Coinbase announces confidential submission of draft registration statement
blog.coinbase.com
blog.coinbase.com
When the credit market is hot, issue debt.
When the consumer spending is hot, sell more product.
Many people don't get this, specifically that this concept is not married to any particular entrepreneurial idea, and many founders are following these financial axioms, not product line passions.
Way to go Coinbase for getting the ducks in a row.
It's more like 'our chances at IPO are always scary, if there ever comes a clear window to do it then DO IT'.
It's hot, so strike now. That's mostly it.
See: MBA-ization in action.
By being the easiest cryptocurrency broker to use, by far. By being based in the US, and not in some SEA country (not saying that's inherently bad, but I'd rather keep my money in the US if at all possible). They even have an insurance policy for everything on their platform. Let's see the Binances of the world provide that.
Saying your keys are in the USA is kinda like saying your Swiss bank account’s login and password are in the USA. If that Swiss bank account is still reportable, why not your Bitcoin too?
What matters is where the asset is, not where you can control it from.
I work for a crypto company and this is our belief. Users hold their own keys and must sign their own transactions. Of course that means that things like limit orders can't be done (easily) and it means all trades have more latency and more costs (due to fees for sending transactions vs. db entry).
However, we've found it difficult to get market traction as a lot of people seem to prefer the ease of custodial wallets.
You do gain a higher degree of financial sovereignty by managing your own keys, and it's definitely an important option to have and fight for. Just be cognizant that you also gain a lot of responsibility, too. For some people, storing at a site like Coinbase will continue to be a safer option.
Nope, thank them for their contribution to the predictable frequency of lost digital assets and their scarcity. Praise be. Blessed be the fruit.
Even you yourself don't understand it, so you you should be a little less confident in what you promote. Equating investment ability with key management ability is stupid.
All that being said it still seems really pointless to me to have coins which you cannot send online. But prehaps if like my grandpa wanted to hold some bitcoin as an investment, I'd advise something like cash app robinhood because no matter what you do wrong nobody can get the actual coins, at best to a fraudster it's another classical bank account for which there are all manner of legal clawback methods and safeguards in place.
The vast majority of people involved in the space today are simply here for the money, and would prefer cryptocurrencies to work more like their existing bank accounts.
This is by design. The BTC GitHub repo was hijaked years ago by Blockstream and corporate interests that want to force users on to their "second layer" solutions.
Real Bitcoin users and anyone with a brain moved to competing projects like Bitcoin Cash, Ethereum and Monero long ago. Only newbies and shills stick around pushing the, biTcOiN is gOLd narrative.
Wild-ass guess: "most" is true of "number of humans that own cypto-currency", but probably not true of "percentage of crypto-currency by value held", if that makes sense. More succinctly, I'd expect more crypto to be held in exchanges than in individual wallets, if you're able to somehow account for coins/value stored in lost wallets.
Update: looks like figuring this with any real accuracy is probably near impossible
While what you said is true, CASH lets you send your BTC out of it. Unlike Paypal/RH et al.
that is objectively true, it's so regularly so that it's become a meme in the btc community.
There isn't a winner take all strategy in brokerage houses, its take enough to make a return, why would you apply a different higher fictional standard to crypto exchangers?
Also they provide various interest-like services and keep the difference between what they earn and what you earn.
And notably, PayPal's market penetration is much greater than Coinbase's.
> You cannot withdraw to your own wallet/cold storage.
The prevailing mass interest in Bitcoin is for speculation, which doesn't require an offline wallet. Letting PayPal hold it is fine for most users.
You still need a centralized exchange to be an on-ramp to go from regular money to the blockchain. But that's way less lucrative. You convert your dollars to USDT/WBTC/Ethereum at Coinbase, transfer to your wallet, then do 99% of trading/gambling on Uniswap. That's not a future where Coinbase is very valuable.
institutions can invest in a decentralized software contracts (which by nature, don't KYC) like anyone else. it's just not common right now.
But then Coinbase would just charge high fees for doing so and draw those down over time if/when competitors enter the market.
Most "regular people" are going to use trusted and established brands and companies. They don't want to see their money go poof.
