The largest US-based cryptocurrency exchange Coinbase plans to go for a Direct Public Listing (DPO) of its Class A common stock. The firm expects the Form S-1 filed with the US Securities and Exchange Commission to become effective after the Commission completes its review.
Coinbase Aims For Direct Public Listing
CryptoPotato reported in December that the San Francisco, California-based had submitted a draft registration with the SEC to go public with an initial public offering (IPO). Early estimations suggested that the company’s potential valuation was at nearly $30 billion.
The exchange released an update on its futures plans that contains a slight twist. Instead of going with the more traditional process of relying on large investment banks to set the price and line up for buyers for the shares, Coinbase intends to go for a proposed direct listing of its Class A common stock.
“We believe a direct listing more closely follows the ethos of crypto and Coinbase because it democratizes access and opportunities for all investors.” – commented company CFO Alesia Haas.
Direct Public Listings (DPOs or simply direct listings) operate as alternatives to IPOs. During DPOs, though, the company doesn’t rely on raising outside capital as the employees and investors convert their ownership into stocks that are then listed on a stock exchange.
Upon the listing, the general public, including retail investors, could purchase or dispose of their positions without the “lock-up” period of traditional IPOs.
Spotify and Slack were among the most prominent companies that went for a DPO instead of an IPO.
The First Of Many?
Shortly after Coinbase announced intentions to go public, a few other cryptocurrency-related companies shared similar plans.
Bakkt, the Bitcoin futures platform owned and operated by the Intercontinental Exchange, was the first to do so. The statement highlighted a merger with a special purpose acquisition company and noted that Bakkt had an estimated enterprise value of $2.1 billion.
The Winklevoss twins, the co-founders of another US-based cryptocurrency exchange, Gemini, also seemed fond of the idea. During a recent interview, Tyler and Cameron said they were discussing going public and had internal conversations within the company on whether it made sense at this point.