Crypto-exchange Coinbase Plans To Go Public Via Direct Stock Listing

U.S.-based cryptocurrency exchange Coinbase Global, Inc. announced plans to become a publicly-traded company later this year by pursuing a proposed direct listing of its Class A common stock.

Coinbase, one of the world’s largest cryptocurrency exchanges, had previously announced in mid-December that it had confidentially submitted a draft registration statement on Form S-1 with the U.S. Securities and Exchange Commission.

The company said the Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions.

Coinbase said this announcement is being issued in accordance with Rule 135 under the Securities Act of 1933, as amended. It also added that this announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Unlike the traditional Initial Public Offering (IPO), the direct listing process (DLP) to go public involves selling existing shares of the company directly to the public instead of offering new shares in the company.

The DLP has become much more attractive than an IPO in recent times as it makes existing stock owned by employees and/or investors available for the public to buy and does not require underwriters or a lock-up period. It also increases liquidity for existing shareholders and is usually cheaper than an IPO.

IPOs and direct listings are two methods for a company to raise capital by listing shares on a public exchange. On December 22, 2020, the SEC had announced that it will allow companies to raise capital through direct listings based on a proposal floated by the New York Stock Exchange.

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