Not necessarily. The regulatory landscape in traditional finance is somewhat fragmented as well, which simply means people/institutions/corporations shop around for the regulatory venue they prefer.
Or the US can impose its own de-facto global regulations, similar to what it already does on a global scale because a huge % of finance goes through US banks at some point. For example: Want to go against the Iran sanctions? Well, you can, legally, if your country hasn't signed on to them. You just won't ever be able to do business that touches anything US related. Which means you won't be able to do business with any other major western or global bank either under threat of the US cutting ties with them.
Without large institutions, and a few of the largest playing the part of "market makers" that provide liquidity, you won't get significant liquidity for large moves, not unlike the current crypto situation. And large institutions will always be subject to the sort of regulatory situations above.
It's a bit of a paradox: Part of crypto's appeal is its freedom from regulation. But in order for crypto to really go mainstream, global financial systems & their regulations. Nations have a strong interest in keeping monetary policy within their control. They will use every tool at their disposal to make sure crypto can't do an end-run around that control.
New projects will even tease "Binance listing coming!" to build up hype for their projects.
And Binance is still not as selective as Coinbase. A Coinbase listing is a marker of legitimacy for any crypto project.
This reputation alone makes Coinbase a very valuable buy.
There's a fair bit of money in WaAM - my wife used to do it for Wells and had a $6B book (as a fresh college graduate!). Consumers don't have money, that's what makes them consumers. If you're managing money, you ought to do it for rich people that have a lot of it.
Also there are two reasons why DEX's have high volume: - Long tail of assets are only on DEX's. Average retail isn't buying these - DEFI protocols utilize DEXs. I would argue most of the volume isn't people trading, rather automatic trading to support protocols like Yearn.finance
Although I suppose Coinbase could be the platform through which those general purpose companies work for clients that want crypto.
Of course this could also be where Coinbase's niche ends up: providing the backend infrastructure for traditional wealth management companies to handle the crypto plumbing for them. If I were Wells Fargo or similar and wanted to offer crypto services to my wealth management customers, I'd much prefer using Coinbase as a turn-key solution for it than try to roll my own setup. Or simply buy Coinbase itself and have a huge strategic advantage over competitors.
Of if I were in a position to make such decisions, I'd be too busy swimming through my piles of money, lighting cigars with $100 bills, and sipping single malts older than my great grandfather to bother posting here from my armchair where I have not a single horse in the game.
A brokerage might be the "custodian" of your shares, but you still have control over them, and there's a massive paper trail to prove that. Borderline impossible to steal.
Crypto is a different story.
And yes, the potential market for Coinbase Custody is companies like Wells, Goldman, family offices, etc. that manage money for the actual rich people. On the application form they ask you how many millions (or billions) you have under management. They're clearly marketing it to hedge funds, WaAM divisions, family offices, etc that are managing institutional money.
If this is actually the case, I'd much rather use Gemini than Coinbase. Gemini seems much more fiduciary-minded in their verbiage on their site, and the fact they don't throw a bunch of "shitcoins" at your face on every other click. Their fees are lower, too (but higher than Coinbase Pro, which is more for the trading-minded) and they have a daily auctioning system which to my knowledge coinbase has no equivalent.
Also, Coinbase is notorious for the servers crashing on every price spike. Gemini, on the other hand, stays out of the headlines regarding uptime, which is what a wealth management company should do.
Full disclaimer: I have accounts I use in both Gemini and Coinbase, I don't believe myself to be biased here, and I actively use both services.
But if you really want a "wealth and asset management" service, I would personally recommend Gemini as the platform. If you think you have a leg up on the market and would like to trade for profit, go with Coinbase.
If I have $100M to invest, why the hell would I go on Coinbase like a common day trader millenial looking to make $2500, rather than use Gemini Trust to store my millions, where I could save hundreds of thousands or millions of dollars using their auction system?
To loosely use an analogy if you will, Robinhood is to Coinbase as Vanguard is to Gemini.
[0] https://blog.coinbase.com/coinbase-is-helping-corporate-comp...
Futures and swaps just give you so many more contracts to arb and more leverage if you want it.
