The Real Reason for the Coinbase IPO

Andy Snyder|April 5, 2021

The big day is coming. The day so many crypto fans have been waiting for is just around the corner.

Late last week, the folks at Coinbase told us they’ll take their shares public on April 14.

Hoorah.

It’s a big win for the crypto crowd. The world’s most popular digital exchange will finally hit Wall Street.

But wait… Wall Street?

Why does crypto need Wall Street?

If Coinbase is truly the future of investing, why won’t its shares trade on its own exchange?

It’s the kind of question that forces the bulls to stop and rip up another big bite of grass. They need to chew on this one a bit.

Coinbase IPO = No Choice?

There are a couple of good reasons Coinbase will succumb to the gods of irony and list its shares on the Nasdaq.

The first is what it’s said publicly.

The company says regulations keep it from listing itself. This is all new territory, it says, and the folks at the SEC aren’t quite sure what to do with a whale that wants to sell itself on itself.

That makes some sense. But let’s not forget the company is a pioneer in a land that shuns these sorts of regulations. The Coinbase IPO is an abrupt about-face for a firm that makes its living poking regulators in the chest.

The company also blames technology.

Again, we don’t buy it.

It’s managed to create a major exchange out of the digital air. If there was a will, surely there’d be a way.

What we do buy, though, is the idea that the technology needed to make it happen would be expensive and likely wouldn’t pay off.

Greed Wins

After all… that’s the point of all this. Coinbase isn’t looking to raise money from an IPO. If it were, it would have gone the traditional route and hired bankers and hit the streets with its sales pitch.

But it opted for a direct listing. Current owners are simply going to trade their stakes for the cash in the pockets of a horde of eager buyers.

Greed is a loaded word, but let’s shoot straight here… That’s what this is about.

Sure, if it wanted to, Coinbase could find a unique and novel way to debut on the market it created. But that would keep so many hedge funds, institutions and big ETFs out of the foray. It would open the door for a brand-new way of doing things… but it would slash the size of yacht these early investors who are now selling could afford.

We can’t blame Coinbase for knocking on Nasdaq’s door. But for investors who are thinking about getting in on the action, it’s a sign of the listing’s real purpose.

Cashing Out

The aim isn’t to stuff Coinbase with cash so it can conquer the markets. No, the aim is to reward the patient investors who have backed the company from the beginning… and stuff their pockets full of cash.

So, in much clearer terms, should you get out your wallet on April 14?

Quick in-and-out traders will surely have a great day. Demand will be huge, and the folks who play it right will win.

But if you’re not willing to be glued to your screen for 48 hours or if you’re thinking of buying now and selling later, there are better opportunities.

It may sound odd for a “crypto guy” like us to say it, but the Coinbase IPO isn’t about crypto.

It’s about cashing out.

There are better ways to get in on the crypto action.

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