The news is abuzz with excitement about Coinbase’s IPO. The San Francisco-based digital currency platform began trading on the NASDAQ under the ticker COIN for $381 per share today and closed out the day at just over $328 per share.
It’s always exciting when a fintech company goes public, but there are a few reasons why Coinbase’s debut is particularly compelling:
Legitimacy
Coinbase’s listing helps legitimize cryptocurrency in general. Many everyday consumers consider cryptocurrency as a medium of exchange for fraudsters and bad actors on the dark web. This will shift, however, to placing digital currencies in a more positive light and consumers will begin to understand the true benefits of crypto– a tool for faster payments, a way to lower fees, and an agent for a more inclusive financial system.
Sets the stage
The Coinbase IPO sets a precedent for others in the cryptocurrency industry to go public. Digital currency wallets and crypto marketplaces are closely tied to the price of cryptocurrencies, which have historically been extremely volatile.
Despite the uncertainty, Coinbase has proven to be profitable. According to the New York Times, Coinbase made $730 million to $800 million in net profit on $1.8 billion in revenue in the first quarter of this year. The company’s performance in the public eye will dictate the moves of others in the cryptocurrency industry, including bitcoin exchange Kraken, which is considering a public listing next year.
Ready for CBDCs?
One effect we may see come from Coinbase’s move into the public eye is its potential to prime the U.S. market for central bank digital currencies (CBDCs). This reflects back to the first discussion point about offering a sense of legitimacy to the cryptocurrency realm.
The U.S. hasn’t taken any formal actions toward the launch of its own digital currency. However, multiple other nations, including China, Brazil, and Russia, have recently made announcements regarding their own nations’ CBDCs. Bringing cryptocurrency into the realm of traditional finance helps ready the everyday U.S. consumer for the eventual proliferation of digital currencies.
An increase in demand
Will Coinbase’s exposure outside the cryptocurrency space increase the number of people holding digital currencies?
Ben Weiss, CEO of crypto ATM provider CoinFlip answers it this way, “While it is hard for us to know if more people will get into crypto just because Coinbase is trading publicly, we know for sure that at least people who were too scared of the volatility of bitcoin can now take a more traditional approach by buying Coinbase stock. There will definitely be a lot of these people and hopefully this is a gateway for them to get into bitcoin over time.”