finance

What is Coinbase and when is it going public?


CRYPTOCURRENCY business Coinbase is set to go public in the US in a highly anticipated event on Wall Street.

But what does the company do and when is it listing on the stock market? We explain all you need to know.

Cryptocurrency exchange platform Coinbase is going public today

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Cryptocurrency exchange platform Coinbase is going public todayCredit: AFP

But first, a word of warning: buying cryptocurrencies as well as stocks and shares is a risky business.

Investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the money.

Cryptocurrencies are also highly volatile, so your cash can go down as well as up in the blink of an eye.

What is Coinbase?

Coinbase is an American cryptocurrency exchange platform, and customers can buy and sell around 50 cryptocurrencies on its site, including bitcoin.

The company was founded in 2012 by Brian Armstrong and Fred Ehrsam.

As of March 2021, Coinbase was the largest cryptocurrency exchange in the US by trading volume.

Coinbase says it has more than 56million verified users across 100 countries.

The company has benefited from bitcoin’s rise in value, which has rocketed by 1,000% over the past year and hit a new record high yesterday.

5 risks of crypto investments

THE Financial Conduct Authority (FCA) which creates the rules for the banking industry, has warned people about the risks of investing in cryptocurrencies.

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. 
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. 
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.  
  • Marketing materials: Firms may overstate the returns of products or understate the risks involved

When is Coinbase going public?

Coinbase is going public on the Nasdaq stock exchange in New York City today, April 14.

The company isn’t doing a traditional initial public offering (IPO), and will instead do a direct listing.

In a direct listing, a company floats its shares on a stock exchange, but without hiring banks to underwrite the transaction, like in an IPO.

A direct listing doesn’t allow the business to raise new funds, but it offers current shareholders the chance to sell their stocks on the market.

Music streaming site Spotify also chose this method when it went public in 2018.

Coinbase’s overall valuation will begin at $65.3billion, making it the biggest new US stock market entrant since Uber in 2019.

Dating app Bumble went public in February, and it saw its share price soar.

Meanwhile, Brits are being warned they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.

For more on trading, we’ve explained the six things you need to know about GameStop

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