Citation needed. The fees are significantly lower than the brokerage (custody fees go down with larger amounts), which has been the bread & butter that's funded the development of all their other operations. Custody fees are probably not insignificant in absolute terms, but I'm highly doubtful they're greater than brokerage fees.
An amount like $5b would likely pay less than 10 bips (0.1%) per year in custody fees, or $5m/year. Coinbase Pro's volume has recently been doing up to a few million dollars in revenue per day - and that's not even counting the higher brokerage fees that apply on top of some of that volume.
Custody is certainly an important part of the business. But I think brokerage currently accounts for a much larger % of revenue. Custody will become bigger as the price of crypto grows.
[0] https://www.coindesk.com/crypto-exchange-coinbase-acquires-x...
I'm sure there's some vertical integration considerations here: the people that hold this amount of assets also trade, and probably trade at OTC with very special requirements that make them valuable.
As a casual observer, I believe you are dead wrong here. My guess is that the retail arm of Coinbase is the real profit center. Will be interesting to find out.
I remember the ,,thin protocol vs thick protocol'' comparisions that said that for Internet it was worth investing in the companies over the internet, as with Bitcoin, just buying it can give a better return.
Ethereum is a complementary to Bitcoin that's a more complex and less secure, less scarce store of value, and it's much more about running complex financial contracts.
As these protocols have strong network effects that give their value, it's really hard to just ,,overtake'' them.
Ideally (from the perspective of Coinbase) they end up offering an absurdly broad range of services to consumers in the entire sphere of cryptocurrency, similar to how some banks don't just let you hold money with them, but may offer 10 different services as well, from exchange to lending to credit to trading and so on.
And making it worse for people who simply don't know any better and catering to high-net worth people? Amazing business model.
> Ideally (from the perspective of Coinbase) they end up offering an absurdly broad range of services to consumers in the entire sphere of cryptocurrency, similar to how some banks don't just let you hold money with them, but may offer 10 different services as well, from exchange to lending to credit to trading and so on.
So, they're a bank? The very incarnation of Bitcoin's persona non grata ever there ever was one.
The apologists around here trying to suck off YC and VC money teet may be more complaint, but I hope this new wave of customers goes to Square/CASH (an easier transition since so many already have it on their phones) in order to steer them to companies that do actual meaningful work in this ecosystem, instead of act as a parasite as Armstrong and Coinbase do.
Bitcoin is stronger than the current financial system, so I'm not afraid of companies that bridge the two systems.
Personally I stay with Bitcoin, as it has a monopoly position, unlike Coinbase that has great competitors for all their important products at this point.
They once served as training wheels, but we have moved on from needing Coinbase a long time ago, and now they're a drag on over all UX of onboarding new users as they quickly realize how intrusive, invasive and altogether bad the experience is with delays, transactions being reversed, and accounts being frozen or canceled arbitrarily.
It's clear their focus is operating as an investment/bank platform for wealthy investors, see Microstratgey's position, but it remains to be seen what they have done in the last 5 years that isn't antithetical to the values of the Bitcoin community as they simply cancel accounts they deem invalid (wikileaks), they sell information to 3rd parties and banks and the IRS, they serve as gatekeepers into a walled garden system that plays judge/jury/executioner if you transact with what they deem to be 'inappropriate' wallets.
The list goes on, but over all we're worst off having them associated to Bitcoin at all at this point and we would be better off if Armstrong just focused on alt trading entirely as it seemed we had finally achieved getting rid of a lot of deadwood with the bcash fork. Sadly, most of us in the Community are actual staunch advocates of free market enterprise and commerce so we cannot do to them what they do to others out of sheer principal.
To this day the best exchange in my opinion was BTC-e, it served as the axiom of what we wanted most from an exchange which is to simply work, and despite all the hallmarks of being a massive exit scam they were the most honest of all until it got shutdown in 2017: its very telling the FBI/DOJ went after an anonymous Russian (Online only really) based exchange for 'money laundering' at a time when neither the SEC or the IRS considered Bitcoin 'money' at all. This was after having jailed Ross Ulbrich for Life plus 40 for simply hosting a website and acting as middle man and HSBC was caught red handed laundering money for the mexican drug cartels and they walked away with a fine.
