Coinbase, the largest encrypted digital currency trading platform in the United States, is applying for an IPO. It is now valued at $28 billion. This IPO valuation is already one of the largest IPOs in history. But I think when it is actually IPO, the market will value it far more than 28 billion US dollars. The rise in the price of Bitcoin will directly push up the valuation of Coinbase. Recently, Bitcoin has created its all-time high, surpassing $20,000 per coin, and it is still growing. When Coinbase does IPO, the high probability event of Bitcoin price will increase further. Given the number of bitcoins held by Coinbase, this will directly push up Coinbase’s valuation.
For encrypted digital finance, the successful listing of Coinbase will also give a huge boost to encrypted digital finance. This is embodied in the following aspects.
First, it will further push up the price of Bitcoin
The origin of the current big bang in the world of encrypted digital finance originated from the launch of Bitcoin in January 2019. Today, Bitcoin has been considered as a new asset type. Bitcoin holders have also developed from the initial geek enthusiasts to retail speculative users and the early institutional speculators and investors who are just now beginning. But now, most of the institutional funds still have not entered Bitcoin. The perception of institutional investors is still the most important factor affecting this decision. The most representative view in this regard is Buffett’s view. He believes that Bitcoin is the square of rat poison. He does not hold it now and will not hold encrypted digital currency in the future. This view of his is very representative among mainstream financial institutions. Now, institutional investors’ views on Bitcoin have begun to change. If Coinbase succeeds in listing and becomes one of the largest IPOs in history, then this event will definitely change the perception of Bitcoin among many institutional investors. Therefore, more funds held by institutions will enter Bitcoin, which will naturally greatly push up the price of Bitcoin.
Second, it will promote the development of encrypted digital financial market infrastructure in the US market
Coinbase has been following the path of compliance. It has been applying for various financial licenses it can obtain. It now holds money transmitter service licenses issued by various states and also has a trust license that can provide digital asset custody services. The U.S. Office of the Comptroller of Currency, which now oversees the U.S. banking industry, is advancing a new type of payment banking license nationwide. Brian Brooks, the current Acting Administrator of the Office of Inspectors of the United States, was previously Coinbase’s chief legal officer. He is very knowledgeable about Coinbase’s business. He is also actively promoting the development of encrypted digital finance in the US market. So if this license is launched, Coinbase is likely to apply. The chances of it obtaining this license are also very high. Coinbase will therefore become more of a part of the mainstream financial market in the United States.
In terms of encrypted digital financial infrastructure, another project that Coinbase participates in that is not well known in the market is the USDC stable currency project. USDC is promoted by Centre, an industry consortium. The main promoters of this alliance are Circle and Coinbase. The organization of Centre is actually very advanced. It was established before Libra, and the components of Libra are very similar to those of Centre. The basic components of the Centre are also the underlying blockchain, digital stablecoins and alliances. It’s just that Centre’s market influence is far less than Libra. Coinbase is therefore the main promoter of USDC. USDC has doubled its growth in the past few months. The listing of Coinbase will naturally further enhance USDC’s market influence. The promotion and use of USDC in the market will also further promote the development of encrypted digital finance.
Third, it will promote the development of encrypted digital finance outside the US market
Encrypted digital finance is still in its early stages. Due to different judgments of its nature and value, different regions of the world have different attitudes towards its supervision. This directly determines the different development trends of encrypted digital finance in different regulatory regions. Coinbase’s IPO in the US market further demonstrates the recognition of the development of encrypted digital finance in the US financial market. This will therefore also affect the regulatory policies of other regulatory regions and encourage the development of local encrypted digital finance. For example, Singapore recently approved its largest commercial bank, DBS Bank, to provide encrypted digital financial services. The Singapore government has always held a very positive attitude in the field of encrypted digital finance. This includes the Singapore government has been testing the issuance of its CBDC, its sovereign fund Temasek has also become a member of the Diem Association, and there are also various types of encrypted digital financial startups in the Singapore market. The successful listing of Coinbase in the US market will certainly further encourage the development of Singapore’s encrypted digital finance.
Fourth, promote the development of global encrypted digital financial regulatory policies
Bitcoin is a system that operates on a global scale. Bitcoin transactions are also carried out in many places around the world. These transactions include Bitcoin spot transactions and derivatives transactions. Therefore, Bitcoin transactions around the world influence each other. Bitcoin transactions in the US market are therefore also affected by Bitcoin transactions outside the United States. However, according to the relevant laws of the United States, Bitcoin transactions overseas in the United States are not in full compliance with the securities regulations of the United States. Such a transaction will affect the Bitcoin transaction in the U.S. market, which in turn will affect the fairness of the U.S. market and the protection of its investors. After Coinbase goes public, Bitcoin will become more of a trading species and holding assets in the US market. Therefore, this will further prompt US regulators to adopt regulatory measures to ensure fair trading of Bitcoin.
Previously, the US SEC has repeatedly rejected applications for the establishment of Bitcoin ETFs in the market. One of the main reasons is that ETF applicants cannot guarantee that the price of Bitcoin will not be manipulated by the market. The listing of Coinbase will definitely promote the market’s enthusiasm for Bitcoin, and the application for the establishment of a Bitcoin ETF will definitely be submitted again. The market will therefore require US financial regulators to take measures to regulate Bitcoin transactions. The U.S. financial regulatory agency will therefore cooperate with regulatory agencies in other countries and regions to further regulate the operation of Bitcoin and encrypted digital currencies. In fact, work in this area has already begun. The latest development in this regard is that after a recent meeting, G7 announced that it would strengthen supervision of encrypted digital currencies. Although the cooperation between local regulatory agencies in this area has begun, the market’s enthusiasm for encrypted digital currencies brought about by the listing of Coinbase will accelerate this progress.
