Qwick Takes: Coinbase IPO and its implications for the crypto industry
This week, Talking Biz News Deputy Editor Erica Thompson reached out to Qwoted’s community of experts to inquire about the implications of Coinbase’s recent IPO for the crypto industry.
Check out some of the top commentary:
Eric Christensen, Chief Payment Officer at Digital River:
The successful IPO of Coinbase Global marks another milestone for cryptocurrencies and their integration into the mainstream. However, as a payment method there remain significant hurdles for both consumers and merchants. The first is whether consumers will make the decision to actually use their cryptocurrency as a funding mechanism. How many shoppers will choose this route, as opposed to continuing to look at cryptocurrency as an investment vehicle, is yet to be seen and analyzed.
James H. Lee, Founder, StratFI:
Intense IPO activity is one of the signs of a market top, and the Coinbase IPO was one of the most anticipated events of 2021. It added legitimacy to the crypto industry and makes people ask, “Should I have crypto in my portfolio?”
It is also a classic case of “Buy the rumor, sell the news.” Competitors such as Kraken and Gemini may also file for an IPO at some point in the future.
Of interest may the be recent direct-to-public offering by Exodus. Over $60 million was raised in just five days. Investors could ONLY participate by transferring cryptocurrency (BTC, ETH, and USDC). True to the spirit of DeFi, this IPO completely bypassed the traditional investment banking community. If anything, this says more about the future of crypto than the Coinbase IPO.
Jason Blick, CEO, EQIBank:
Rather than make cryptocurrency mainstream, the impossibility of an adequate return on Coinbase stock (COIN) is going to further damage a sector that has long been criticized for extreme volatility.
Following its successful IPO, COIN is trading at a price-to-earnings ratio of nearly 200 with a price-to-sales ratio of almost 50. Given that Coinbase makes the majority of its revenue from fees and commissions, on the purchase and sale of cryptocurrency, the valuation is impossible to justify. Taking a chance on Coinbase is, for the moment, an optimistic gamble that BTC will continue its growth as a speculative asset rather than a viable replacement for USD or payment service. Either way, at this valuation, it will be impossible for other large cryptocurrency exchanges and custodians not to be tempted to IPO, all at the cost of another unsustainable bubble.
Gil Hildebrand, CEO, Co-Founder of Gilded:
Higher taxes could have the adverse effect of pushing corporations to send their dollars elsewhere into jurisdictions with more favorable tax rates. The global corporate tax rate proposal by Janet Yellen could mitigate this effect, but the implementation of a global corporate tax rate floor would be a complicated process with much deliberation. The last time this happened, the government offered a repatriation holiday whereby corporations could bring back their foreign earnings and reinvest them domestically – effectively letting corporations have their cake and eat it too. What’s the point of missing out on all that reinvestment in the short term?
Ruben Merre, CEO, Co-Founder of NGRAVE:
There will be several to follow this IPO path, Kraken already recently announced their own upcoming listing. But there are more funds taking a similar route to open up the mainstream to crypto. A good example is Pluto Digital Assets, which is a fund that was recently created by some IPO-veterans, raising 40M dollars in a week, and currenlty eyeing an IPO in May of this year. That will allow non-crypto investors to get exposure by buying into this IPO or after the listing. Pluto will be investing in private equity crypto companies, but likely as well in some of the coins directly as well.
Alex Adelman, CEO, Co-Founder of Lolli:
The Coinbase IPO is a major milestone in a year of rapid growth in mainstream acceptance of bitcoin. The leading exchange’s IPO will result in an influx of new players in the crypto market, and cement cryptocurrency’s place in the traditional financial markets. This is a legitimizing moment both for digital assets and companies building in the crypto space.
The bolstered investor confidence and accelerated adoption of digital assets that will result from this exciting event will make bitcoin an increasingly more attractive asset on Wall Street, in continuation of a trend of growing institutional interest. This monumental IPO will also make it easier for startups such as Lolli to grow and scale more quickly.
Bradley Kam, Co-Founder of Unstoppable Domains:
Coinbase’s direct listing on Nasdaq is a major step forward in bringing legitimacy and mainstream awareness to the digital asset sector as a whole. The success of Coinbase in growing to 56 million users and $1.8 billion in total revenue shows that consumer adoption is real, we just need tools that make crypto easy and intuitive. For the next billion cryptocurrency users, it will be critical that we focus on ease of use.
Fred Schebesta, Co-Founder, Finder:
It’s definitely possible we are moving to that mainstream. With the recent synthetic application of stocks turning into crypto you can sell, such as an Amazon stock in cryptocurrency form which has a synthetic representation of it, that actually opens up a space. The LSE and NASDAQ usage is going to be challenged as well, potentially. Coinbase could be a venue for that.”
Joseph Trevisani, senior analyst at FXStreet:
Coinbase’s successful IPO indicates investors are eager to take a bet on the cryptocurrency exchange business. That is a very different animal than the market value of any particular currency, Bitcoin, Ethereum, Cardano, Dogecoin or any other. There appear to be more than 6,000 individual currencies and over 400 exchanges, not one is really sure. Most of these currencies and exchanges will not survive. Contact with reality is fast approaching for the entire crypto world and the IPO is the leading edge. Traders want to use their profits, that, if nothing else will drive cryptos into the arms of the existing financial and consumer markets.
Check out the original blog on TalkingBizNews.
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