What Microstrategy did with getting $650 million debt with 0.75% rate and moving to Coinbase institutional Bitcoin storage is to use the vulnerability of the current financial system that was used by bankers for a long time for financing wars to finally do something good and move us closer to a non-debt based financial system.
What matters is having the option of total freedom, not using it all the time. Sure, I could make anonymous payments with Bitcoin if I really wanted, but as long as the laws don't get to the levels of gold confiscation, I'm OK with being 100% legal and being tracked.
Ross Ulbrich was not using the fact that Bitcoin is a trojan horse: don't talk about the vulnerability of the central banking systems, just use all the legal tools and loopholes it gives and get rich.
"In a gold rush, sell shovels"
People like Greg Maxwell and Adam Back were able to kick out the original maintainers and are hell bent on making Bitcoin not work.
Bitcoin Cash is the closest thing to "Bitcoin" now but Blockstream employees an army of Twitter and Reddit trolls to block any real discussion. Greg is basically a one-man-army himself at this point.
I don't know what it was when they forked, but it should have been the same size.
The people you accuse of hijacking Bitcoin seem to have a much higher transaction rate since the fork than the Bitcoin Cash team has achieved.
I think what we actually want is the ability for us normal people to invest in private companies more easily, rather than for private companies to become public more easily. This is difficult partially due to the SEC and partially due to historic reasons for how private equity is generally allocated and traded, but I'm hoping it gets better some time.
But I share the sentiment, I'm continually disappointed when there's a company I really want to invest in, but I know that I won't get a chance to buy it until 5 years later when it has already 100x'd and then just gets IPO dumped to retail, becoming more of a short-term casino (e.g. see all recent tech IPOs) instead of long-term bet placed intelligently early-on in the race.
If I could purchase shares in anything from Stripe to Discord to even Chik-fil-A (not to mention a certain 10 or so certain YC companies...), I would in a heartbeat (and I'd be willing to pay a premium for this too!), but the privilege likely won't be given to me until I no longer desire it.
And you do own shares in an SPV instead of owning the shares outright, but that’s a lot of what makes the lower minimums possible.
What ownership/distribution issues have you seen?
>I think what we actually want is the ability for us normal people to invest in private companies more easily
I think these two sentiments both make sense and are in tension with one another. A lot of the work of going public is putting the company into a state that outsiders can understand. Preparing a prospectus isn't just writing down what exists, it's ensuring that there are controls in place to check that expectations are being fulfilled.
An individual can decide that one or more of the requirements to go public aren't important to their particular investment strategy, but that choice involves a certain level of expertise about how public companies work v.s. how this particular private company works. So you're really suggesting that we should let individuals make their own choices about if the current circumstances of a private company make it suitable for investment. That's, as you said, a lot of work. We generally demand companies do that work before they can receive money from public markets. It's unfair, because it means wealthy individuals can get in early on companies, but the whole reason they can decide which companies to get into early is that their wealth gives them access to the resources to evaluate these companies. Allowing people to enter into investments they don't have the resources to evaluate is not going to, on average, help people build wealth.
Personally, I think we could have more "levels" of public-ness. But I'm also aware of the penny-stock scams of the recent decades and think that opening up private companies to early investment has all of the same problems.
If you think they will still grown, I'm sure the owners do as well. They don't benefit from selling at a lower price than they think they will eventually, unless they need the cash. But if they need the cash, getting it from a single source like a VC comes with many other benefits.
The only way it would work out for them is if 'going public' would give them significantly more money per share than a VC would. Which I guess may be possible
And SOX was born because of Enron. So blame Enron for this trend.
These regulations were created mostly in the name of protecting "mom-and-pop" investors, but the net effect has mostly been to shut "mom and pop" out of the most lucrative investments. This might or might now be a good thing, depending on how valuable you think it is to decrease variance for "unsophisticated" investors.
1) Indirectly: Find a publicly traded VC firm that owns a piece of the startup(s) you like, and invest in them. You'll benefit from the upside if those startups do well, and be buffered from the downside through the VC firm's diversification.
2) Directly: There's a few ways to invest through secondary markets. Sharepost & EquityZen provide some access in this area, possible others as well.
