Crypto exchange operator Coinbase is nearing one of the most anticipated initial public offerings (IPOs) in recent memory. Slated to trade on the Nasdaq under the ticker “COIN,” Coinbase is looking for a valuation of $65 billion, off recent highs of $100 billion, according to reports that surfaced late Tuesday.
Coinbase operates one of the largest digital currency exchanges. The company also launched the the Coinbase Index Fund in 2018. The fund is available only to accredited investors defined as those with an annual income of $200,000 or a net worth of $1 million or more. The minimum investment is $10,000 and the fund has an annual management fee of 2%, according to Coinbase.
Early investors include Tiger Global Management, Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain, among others.
“The fact there’s so much excitement for the IPO has less to do with the internal specifics of Coinbase’s business, and a lot to do with the paucity of pure plays available to investors trying to access the booming crypto space,” said Dave Nadig, Director of Research at ETF Trends. “While direct ownership of Cryptocurrencies has skyrocketed in the past year, there’s still a huge part of the market that can only access the market through proxies — and Coinbase is going to be the mother of all proxies.”
ETF Implications for Coinbase
While a dedicated Bitcoin exchange traded fund remains elusive in the United States, Coinbase could emerge as a proxy on the digital currency.
For example, the ARK Innovation ETF (NYSEArca: ARKK) and the ARK Fintech Innovation ETF (NYSEARCA: ARKF) make for logical destinations for Coinbase stock. Both ETFs are actively managed, so the shares could be added to the funds at ARK’s leisure.
ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs.
The Amplify Transformational Data Sharing ETF (BLOK) could also house Coinbase stock.
According to Amplify, “BLOK is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in equity securities of companies actively involved in the development and utilization of blockchain technologies.” Amplify classifies each company included in the index as either “core” or “secondary” based on how closely-tied the company’s business is to blockchain development.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.