The world of cryptocurrencies, but also the world of international finance finally got the moment many have been waiting for. Recently, Coinbase announced that it is going public on the US stock market with an initial public offering. That took place as the US Securities and Exchange Commission published its S-1, which is a move that clears the way for it to get a listing on Nasdaq. The majority of details from that decision are still not around for the public, mainly when the moment of the listing should take place, but the public still got a glimpse into the mechanisms that will take Coinbase to the stock market.
Also, the S-1 documents provided some insight now into crypto exchange operators at the present time, but also where its fears lie, and finally, the extent of the market growth. What was once a tight niche of esports players, tech enthusiasts, and similar individuals that were rare and far between is now a massive company. Also, its user base transcends all previously mentioned individual profiles and now encompasses a huge number of people from all walks of life and all parts of the globe. At the same time, just as importantly, it is also catering to a growing institutional presence with its Coinbase Pro accounts. That in itself is a huge and very telling development that helped in propelling Coinbase to this impressive point in its business development.
The information that the SEC listing provided paints a very impressive picture. In the last quarter of 2020, Coinbase had 43 million registered users. This followed a period when it added nearly 50,000 new users every day. The average number of users conducting transactions on a monthly basis grew by 30 percent in the same quarter. It ended the year at around 2.8 million. That means that around 7 percent of its total users remain active on a regular basis, sending and receiving funds in cryptocurrencies that are supported on the platform.
For a lot of individuals in the early cryptocurrency scene, these numbers would be an incredible reminder of just how far the use of digital currencies advances since the early days of laptop mining and similar ventures. Coinbase shows that on a single trading and digital exchange platform, soon-to-be 50 million global users keep crypto for a range of purposes. However, the even more impressive picture is seen inside of the Coinbase Pro accounts, where institutional entities continue to trade in bitcoin and other cryptocurrencies.
One of the strongest arguments about not just the strength of Coinbase as a company, but also the entire ongoing cryptocurrency bull run. In a previous couple of months, it became abundantly clear that it was the institutional players who are pouring money into crypto. That includes massive global companies like Tesla Motors and Square, which is headed by the long-time crypto supporter Jack Dorsey. In the fourth quarter of 2020, institutional trading grew in volume over 110 percent.
For the same period it stood at 57 billion USD, while at the same time, the volume of retail trading grew nearly 80 percent. Presently, the company services some 7,000 accounts that belong to institutions. That includes a big percentage of US companies, beyond the names that are in line with MicroStrategy or Tesla Motors. Equally importantly, many other businesses are eying the right moment for their entrance into the institutional crypto investment domain as well.
Beyond the raw data on the recent and ongoing success of this financial and digital institution, the filing with SEC provided additional interesting information. Firstly, Coinbase is a fully decentralized company that features no physical headquarters. Instead, it is located – so to speak – entirely online with a range of associated physical locations. That is why Coinbase calls itself a remote-first company, which it officially became in May 2020, scrapping any notion of a physical central location. Also, the readers of the document could see just how bold and innovative the business is towards not just its services, but also the acquisitions it took on recently.
One of these is the merger with the Earn.com company. This produced the Coinbase Earn division, which allows everyone to generate cryptocurrency for themselves while learning about different crypto tokens that are listed on the platform. Also, the filing even included a nod to Satoshi Nakamoto, the mysterious creator of bitcoin. He is listed on the front page of the document as one of the recipients of the S-1 copy, among many other names and entities. However, the document will be examined in the coming days and future information is likely to surface as well that will be interesting. But, throughout all of this, the fact remains that the same filling with the SEC is doing a huge service to an industry that desperately needs more public trust.
While the filling is an amazing moment in the development of the crypto ecosystem, it still has revealed some elements that many will find worrying. Furthermore, the fact that S-1 discloses them only further entrenches these possible corrosive avenues for the company and the wider crypto field. The major problem that the company might face is the wild nature of volatility in all crypto markets. These have so far brought the price to its knees of any digital asset and also, at least once, elevated them beyond anyone’s expectations.
Volatility is rarely good in any industry and the same applies to Coinbase, even though it has developed strategies to cope with the same fluctuations. Beyond that, the potential threat for the system is cybersecurity and the possibility of a big breach of its firewalls. After all, the Mt. Gox fiasco already devastated the crypto landscape and another such event would do the same. Lastly, the thing that is most impactful in the near future is the possibility of big regular action, especially in the light of numerous massive company acquisitions of cryptocurrencies. While Coinbase is on sound legal footing itself, an exodus of investors would still be massively damaging to its future outlook as a publicly-traded entity.