The major crypto exchange in the U.S., Coinbase, has declared that it intends to list on the stock market via a direct listing rather than a conventional IPO. In July last year, Coinbase filed its registration documents with the U.S. SEC (Securities and Exchange Commission). However, it did not stipulate that it would prefer a direct listing instead of the conventional IPO processes.
The prevalence of direct listings has been steadily growing, with various customer-based technology firms like Spotify Technology SA have employed direct listings to go public. Hence, it is not unusual that a firm like Coinbase chooses to take this course to public markets. Various firms have embraced this path. For instance, after hesitating to follow its late-2020 IPO market and private capital funding, Roblox Corp online video game firm has also unveiled its plans to go public through a direct listing.
Coinbase seeks Direct Listing of Class A Common Stock
According to a blog post, the crypto exchange Coinbase disclosed intentions to seek a direct listing of its Class A common stock. This is following a registration statement with the U.S. SEC. The Form S-1 registration statement will become active after the securities regulator concludes its review. The direct listing format would not contribute new shares yet instead, sell present shares directly to the public.
Moreover, few benefits of the format for those holding stock in the company can involve selling without lockups. It is a model currently used by Palantir that has the potential to create instant billionaires. Unlike with an IPO, direct listings do not need an underwriter’s services to promote the sale. In accession to evading the lockup period, direct listings perform a role of protecting against share dilution.
The field of power encircling Coinbase proceeds to develop after numerous high-profile acquisitions. The exchange recently took over Bison Trails, a wholly managed blockchain infrastructure provider. Additionally, in January, the company acquired the Routefire platform, assisting in expanding trade execution prominently. Furthermore, the firm has over $25 billion in assets on the crypto platform and over $320 billion in total volume traded.
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