On a day when Bitcoin (BTC) rallied to a new all-time high, Coinbase, the largest cryptocurrency exchange in the US, went live with its direct listing on Nasdaq. After beginning at $381, the crypto exchange Coinbase shares traded above $400 and then into the low $300s. Despite this, COIN is up about 55%, valuing the US crypto exchange giant at just under $100 billion.
Crypto exchange Coinbase, with no official headquarters, decided to forego an initial public offering (IPO) and instead list its shares on the Nasdaq stock exchange directly, rather than depending on Wall Street investment banks to set the price.
Experts, traders, and economists hailed the stock sale as a watershed moment for cryptocurrencies, as the exchange now has access to mainstream stock-market investors. The conference has also been dubbed a “catalyst” for digital asset adoption. Coinbase will have a market cap of $76 billion based on the most recent exchange price, with 199.2 million outstanding shares. Using the completely diluted share count of 261.3 million, the total will be $99 billion, according to Coindesk report. According to regulatory filings, the San Francisco-based company has 56 million users globally and an estimated $223 billion in assets on its website, accounting for 11.3 percent of the crypto asset market share. After US regulators charged Ripple with a $1.3 billion unregistered stock offering, Coinbase suspended trading in XRP last year. The allegations have been refuted by Ripple. After weeks of anticipation following Coinbase’s direct listing announcement on the Nasdaq, trading on the COIN stock has already started. Bitcoin, the most valuable cryptocurrency by market cap, surged to a new all-time high above $64,000 on Wednesday, until slipping down to about $63,500 as of press time. Ethereum also hit a new high of about $2,400.
Coinbase’s trading debut ushered in a new era for cryptocurrencies on Wall Street, bringing the oft-mocked asset class closer to mainstream acceptance. But that’s just the sort of attention that generates outrage among a small, disgruntled cohort of the BTC community.
For the most ardent Bitcoiners, the so-called maximalists who regard other cryptocurrencies as schemes to part neophytes from their money, talking about Coinbase raises hackles. It seems the idea of a centralized exchange dominating trading in what they see as a decentralized alternative to the current financial system is abhorrent to them.
The less extremist reasons are varied, with sentiments ranging from “there are better places to trade” to “do you know what they did,” but the tone is unmistakable.
One of the other complaint is about the exchange’s fees, which are among the highest in the industry, according to data from CoinTracker. On its Coinbase Pro platform, maker and taker fees for trades less than $10,000 stand at 0.5%, which can be more than double what a similar trade would cost on a competing exchange like Kraken. Flat fees on its flagship product can be even higher with levies for US customers buying via their bank accounts clocking in at 1.49% of the transaction value.
With more than 90% of Coinbase’s revenue coming from retail trades, which made up just 36% of volume during the quarter ending Dec. 31, critics caution that the exchange’s high fees and explosive revenue growth will inevitably come under pressure as its customers become more accustomed with competitor offerings.
Then there’s the long simmering feud about what was perceived as Coinbase’s lending its imprimatur to Bitcoin knock-offs.
The exchange has offered its clients the ability to trade in spin-off protocols like Bitcoin Cash which jump-started the forking craze in which several software-development teams sought to create money out of thin air by tweaking the original computer code and releasing coins with “Bitcoin” in their names.
For a firm inspired by founder Brian Armstrong’s reading of the Bitcoin white paper, its holdings of the crypto are regarded as paltry in comparison to the likes of MicroStrategy Inc. which has made it a crucial part of its treasury strategy.