The much-anticipated launch of Coinbase stock has been given the green light by the SEC, following months of speculation about how much share prices would be and whether the company would live up to its $90 billion valuations.
In the announcement, the company confirmed:
“Coinbase anticipates that its Class A common stock will begin trading on the Nasdaq Global Select Market under the ticker symbol COIN on April 14, 2021.”
It was previously thought that the U.S.-based crypto exchange would go public via a traditional IPO, but Coinbase has taken a different approach, opting for a direct listing instead.
This means that the stocks would be made available on the open market without issuing any new shares. This shows confidence from Coinbase’s perspective, as using existing stock means that there is a lot of confidence in the ability to attract enough investors.
A Riskier Approach for Going Public?
Typically, this method isn’t used as a means of raising capital and it won’t dilute the existing stock. That’s good news for shareholders as it won’t water down their current positions. Another detail about a direct listing is that underwriters from investment banks won’t be required to sell stocks to their clients in exchange for compensation.
There are risks to a direct listing though. If there isn’t enough interest for COIN, the value of the stock will plummet pretty quickly.
Coinbase initially planned to go public in March, but they opted to push the listing back to April following a settlement with the Community Futures Trading Commission (CFTC.) The exchange had been accused of inaccurately reporting Bitcoin trading data. The charges also alleged that an employee “self-traded” in order to exaggerate the volume and demand for Litecoin.
The trading platform was found to be “vicariously liable” for the fraudulent trades by the CFTC, which issued a total penalty of $6.5 million.