasdaq
The San Francisco-based exchange has chosen to pursue a direct stock listing on Nasdaq, The Block reports. The report explained that the company would forgo the New York Stock Exchange (NYSE), contrary to what many had initially thought.
The decision to go through the Nasdaq appears to be the second surprise of its public listing process. Last week, the Silicon Valley firm announced in a blog post that it would issue a direct listing instead of an Initial Public Offering (IPO). According to its registration statement with the SEC, COinbase will issue Class A common stock, as the blog post showed.
The direct stock listing format will not offer new company shares. Instead, it will allow existing shareholders to offer their holdings directly to members of the public.
The arrangement is advantageous for existing company shareholders as it enables them to sell their stock without lockups. Also, unlike the traditional IPO, direct listings don’t require any underwriting services for facilitating sales. Direct listings are also thought to protect against share dilutions.
Coinbase Putting in the Work
Coinbase first announced its public sale last year, filing a Form S-1 with the SEC. The agency is still reviewing the filing, with Coinbase raring to go and hoping to complete the sale this year. Along with the filing, Business Insider also reported that the company had tapped leading investment bank Goldman Sachs to lead the offering.
Coinbase has an extensive history with Goldman Sachs. Fred Ersham, one of the exchange’s co-founders, had worked at the Wall Street bank as a trader. His desire to launch Coinbase with Brian Armstrong led to his exit from Goldman after just two years. Ersham himself left Coinbase in 2017, although he still holds a board position.
The Block reported that the decision to list on the Nasdaq came after the firm’s secondary offering on Nasdaq Private Market last month. Per the report, the secondary market for Coinbase stock launched on January 25, allowing company shareholders with vested equity to sell their shares. A source told the news outlet that shares were matched at $200, bringing Coinbase’s possible valuation to $50 billion (with 254 million outstanding shares). However, the company’s pre-IPO futures contracts are already available on FTX, where shares trade for $277 a piece. Based on those metrics, Coinbase could be worth as much as $70 billion.