From the edge to the mainstream, Coinbase "enters the industry"

The listing of Coinbase is one of the major events in the field of encrypted assets in 2021. On March 18th, Coinbase chose Reddit for a 3-day road show before listing, and its direct listing plan will be completed in April.


From the edge to the mainstream, as the first original "quasi-"US listed company with encrypted asset trading as its main business, Coinbase has brought a legal and compliant "regular army" model to the encrypted asset trading market, which is regarded as injecting a shot in the arm into the industry and attracting market attention.

According to the disclosure documents of the US Securities and Exchange Commission (SEC), as of December 31, 2020, there were 21,035,491 Class A issued ordinary shares and 164,950,620 Class B issued ordinary shares, plus 114,850,769 Class A ordinary shares to be publicly issued, totaling 300,836,880 shares. According to the weighted trading price of Class A shares in the first quarter,

Although Coinbase said earlier that the market activities before IPO could not accurately reflect the price situation of stocks after listing, there are still people who are optimistic that Coinbase's market value will exceed 100 billion dollars.

Some analysts pointed out that if Coinbase can support its valuation of US$ 100 billion, then the three major exchanges in the Chinese-speaking region will not give in too much. With the demonstration effect of Coinbase listing, it is worth further observation whether other digital asset exchanges can successfully follow the trend.

  • Coinbase welcomes the highlight moment

Coinbase is about to become the world's first encrypted asset exchange to land in the traditional capital market, and has ushered in its own highlight moment.

Coinbase, founded in 2012, is one of the earliest cryptocurrency exchanges in the world and the largest cryptocurrency trading platform in the United States. At the same time, under the American regulatory system, Coinbase has been developing fairly well.

According to industry insiders, Coinbase has compliance licenses in more than 40 States in the United States, including BitLicense license license and MSB license, etc., and its compliance development is impressive. it also puts forward higher KYC and AML access standards for registered users.

Gu Yanxi, a researcher on blockchain and encrypted digital assets, wrote that Coinbase is far ahead of other similar companies in integrating into mainstream financial fields because of its compliant operation and regulatory recognition.

On the one hand, this mode of operation can enable it to obtain the business of institutions holding large amounts of funds.

At the same time, compared with the three major exchanges in the Chinese-speaking region, Coinbase does not seem to be gregarious. First of all, it did not introduce platform currency. Second, it has no derivatives trading. Third, it does not act as an exchange public chain. In addition, Coinbase has relatively few online currencies. In addition to the spot product line, Coinbase is also keen on encrypted asset storage and custody, digital wallet, investment and other businesses, helping to incubate the industrial chain.

On February 25th, the S-1 form submitted by COINbase for listing was approved by the US Securities and Exchange Commission, and it will be listed on NASDAQ under the stock trading code Coin. This means that the listing of Coinbase has been finalized, which has become a milestone event in the encrypted asset trading market.

It is worth mentioning that, according to Coinbase's statement, it is weaving a huge crypto ecosystem through extensive self-operated business and investment layout, aiming at providing financial services based on encrypted assets to everyone with smart phones and becoming their entrance into the world of encrypted assets.

On March 17th, according to the documents disclosed by the US Securities and Exchange Commission, Coinbase registered 114,850,769 shares for public offering.


Coinbase registered public offering shares

With the listing of Coinbase, Brian Armstrong, CEO of Coinbase, has experienced a huge increase in net worth. According to analysts, Brian Armstrong's net assets should be between $7 billion and $15 billion based on Coinbase's valuation of over $100 billion.

On March 2nd, Hurun Research Institute released the 2021 Hurun Global Rich List of Shimao Port City in Zhuhai and Macao, which showed that Brian Armstrong, 38, was on the list with a wealth of RMB 75 billion.

Recently, however, the voice that Coinbase is overvalued has never been broken. David Trainer, CEO of New Constructs, a stock research company, said that with the intensification of competition in the cryptocurrency market, Coinbase's current

market share and profit rate will not be sustainable in the cryptocurrency market that will continue to mature in the future. He believes that the current valuation of Coinbase is based on market sentiment, not fundamental analysis.

  • Favored by institutional investors

In recent years, Bitcoin has been paid more and more attention by traditional financial markets, and the head digital asset exchange, as the biggest "water supplier", has earned a lot of money.

According to the S-1 listing document submitted by Coinbase to the SEC of the United States, many data and details revealed in the document have uncovered the financial background of this unicorn enterprise. According to the document,

Coinbase has users in more than 100 countries around the world, with about 43 million certified users, 7,000 institutions and 115,000 ecosystem partners, and its business scope covers investment, consumption, savings, earning and using cryptocurrencies.

