Coinbase historic IPO
Cryptocurrencies,  Regulation

Coinbase takes historic step towards stock market listing

The cryptocurrency giant announced that it has filed documents that could lead to the cryptocurrency industry’s first initial public offering

In an historic move, Coinbase announced on Dec. 17 that it has filed preliminary paperwork to make it the first company in the cryptocurrency industry to hold an initial public offering.

Coinbase historic IPO
Cisco CFO Kelly Kramer joined Coinbase’s board the day before it announced a possible IPO (Photo: Coinbase)

The terse IPO announcement came a day after the appointment of two new board members, including Cisco executive vice president and CFO Kelly Kramer, who will head up the Coinbase board’s Audit and Compliance Committee.

In announcing that the company “has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission,” Coinbase is beginning the process of becoming the first company in the cryptocurrency industry to go public with a traditional stock sale. The S-1 will not become effective until the SEC completes a review. 

Coinbase’s timing was auspicious, coming two days after Bitcoin finally broke through the $20,000 barrier during a seven-day bull run that has seen BTC’s price climb 25%, reaching a new all-time high of $23,642.

Along with Kramer, Andreessen Horowitz co-founder Marc Andreessen has become a full board member, transitioning from observer status.

There are some questions about what form the IPO will take. Fortune cited interviews suggesting the company would prefer to issue tokenized stock. If the SEC does not approve that, the company might turn to a direct listing, in which it sells shares directly to the public rather than the usual route of using banks to sell shares to institutions at a fixed price.

Reading the tea leaves

There have been signs Coinbase has been building to an IPO for some time. In July, it hired Facebook deputy general counsel Paul Grewal as its chief legal officer, after Brian Brooks left to become the U.S. Treasury Department’s Comptroller of the Currency. At the time, Reuters reported that he would be preparing for an IPO before the end of the year. 

Nor did it hurt that that Brooks used his new position to issue several deeply important rulings in the cryptocurrency industry’s favor, including clarifying that banks are allowed to custody cryptocurrency for customers and hold reserves for stablecoin issuers, and forbidding banks from discriminating against whole industries—such as crypto.

Even before that, Coinbase had already broken through a banking industry-imposed glass ceiling, convincing JPMorgan Chase to take it (and competitor Gemini) on as clients. 

And in February, Coinbase Custody completed two series of very rigorous security audits, the American Institute of CPAs SOC 1 Type 1 and 2, and SOC 2 Type 1 and 2. The certifications are highly regarded in the mainstream financial industry.

It has also assisted the Department of Justice in darknet drug investigations, and contracted with the IRS and the U.S. Secret Service to provide analytics software—both deals that earned it criticism within the industry. 

It hasn’t been a perfect year, however. Armstrong’s often tone-deaf stance about the company remaining “apolitical” about societal issues including the Black Lives Matter movement led to an exodus of some 60 staffers in October. That in turn led to a very high-profile New York Times investigation that turned up substantial allegations of black employees claiming they faced poor treatment and discrimination at Coinbase.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.