Coinbase, the largest cryptocurrency exchange in the U.S., has filed a registration statement with the Securities and Exchange Commission to go public through a direct listing.
The exchange, which enables people to buy and sell digital assets such as Bitcoin (BTC 2.27%), is looking to raise up to $1 billion in the offering and could be valued for as much as $100 billion, according to various media outlets. The company plans to list on the NASDAQ.
By choosing to go public through a direct listing, instead of offering new shares as with a traditional initial public offering, existing investors and employees will convert their current stakes in the company to stock and sell it to the public.
Direct listings also remove underwriters from the process that, in a traditional IPO, are tasked with drumming up interest from institutional investors, which gain access to shares before they hit the public market.
Direct listings essentially allow retail investors to purchase shares at the same time as institutional investors, and are cheaper for the listing company.
Coinbase's registration statement showed that the company reported net income of more than $322 million in 2020 on total revenue of $1.28 billion. That compares to a $30 million loss in 2019 on revenue of $533.8 million.
Close to $1.1 billion of Coinbase's revenue in 2020 came from transaction fees, while the rest came from subscription and service and other revenue.
The company also had 43 million retail users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries on its platform.
Personally, I think the decision to go public through a direct listing very much aligns with Coinbase's brand. The exchange helps investors gain access to decentralized assets, and considering that digital assets initially arose to help people escape the traditional financial system, a traditional IPO would not exactly have been on brand.