Coinbase will start an IPO, what information is revealed in its listing application form?

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Coinbase has a total revenue of 3.4 billion US dollars as of 2020, 43 million verified users, and 2.8 million monthly transaction users.

Written by: Larry Cermak, Head of Research, The Block Translation: Lu Jiangfei

On February 25, 2021, the U.S. Securities and Exchange Commission (SEC) confirmed the validity of the S-1 form submitted by the cryptocurrency exchange Coinbase for listing applications. What information is disclosed in this S-1 form? Larry Cermak, head of research at The Block, did some simple analysis.

Coinbase’s total revenue as of 2020 was US$3.4 billion, mainly from transaction fees (96% of net revenue). The net income in 2020 was US$322.3 million. The net loss in 2019 was US$30.4 million. The number of verified users was 43 million. The number of monthly trading users is 2.8 million.

Coinbase has revenue of 534 million U.S. dollars in 2019 and revenue of 1.28 billion U.S. dollars in 2020, an increase of more than 2 times.

As of the end of 2020, Coinbase has a total value of 1.1 billion U.S. dollars in cash and cash equivalents, and holds approximately 48.9 million U.S. dollars in stable currency USDC. The cryptocurrency holdings are as follows:

  • $130.1 million in Bitcoin
  • 23.8 million USD of Ethereum
  • $34 million in other cryptocurrencies

Coinbase disclosed its listing policy to the US Securities and Exchange Commission, but avoided Ripple’s problems. It shows that Coinbase has policies and procedures to analyze and seek to promote whether each encrypted asset traded on the platform is considered a “securities” under applicable laws. Coinbase’s policies and procedures do not constitute legal standards, but represent a scoring model developed by the company that enables Coinbase to conduct a risk-based assessment of the likelihood of certain crypto assets being considered “securities” in accordance with applicable laws. Regardless of Coinbase’s conclusions, if the US Securities and Exchange Commission, foreign regulatory agencies or courts determine that the supported crypto assets currently offered, sold or traded on the Coinbase platform are “securities,” Coinbase may be subject to legal or regulatory litigation.

Coinbase has very little custodial funds on its balance sheet.

Coinbase will start an IPO, what information is revealed in its listing application form?

A very important indicator: the scale of crypto assets on the Coinbase platform has reached US$90 billion!

Coinbase will start an IPO, what information is revealed in its listing application form?

Coinbase has a total of three acquisitions, including Tagomi-$64.3 million, Neutrino-$6.4 million, and Xapo Insti-$68.3 million.

According to the breakdown of revenue by geographic location, 76% of Coinbase’s total revenue comes from the United States.

Coinbase will start an IPO, what information is revealed in its listing application form?

The breakdown of Coinbase’s stock types is as follows:

Coinbase will start an IPO, what information is revealed in its listing application form?

Coinbase will be listed directly on Nasdaq:

  • Market makers: Goldman Sachs, JPMorgan Chase and Citigroup
  • Advisors: Goldman Sachs, JPMorgan Chase, Allen & Company, and Citi

Coinbase executives and options/share data, frankly, are lower than I expected. CEO Brian Armstrong has a salary of US$1 million in 2020, option awards of US$56,670,000, and other compensation of 1802256, totaling US$59,472,256. Chief Product Officer Suojit Chatterjee has a salary of only US$616,435 and Chief Legal Officer Paul Grewal’s salary. Only $209,519.

Coinbase will start an IPO, what information is revealed in its listing application form?

But Brian Armstrong holds a high stake, and if he goes public, he will become very rich!

Coinbase will start an IPO, what information is revealed in its listing application form?

Coinbase has some interesting “background relationships” with Compound. The exchange helps the Compound protocol provide USDC liquidity and promotes Compound’s transition to decentralized governance in June 2020. Coinbase seems to be very optimistic about DeFi. However, although Coinbase is optimistic about DeFi, it is still cautious about related risks.

According to FTX’s current pricing, the market value of Coinbase is approximately US$108 billion, but after today’s approval by the SEC for listing, this number is worth paying attention to.

Coinbase will start an IPO, what information is revealed in its listing application form?

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