Should Coinbase Go For an ICO or an IPO?
The firm is in search of an option that will be beneficial to its short and long-term plans.
Why Coinbase Should Launch an ICO
For some time now, reports have been circulating stating that Coinbase will venture into the territory of an Initial Public Offering. Shares for Coinbase have been in demand but the sellers have been on the minimal side. At the moment, Coinbase is working on a strategy to raise $500,000 from the private sector for an IPO valued at $8 billion.
The company has not released a clear strategy for raising the money. Throughout 2018, Coinbase has been working hard to get more financing. However, a number of setbacks have seen the company fall short of its target.
It is not yet clear if Coinbase will venture into an ICO. In the event they raise the targeted funds or even more, investors will be susceptible to overpayment when compared to the IPO share value. At the same time, the company might require additional funding since they have been purchasing smaller firms. Recently is acquired Earn at the sum of $100 million.
To date, Coinbase has following regulations by the book. The company has been adhering to the Silicon Valley script provided by TCombinator back in 2011. The firm is aware of all the rules at play. They can eliminate competition by attracting relevant investors.
Coinbase has all the tools to change the game. If they venture into the IPO world, they will join the Wall Street class. At Wall Street, small players do not have any say. Under Wall Street, the entire cryptocurrency market cap can be seen as insignificant.
If Coinbase ventures into an IPO, the rules won't be a big issue compared to an ICO. With ICO’s they will have to adhere to the strict SEC laws. They will be confronted by questions such as determining the exchange that will list the token. Additionally, Coinbase will be required to come up with measures on barring the tokens from making it to the dexs among other queries.
The main question should be about the amount raised by the offerings. Will an ICO be beneficial compared to an IPO. The firm is in a position to get the best lawyers for their legal needs. This could end up being the easiest element of the entire process.
It is difficult to determine which offering will raise more money. For an IPO, it will be hit with boundary limitations since it will be confined to one country. On the other hand, an ICO will be open to the entire world. The only challenge with an ICO will be short selling. Additionally, an ICO by Coinbase will greatly impact the cryptocurrency market and the customer base.