In a landmark event within the stock markets this week, cryptocurrency exchange company Coinbase made its public trading debut with a direct listing on NASDAQ (Ticker: COIN).
The significance of this listing is that it represents the first cryptocurrency company to have shares publicly traded on a US market. Coinbase is an exchange where digital currencies like Bitcoin and Ether are traded and this moment allows mainstream investors to invest in the hot cryptocurrency economy without buying cryptocurrency.
Interestingly, I got a few questions this week about whether Coinbase’s stock was being traded like other stocks, or if this was instead another way to trade digital currency. This listing was a bit unusual in that it was not a traditional IPO. Additionally, I think the crypto element seemed to confuse a few into thinking just maybe there would be a way to grab some bitcoin or other digital currency. So, I’m taking a moment to break down some facts about the Coinbase listing, including how it translates to employee stock.
Coinbase is listed on the NASDAQ. For investors, buying Coinbase shares is just like buying any other stock listed on NASDAQ or NYSE – you are buying a slice of the company itself (not portions of the digital currencies that are traded on the Coinbase exchange).
Employees of Coinbase were each given 100 shares of stock at the IPO with no strings attached (no vesting or holding requirements, as far as I can tell). Those shares were worth over $30,000 per employee by the end of the first day of trading.
The Coinbase IPO was a direct listing, which means the company didn’t actually raise more capital by selling new shares. This type of listing facilitates sales of already issued shares by current shareholders and allows mainstream investors to buy those shares.
Direct listing on a stock exchange typically means there are none of the traditional lockup periods that prevent insiders from selling stock in the initial months post-IPO.
Coinbase registered several stock plans on a Form S-8, including an Employee Stock Purchase Plan. So it appears that equity compensation for employees will be broad.
It’s heartening to see all employees of Coinbase “in” on shares of the company stock, with likelihood of more equity plan opportunities to come. I guess you could call Coinbase the "Unicorn" of cryptocurrency companies. They certainly made big history, all while paving the way for an entirely new industry to reach the hands of traditional investors, inlcuding employee shareholders.