From its establishment in 2012 to the end of 2020, Coinbase mainly focused on trading commission income. By the end of December 2020, Coinbase supported the trading, custody and lending of more than 90 cryptocurrencies. The total transaction volume of customers on its platform exceeded USD 456 billion, and assets worth over USD 90 billion were stored. In addition, the annual net profit in 2020 exceeded USD 320 million, accounting for more than 96% of the total revenue.

At the same time, with the coming of this round of "institutional bull market", institutional investors have become the main force of Coinbase platform, mainly including hedge funds, listed companies, financial institutions, family businesses and encrypted asset companies. Data show that in the fourth quarter of 2020, institutional users on Coinbase platform contributed USD 57 billion in transaction volume, accounting for 64% of the total transaction volume.

Despite this, Coinbase's spot trading volume is not ranked first in the industry. According to TokenInsight data, in 2020, the spot turnover of encrypted assets exceeded USD 21 trillion, the spot turnover of Binance ranked first, close to USD 1 trillion, and the spot turnover of Coinbase was less than USD 200 billion, ranking eighth.


Ranking of Spot Volume of Encrypted Assets Exchange in 2020

Since the beginning of this year, with the skyrocketing bitcoin and the preparation for listing of Coinbase, its spot trading volume has reached a record high. On March 8th, Larry Cermak, research director of The Block, said that the spot transaction volume of encrypted assets reached a new record high in February, exceeding USD 1 trillion, which was more than three times higher than the highest level in 2017. Among them, among the exchanges supporting French currency,
Coinbase's trading volume is far ahead.

Analysts believe that the compliance development of Coinbase in the past few years has laid a solid foundation for its development. With the rush of American institutional investors into the crypto market, Coinbase, as a channel for US dollar investment, has naturally become the biggest beneficiary. According to the S-1 form submitted by Coinbase to SEC, the transaction volume of retail users' contribution to its market has been declining since 2018. The percentage of retail transactions in total transactions decreased from 80% in the first quarter of 2018 to 36% in the fourth quarter of 2020.

  • Crypto assets "link" traditional financial markets

With the integration of encrypted assets and traditional finance, "linking" the traditional financial market has increasingly become an urgent need of encrypted asset trading platform. At the same time, from a global perspective, the encrypted asset trading market is increasingly constrained by strict laws and regulations. Because of this, Coinbase's development path to meet legal and regulatory requirements through listing is regarded as a wise choice by the industry.

Du Jun, co-founder of Huobi Group, once said that Bitcoin has brought new vitality to the financial system, which is behind the increasing recognition and application of blockchain technology. Du Jun believes that continuously promoting the global compliance process is one of the important measures to deal with the uncertainty in the encrypted asset industry.

"The listing of Coinbase will accelerate the development of encrypted asset finance." Gu Yanxi believes that bitcoin is a global system, and these transactions include bitcoin spot transactions and derivatives transactions. Therefore, bitcoin transactions around the world influence each other, and bitcoin transactions in the US market are also affected by bitcoin transactions outside the US. However, according to the relevant laws of the United States, overseas bitcoin transactions in the United States do not fully comply with the securities laws and regulations of the United States. Such transactions will affect the bitcoin transactions in the US market, which in turn will affect the fairness of the US market and the protection of its investors. After the listing of Coinbase, Bitcoin will become a trading variety and holding assets in the US market.

Therefore, this will further encourage American regulators to take regulatory measures to ensure fair trading of Bitcoin.

However, there are many yearning, but few successful people. The reasons are: first, the policy process is slow, and it is difficult to make a breakthrough under the prudent supervision environment. Second, enterprises with related encrypted assets have been wandering on the edge of supervision and compliance.

An industry insider, who did not want to be named, thinks that the listing of Coinbase is a "watershed" at the regulatory level, which may be the "goodwill" released by the US Securities and Exchange Commission on the encrypted asset trading market. After the successful listing of Coinbase, there will probably be a wave of listing in the encrypted asset trading market.

As a matter of fact, there are quite a few related encrypted asset companies seeking to be listed on the US capital market at present. According to Charles Gasparino, a Fox business reporter, Kraken, a major cryptocurrency exchange, is considering listing in 2022. Kraken executives are considering cooperating with a special purpose acquisition company (SPAC) or adopting a more traditional IPO. In addition, according to media reports, IPO news came out from BlockFi, MicoBT, Gemini, eToro, Bitfury, etc.

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