Coinbase has filed public paperwork to list its shares on the NASDAQ exchange, a huge step forward in the first major public offering for a cryptocurrency company. Coinbase’s S-1 was released Thursday morning, after it was filed confidentially with the SEC in December.
In an attached letter to investors, founder Brian Armstrong presented cryptocurrency as an equalizing force in the financial markets – and Coinbase as the company at the forefront of that change.
“The current financial system is rife with high fees, unequal access and barriers to innovation,” the letter read. “If the global economy ran on a set of common standards that could not be manipulated by any company or country, the world would be fairer and freer and human progress would accelerate.”
The filing lays out the company’s finances in unprecedented detail, including a surprisingly profitable 2020 driven by a massive spike in bitcoin’s price. Coinbase raised $ 1.2 billion in revenue over the year for a profit of $ 322 million, the first time the company has made an annual profit.
Coinbase had 43 million verified users at the end of 2020, with 2.8 million users making transactions every month and a total of $ 90 billion in assets under custody. All told, the company has handled transactions worth $ 456 billion over its lifetime as a business.
Yet bitcoin’s sky-high price also has its drawbacks. The filing acknowledges that cryptocurrency price volatility will pose a significant risk to Coinbase in the future.
“All our sources of income depend on crypto assets and the wider crypto economy,” the filing reads. “There is no guarantee that a supported crypto asset will maintain its value or that there will be meaningful levels of trading activity. In the event that the price of crypto assets or the demand for crypto asset trading falls, our operations, results of operations and financial condition would be adversely affected. “
Much of Coinbase’s success is due to its ongoing focus on complying with financial regulations related to cryptocurrency. Coinbase was one of the first exchanges to embrace conventional know-your-customer funding rules, despite reluctance from the libertarian corners of the cryptocurrency world. While those rules keep getting tougher, many Coinbase’s competitors have been prosecuted for money laundering, and the company continues to invest heavily in legal compliance. Kathryn Haun, a former prosecutor who led the Silk Road task force’s corruption case, now sits on Coinbase’s board of directors.
In a nod to the historical nature of the filing, elusive Bitcoin founder Satoshi Nakamoto is listed on the S-1 as an interested party alongside lawyers and investors involved in the deal. As a result, a copy of the application was sent to Nakamoto’s bitcoin wallet.