  What you need to know today in crypto and beyond April 14, 2021 Sponsored By:  If you were forwarded this newsletter and would like to receive it, sign up here.
Send feedback to daniel.kuhn@coindesk.com – we'd love to hear from you!
Today's must-reads Top Shelf  PEIRCE PROPOSAL: Securities and Exchange Commission Commissioner Hester Peirce has updated her proposal letting crypto startups sell tokens to fund their development efforts without falling foul of U.S. securities laws. The proposal gives startups a three-year grace period to develop a genuinely decentralized network and the update places greater requirements on companies to report their progress to the SEC.
STAFF PERK: Employees at Coinbase will share significantly in the projected listing windfall. Aside from formal stock options arrangements, all 1,700 staff will get a 100 share gift as the company goes public today. At a reference price of $250 per share, that equates to paper wealth of $25,000 each.
LIFTING BOATS: Coinbase's listing is pushing crypto-related stocks higher. MicroStrategy, which has led a trend of public companies investing in bitcoin, was up almost 20% over the last four days, while Riot Blockchain and Canaan, two bitcoin mining companies listed on NASDAQ, were also doing healthily. Binance's BNB token is also rising on the news.
NOT AN IPO: Despite being widely reported as an IPO, Coinbase's listing is actually not one. Noelle Acheson, CoinDesk's director of research, explains why the distinction matters.
– Ben Schiller
 Introducing Unlocked 101 at Consensus by CoinDesk 2021 New to crypto? Here's a crash course. Unlocked 101 is a free educational series of sessions designed to give you the tools to navigate crypto. Sessions will be hosted May 4–20 to prepare you for Consensus by CoinDesk 2021, our virtual big-tent event.
Overheard on CoinDesk TV Sound Bite  "Whatever competitive risks exist for Coinbase in the crypto space, I think they're going to run circles around the JPMorgans of the world." |
– Founder & CEO of Digital Currency Group (CoinDesk's parent firm) Barry Silbert, on CoinDesk TV's "First Mover."
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A message from CoinDesk
CoinDesk's Quarterly Review Webinar Series
The suits are here to stay, but retail isn't going away. While Q1 saw the emergence of retail investors as a market driver, crypto caught explosive interest through non-fungible tokens from investors, celebrities and the general public.
Every Monday at 11:30 a.m. ET, crypto analysts Noelle Acheson and Christine Kim will discuss the performance and milestones of bitcoin and ether compared to macro and other crypto assets, along with important developments in the emerging DeFi and NFT sectors.
Each episode in this four-part series will reference key findings from the latest CoinDesk Quarterly Review report and a live Q&A.
Sign up for CoinDesk's Quarterly Review Webinar Series, every Monday from April 12.
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What others are writing...
Off-Chain Signals
- Ripple CTO David Schwartz: It's Time to 'Seriously Consider' Selling Some Crypto (if you've made a profit) (Decrypt)
- VanEck launches new ETF on Nasdaq to offer exposure to digital asset-focused companies (The Block)
- NYMag's Intelligencer on NFTs.
- Thoughts on "Token Safe Harbor 2.0" (Mirror)
- Axios interview with Coinbase COO Emilie Choi.
– Daniel Kuhn
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Investor Momentum to NFT Boom: CoinDesk Research's Quarterly Review
Introducing CoinDesk Research's quarterly review, covering the main developments over the first three months of 2021 in Bitcoin, Ethereum, DeFi, stablecoins and – of course – NFTs.
The report presents over 100 insights on how retail investors are picking up market momentum, how Ethereum activity is not being driven by NFTs as much as one might think, how stablecoins have responded to increased activity, how DeFi is for now the realm of decentralized exchanges and more.
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Putting the news in perspective
The Takeaway
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The Last Stock Listing That Matters
Coinbase going public today is the last stock listing that will ever matter.
That may not be true, but isn't it kind of odd that that sentence doesn't sound entirely off base?
Coinbase, the Silicon Valley-based cryptocurrency exchange, today plans to directly list 114,850,769 existing shares on Nasdaq. Its valuations range from $65 billion and $100 billion and beyond. That would make it more valuable than traditional exchanges like New York Stock Exchange parent Intercontinental Exchange and the exchange Coinbase's stock (COIN) will trade on.
The listing is a watershed moment for the cryptocurrency industry. Once shunned by financial giants, crypto is now marching inexorably to mass adoption bringing institutions along with it.
Coinbase's pitch to potential investors is largely that of crypto itself: That decentralized, open financial technologies will disrupt the way we do business. Founded in 2012, Coinbase's mission has been to make crypto trading as easy as sending an email.
By most accounts, it's succeeded. The second-largest exchange by trading volume, according to CoinMarketCap, Coinbase boasts 56 million users globally and $223 billion assets on its platform. It's garnered over $3.4 billion in total revenue since its inception. What started out as merely an onramp has grown into what some call a crypto-native bank.
The road here has been bumpy. Coinbase reports that 95% of its revenue comes from trading fees. In times of market exuberance, the exchange is remarkably profitable. With BTC and ETH rising to all-time highs, Coinbase reported revenues of $1.8 billion in Q1, more than double what it saw throughout 2020.
There have also been lean times; the exchange ran a $45 million deficit in 2019. Other years, it made existential decisions. The unpredictability of the crypto markets is one of the many risks Coinbase cited in its going-public prospectus – along with the reemergence of Bitcoin creator Satoshi Nakamoto.
Apart from an industry downturn, skeptics think Coinbase might find itself in a race-towards-the-bottom scenario related to its core business. Right now, Coinbase charges a significant premium for trading on its platform – attributed to its status as a regulated, and historically-secure exchange.
As Fortune noted, even though volumes on Nasdaq and ICE far exceed those on Coinbase, the crypto exchange's margins are about 50 times higher. But as other exchanges enter the fray or look to compete – be they centralized competitors like Binance or decentralized protocols like Uniswap – Coinbase could be forced to reduce fees.
Stock research firm New Constructs compared the situation to what happened to brokerage fees when Robinhood entered the picture. "The firm's competitive position will inevitably deteriorate," the researchers wrote.
Still, Coinbase's central position to an industry that is reshaping the world means it's not going anyway. Institutions that are unable or unwilling to buy cryptocurrencies directly may view the exchange's stock as a way to gain exposure to the sector.
Crypto itself is just beginning. Coinbase is just the first major crypto firm to go public in the U.S. There will be many more. Wallets, custodians, payments firms are building a new digital-first financial system that are out-disrupting the disruptors.
Fintechs are still media darlings, but their attachment to the legacy system that crypto is eating may be their demise. Yesterday, the WSJ reported Stripe had a banner pandemic year. It's now reportedly valued at $95 billion. But will its public offering generate as much buzz as Coinbase's?
– D.K.
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