Coinbase is a popular cryptocurrency exchange platform. It has filed documents with the SEC to become a publicly-traded company.
The exchange has long wanted to go public. The submissions reveal details about their profitable and impactful business and show the exact metrics sent to institutional companies. Coinbase posted a net profit of more than $322 million in 2020, against revenue of more than $1.1 billion. Primarily, trading fees and other user-facing features generated this.
Brett Tejpaul, Coinbase’s head of institutional coverage, stated that since its founding in 2012, Coinbase had held Bitcoin and other crypto assets on its balance sheets. According to him, the exchange plans to maintain an investment in crypto assets since it believes in the crypto economy’s long-term potential. Coinbase developed new investment accounting and tax policies. Also, it ensured establishing a controlled environment for unqualified audit opinions on its financial statements, Tejpaul said.
The exchange’s operating expenses exceeded $860 million, and Coinbase said it had more than 2.8 million transaction customers on its platform. Its lifetime trading volume was recorded at over $456 billion. The company currently has over $90 billion worth of crypto assets on its platform.
The company’s crypto holdings surged.
The company is targeting a gigantic listing on Nasdaq. The initial public offering has been advised by Goldman Sachs, JP Morgan, and Citibank. Meanwhile, Bitcoin rose to more than $52,000 on the news of the Coinbase presentation. Since then, it has fallen back to the $51,000 level as traders made a profit after last week’s market crash.
The value of the assets on Coinbase can change based on their fair value in the market. The exchange says it will conduct annual impairment tests on October 1.
Coinbase said that a price decline might require the company to take an impairment charge on its crypto assets. A drop in the value of the crypto assets it holds in higher concentrations may have a larger impact on its operating results in any given period.
Even as recent as the numbers are in its filing, they still can’t keep up with the market enthusiasm. Since the beginning of 2021, bitcoin is up another 70%, and ethereum has more than doubled. It means that suppose Coinbase renews its balance sheet based on current trading. In that case, its holdings would likely be worth hundreds of millions of dollars, and it would be more than they were two months ago.
