Coinbase is arguably one of the best-known and largest cryptocurrency exchanges in the world, along with Binance. Recently, there’s been a rumor about Coinbase preparing for an initial public offering (IPO) later this year or early next year.
Only a few years ago it was incredibly difficult to buy and sell cryptocurrencies. Exchanges were small, untrustworthy (no FDIC insurance and no reputation for security), and difficult to use.
But a lot has happened since the early years after Bitcoin’s introduction in 2009. We are now within a stone’s throw of being able to trade cryptocurrencies on the well-established brokerages such as TDAmeritrade and E*Trade.
Some of the smaller and newer brokerages, such as Robinhood, already are a one-stop shop for those who want to buy and sell stocks and cryptocurrencies. But it’s taking a little longer for some of the bigger brokerages to work out the details about how to trade and safely store cryptocurrencies. That’s because exchanges need to be able to offer the same level of protection for all investments, cryptocurrencies included.
An IPO is a huge event for a company as it moves from a private startup to a publicly traded company. It’s typically an indication that the company has significant expansion plans, which is a positive signal for both the company and the cryptocurrency market.
Coinbase could be the first crypto exchange to go public but it will very likely not be the last. The industry has been maturing and professional investment managers have shown greater interest this year in crypto investments.
It’s expensive and time consuming for a company’s managers to take a company public. Coinbase’s managers obviously believe the effort will be worthwhile. Other companies serving the crypto market will be watching this development very carefully since it will speak volumes about the general health of the crypto market.
Institutional investors will be watching how well Coinbase achieves its IPO since a successful launch would open the door further to crypto investments. Companies serving the crypto industry would realize the market could support additional IPOs.
There will be a lot riding on the success, or failure, of a Coinbase IPO. Coinbase knows this and its investment bankers know this. They will likely be looking to time the IPO around a significant positive event for the market to help ensure a successful launch.
In turn, a successful Coinbase IPO would also further legitimize the entire cryptocurrency market. Additional companies would look to follow, attracting even more investment money. Companies and cryptocurrencies would likely benefit greatly. It’s just one more reason why all investors should be looking to place a small allocation percentage of their investments into cryptocurrencies.