A crypto exchange now traded on Wall Street is a huge move into the mainstream for cryptocurrency-based companies and a strong sign that crypto's not just a counter-culture but a force to be reckoned with.

Coinbase goes to Wall Street

Coinbase hit a market value of nearly $100 billion in its stock market listing. This initial valuation put the cryptocurrency trading firm ahead of many well-known giants, such as oil giant BP and key stock exchanges. The listing is a key step towards cryptocurrencies and crypto companies becoming mainstream financial and investment tools. 

Coinbase Chief Executive Brian Armstrong observed: “It feels like a shift in legitimacy not just for Coinbase but the whole industry. Crypto has a shot at being a major force in the financial world.” Indeed, multinationals including Mastercard, BlackRock, and even Tesla have taken steps to incorporate cryptocurrencies into their businesses this year.

Legacy constraints, bad timing, and a slow start led us here

The general sentiment among crypto circles is that the major banks have been on a voyage of denial, then self-discovery, and now panic about digital assets. Looking closer, it seems to be a blend of institutional hurdles and bad timing which led to banks shunning cryptocurrency and leaving the gate open for Coinbase and other firms to move in.

One ex-Barclays banker now in crypto explains: “We had a division looking at blockchain in 2014 at Barclays. We were trying to work out how we could use it to run our operations. It wasn’t that we weren’t on it, or aware of it, but it would have meant replicating our entire operation—a massive change, and all for a technology that was just moving too fast.”

The timing of Bitcoin’s launch—and the subsequent development of blockchain as a financial tool—were against the banks too. The nascent crypto industry got going right after the 2008 global financial crisis. Investment banks faced fines, prosecutions, and intense scrutiny from regulators at the same time BTC and other cryptocurrencies were rapidly gathering momentum.

Opening the doors for banks, investors, and businesses 

In the past decade, cryptocurrencies and crypto companies have rapidly developed and matured into a diverse basket of innovative financial tools that are now being taken seriously by institutional investors and banks.

Asen Kostadinov, Head of Strategy at the institutional crypto investment firm Copper, notes that more hedge funds and family offices are now getting interested. He sees Coinbase’s IPO as a “gateway” for keen investors outside crypto to get involved and buy shares in the firm. From there, he expects investors will move on to invest in crypto markets directly.

For institutions and businesses looking to incorporate cryptocurrencies and blockchain applications into their systems, blockchain-based financial middleware may be the answer. These innovative platforms enable companies to bridge the gap between traditional financial systems and the burgeoning cryptocurrency economy to improve transaction speeds, lower costs, and open up new business models. And since many are provided “as a service” they can be more readily incorporated into existing systems than overhauling internal legacy systems.