There have been many headline-grabbing moments in crypto in recent months, episodes that have inspired breathless op-eds about the industry’s growing maturity and mainstream acceptance. 

Whether due to the activities of Visa, Paypal, Square, Tesla, or some other world-famous company, the enthusiasm coursing through the sector is palpable. And yet, the true watershed moment involved a crypto-native company: Coinbase.

Coinbase lists, crypto comes of age

The San Francisco-based crypto exchange became the first major cryptocurrency company to list its shares on a US stock exchange on 14 April, initially trading at $381 a share – considerably more than the $250 reference price set by Nasdaq. 

After day one of trading, Coinbase’s valuation stood at $85.7 billion, underlining its status as a true unicorn of the digital asset arena. Indeed, it’s now one of the top 100 most valuable companies in the US.

It’s difficult to overstate just how monumental this event was for the industry as a whole. Nine years after founding, Coinbase has become a veritable powerhouse of the digital asset industry, with 1,700 employees and 56 million registered users. 

As a consequence of its strong fundamentals (secure custody, fraud prevention, a resilient fee model), and buoyed by recent events in the cryptosphere, Coinbase achieved a valuation that puts it in the same bracket as Facebook and Airbnb when they went public.

The public offering, and Nasdaq’s decision to subsequently list options contracts for Coinbase stock, has highlighted just how many traditional investors are being sucked into the crypto vortex. In this sense, the regulator-friendly exchange may serve as a gateway to the industry for those who have traditionally been wary of digital currencies and their attendant hyper-volatility. 

Or as Crypto.com CEO Kris Marszalek predicts, it may “fuel a boom in investment” and “reprice all the companies and deals in this space, regardless of the fundraising stage they’re at.”

Across the street, Morgan Stanley has already started offering its wealthy clients access to a trio of Bitcoin funds, and there’s a sense that more titans of the crypto space will follow Coinbase’s lead by listing on the capital markets. Binance and Gemini seem like the logical candidates for an IPO in the near term, not least because the former just hired ex-Coinbase Chief Legal Officer Brian Brooks to run Binance.US.

The surge and the sell-off

Although the euphoria surrounding Coinbase’s listing helped push bitcoin and other cryptocurrencies to fresh highs, a subsequent sell-off over the weekend tempered the mania. Business as usual resumed, with a heady surge followed, inevitably, by an eye-watering correction. The panic was comparatively short-lived – and Coinbase remains in rude health – but it provided a stark reminder that volatility remains the watchword of crypto. 

For Coinbase, whose revenue during Q1 2021 totalled $1.8 billion – up from $190.6m a year earlier – the focus will be on building a richer ecosystem. In a recent interview with The Block Crypto, the company’s CFO Alesia Haas talked up diversification, pointing to the fact that over 20% of users “engage with multiple products, from staking to earning and borrowing/lending.” 

Haas also outlined her visions for a platform that offers “all the new types of transactions that exist, from fiat to crypto to decentralised finance.” With competition intensifying due to incumbents like PayPal and Square, as well as crypto-fiat banking platforms and other exchanges, that would seem like the best way forward. 

Given that 96% of Coinbase’s revenue comes from transaction fees on trading, its business is, to a large extent, reliant on the trading boom continuing. Thus, an endorsement of Coinbase as a company can be viewed as an endorsement of crypto in general. Of course it’s natural to expect the company’s prime brokerage and custodial services to constitute a bigger piece of the pie as the years go on.

Ultimately, the best way to look at the Coinbase listing is as a seminal event for the entire industry – the moment when the lines between traditional finance and the fast-growing digital economy began to blur. The moment when a platform that enables users to buy, sell and store crypto became more valuable than oil giants like BP or banks such as Barclays.  

What does the future hold for Coinbase? It’s anyone’s guess. For the moment, it’s a time for crypto enthusiasts to sit back, take it all in, enjoy the moment… then get back to work.