If you're interested in Coinbase in particular, EquityZen has you covered: https://equityzen.com/listings/?q=coinbase
Not at all, I just like to follow the industry. It's a fascinating time to be a spectator from the sidelines.
I'm perfectly happy with the "aggressive" setting on my retirement fund, paying 0.08% annual fee (that's $0.80 per $1,000) with an average return of 7%-10% over the last 20 years. I'll wind it down to less aggressive as I get older.
Apart from that, I have little trust in myself to, on average, make decisions that will outperform the above. My tolerance for risk of that sort is pretty low, and I'm not particularly motivated by money beyond the comfortable lifestyle I have now: It's zero debt, will see college tuition paid for my 3 kids, a reasonable retirement ready in a few more decades, and some assets to leave to my children to make their lives slightly easier when I ultimately pass away. I guess I'd like to have more money, but it's not a burning desire and I don't see a path to it that doesn't risk either quality of life, lots of stress, or both.
With the fed balance sheet growing and the current revenue multiples small-mid cap tech stocks are receiving, they should be able to raise substantially more money than previously expected.
It'll be interesting to see how much they expect to raise and of course their actual financials.
Balance sheet may be interesting too. Are they "invested" in any of the cryptos? Also, is the USDC on their balance sheet, and even if not (I'm guessing not) does USDC carry (in any shape or form) Coinbase's credit risk? Finally it would be interesting to see if there are any ongoing regulatory/litigation threats that we haven't heard about yet.
And yes, rev growth, yada yada.
E.g. if I tell you "I know a secret" you still don't know what it is, even if you know it exists.
They started corporate development very early in their journey. Portfolio here: (https://ventures.coinbase.com/)
Trading crypto-securities or securities tokens requires completely redundant unnecessary infrastructure, being run by multiple firms registered with various regulators, and then lack liquidity as not only are the custody regulations unclear, FINRA is completely stonewalling any clarity or approvals, while the concept also lacks product market fit because nobody - market makers, investors - gives a crap about it, let alone the limited throughput of any mature enough settlement later.
There is no point in doing that when everyone else can just go anonymous and list directly on Uniswap in 30 seconds. It's just utterly silly trying to shoehorn a compliant offering into that mess.
Just because you can doesn't mean you should.
Does anyone else find that amusing?
When you realized that Silicon valley had became more about further allowing this kind of reckless financial bacchanal instead of creating actual problem solving businesses, were you equally as disappointed in the entire 'start up world' as I was?
As a Californian with roots in the Valley I think you've just encapsulated what I think went entirely wrong with the SV mentality in my lifetime, and why I think its probably best the mass exodus happens as it may have a chance to re-create itself as a hub of actual innovation instead of making it a hotbed of buzz word laden, horrible named companies with no real business model to speak of in order to get a seat at the trough of cheap hot money in the Market created by the State?
You know what they say, behind every joke is some shred of truth; but I don't dislike the startup scene per se, I do however detest what its morphed into these last 2 decades and how they conceal themselves as people wanting to 'make the World a better place' or act as 'disrupters' when in reality they are just playing the game that diverts funding away from actual solution based startups to the sexier sounding pointless and into their own pockets and they almost always have those qualities you listed with just the right connections to make it happen.
I didn't want funding for my startup in fintech which is why I preferred being out of the Bay area after one summer in Sunnyvale, as it meant losing control of operations and we were in uncharted territory that would eventually lead to a watershed moment in legislation; but being forced to listen to a few investor's meetings after listening to lobbyists and politicians hours earlier I quickly realized what a waste of talent and resources this system is. And how both systems have the same incentives misaligned and create the same end result: massive waste.
Coinbase is the the bane of the bitcoin ecosystem, in incompetence and shady practices. The only thing they haven't surpassed them is in lost coins, which still remains to be seen given how much they hold in custody for their customer base.
> Do you have $100M to invest? The rules are completely different for institutional investors and high-net-worth individuals.
Thanks YC for helping re-create the same BS that plagues the fiat World and its horrid corruption based on class and net-worth! Which is exactly what we sought to overthrow with Bitcoin. But... could we really expect any different when its founders are ex-Goldman Sachs?
Edit: Keep down voting, but its right there in the Genesis Block.