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Coinbase Brings Cryptocurrencies to the Heart of Wall Street with Big Stock Market Premiere


The platform for buying and selling digital currencies rises strongly on the Nasdaq in the first bars of trading. Its market value is around 100 billion dollars, like Santander and BBVA together

Brian Armstrong, Coinbase co-founder and CEO, during a talk in California last October.Matt Winkelmeyer / EL PAÍS

One of the great stock market events of 2021 has turned out to be the premiere of a business dedicated to cryptocurrencies, an asset that competes with the stock market to attract investors.

The paradox, consummated with the debut this Wednesday of Coinbase in the Nasdaq US technology index, ends the separation between two worlds, that of Stock Exchanges and that of electronic currencies, which until now circulated on different roads.

The firm, born nine years ago from the ingenuity of two young Californian twentysomethings, had the dream premiere: their titles appreciated more than 50%, and exceeded 400 dollars in the first exchanges, raising their market capitalization to around 100,000 millions of dollars.

The figure pulverizes the 8,000 million dollars at which it was valued by its last round of financing, undertaken just three years ago.

The most skeptical did not miss the macabre coincidence of Bernard Madoff's death in prison and Coinbase's stock market premiere to remember that the worst vices of capitalism are still alive.

Investors, on the other hand, were on their own: making money thanks to the promising future that some predict for cryptocurrencies.

And many of them succeeded.

The rally in the price of Coinbase, amid frenzied volatility, places it in the group of Wall Street's chosen, approaching such reputable companies as Goldman Sachs or American Express.

Taking the comparison to Spanish companies, its value is similar to the sum of the two national banks: Santander and BBVA.

Precisely this last entity is one of the beneficiaries of its emergence.

In 2015 the entity bought a stake in Coinbase during a funding round through the venture capital fund Propel Venture Partners.

The value of that investment has multiplied six years later, although the amount is not excessive.

Coinbase raised $ 75 million from various investors in that round, and while BBVA prefers not to comment on the size of its stake, it explains that it is "significantly less than 1%."

Coinbase's business is multi-legged.

Its platform allows investors to buy and sell cryptocurrencies, whether it is $ 10 or $ 10 million.

It provides businesses that require it with payment gateways to sell their cryptocurrency products online.

It offers custody services to those who accumulate significant amounts in this type of assets.

And it charges creators of new currencies to include them on its list.

Among its most famous clients is the electric car company Tesla, which acquired 1.5 billion dollars in bitcoins months ago.

Raúl Marcos, cryptocurrency expert and CEO of

, believes that their international diversification and the fact that they have licenses to operate make them well positioned.

"They take advantage of the new wave, with the arrival of institutional investors, investment funds and companies. Those clients cannot use an



," he says.

With bitcoin boiling, which exceeds $ 63,000, record highs, and has appreciated nearly 800% in one year, the business is flourishing.

Coinbase has made a huge qualitative leap in the first quarter, a period in which its revenue climbed to 1.8 billion from 190 million a year ago, and its profit surpassed 700 million.

Its service seems to be experiencing unstoppable growth: it is used today by 56 million customers, compared to 43 million at the end of 2020 and 32 million a year earlier.

The euphoria around cryptocurrencies has ended up making billionaires for the two young people who saw the business come.

Its CEO, Brian Armstrong, 38, had a fleeting stint on the tourist rental platform Airbnb before founding the company in 2012. He did it alongside Fred Ehrsam, even younger, 32, a former



Sachs graduated with honors in computer science from Duke University, North Carolina, the same degree Armstrong earned from Rice University, Texas.

In addition, it solves a few financial problems for its 1,700 employees, each of whom received 100 gift shares from the firm before the IPO.

Its jump to Wall Street makes it one of the few options to invest in cryptocurrencies through the stock market without having to immerse yourself in the complex mechanisms of buying these assets.

Until now, that role was almost empty, and only companies like MicroStrategy, specialized in cloud services, which owns $ 6 billion in bitcoins that practically triples its average acquisition value, acted as an indirect way to be exposed to bitcoin through of actions.

The Coinbase premiere has not only attracted attention for the type of business it does. The company, aware of the enormous demand for its securities, decided to start trading directly, without underwriting banks. The method contributes to raising volatility, and it is unusual, although in the past it has already been used by firms such as Spotify or Slack.

Source: elparis

All business articles on 2021-04-14

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