Coinbase's public debut brings crypto to Main Street

Coinbase’s upcoming public listing will be a watershed moment for a cryptocurrency industry longing for legitimacy.

Why it matters: As the first major crypto exchange to go public — and one of the industry's few blue chip companies — industry insiders believe the float will double as validation for a technology that's still seen by many as lawless and experimental.

The big picture: “This is basically the ‘Netscape moment’ of crypto,” argues Electric Capital's Avichal Garg, harkening back to the Internet browsing company whose success and 1995 IPO ushered in the modern web. (Coincidentally, Netscape co-founder Marc Andreessen is on Coinbase’s board.)

• For crypto, this would mean getting more of Wall Street to invest, including in innovative tokens beyond Bitcoin and Ether.
• It's also the first major opportunity for retail investors to get company-level exposure to crypto, as so far they've been limited to more index-like products. Or, as Slow Ventures' Jill Carlson tells me: “What I’m expecting is a demonstration of pent-up demand for crypto."

Tailwinds: Coinbase's listing also is expected to create a public valuation comp not just for rival exchanges, but also for other crypto businesses like infrastructure and custody.

• There also will be voracious reading of Coinbase's financial disclosures, given that Coinbase CEO Brian Armstrong revealed in late 2019 that the company had been profitable for the last three years and had generated $2 billion in transaction fee revenue since inception.

Yes, but: Despite the recent Bitcoin boom, there's no guarantee Coinbase will be a hit with public investors.

• “I suspect it will be schizophrenic,” says an industry source, comparing it to how Tesla polarizes investors.
• And since its revenue is so heavily dictated by the cryptocurrency markets, it'll have to make investors comfortable with potential swings in its own financials.

Coda: Bloomberg reports that crypto exchange Bakkt, which is majority-owned by the New York Stock Exchange’s parent company and used to employ Kelly Loeffler as CEO, is nearing a deal to go public via a SPAC at a $2 billion valuation.

• Bakkt, however, is much newer and smaller than Coinbase, mainly offering Bitcoin futures trading and some other financial services.