the money game

Crypto’s Big, Billionaire-Making Day on Wall Street

Now publicly traded. Photo: John Angelillo/UPI/Shutterstock

In case anyone still needed convincing, cryptocurrency officially claimed its place on Wall Street Wednesday, as Coinbase, the largest U.S. crypto exchange, went public on the Nasdaq. The history-making offering made real American-dollar billionaires out of Silicon Valley executives who previously counted their wealth in digital currencies on a blockchain.

Brian Armstrong, Coinbase’s 38-year-old chief executive — who last fall made headlines when he responded to social-justice protests by declaring Coinbase an “apolitical” company — was, by the end of the day, worth more than $13 billion in his stock holdings alone.

It was certainly a told-you-so moment for Armstrong, who, after the close of trading, recalled on Twitter the trouble he went to in order to get the company off the ground nine years ago: “It’s hard to overstate how bad of an idea everyone thought Coinbase was,” he wrote. “Friends in tech said they didn’t get it or that it was a scam.”

Debuting at $250 a share on Wednesday afternoon, Coinbase’s stock had risen more than 31 percent, to $328 when the market closed. It was a solid first day, if not quite the skyrocketing triumph some market observers had predicted for the bitcoin trading company, with Wall Street forecasts calling for Coinbase to attain a market valuation of $100 billion — roughly the size of Goldman Sachs, by that measure. While Coinbase briefly achieved that milestone in its first few minutes on the market, with shares surging as high as about $430, it quickly fell back down. (By comparison, bitcoin itself held fairly steady at a bit more than $62,000.)

Coinbase is currently worth about $86 billion, which some market bears and crypto naysayers will say is far too much for a company that makes money off an asset as confounding and intangible as bitcoin. At that level, Coinbase is worth about the value of Twitter, Lyft, and GameStop combined, but less than the value of Zoom or Snap or Uber on their own.

Surely Coinbase’s early backers aren’t complaining. The company’s biggest investor, venture-capital firm Andreessen Horowitz, had a stake worth $9.7 billion by the end of the day. And shareholders further down the totem pole — a star-studded roster that includes NBA player Kevin Durant and the rapper Nas — invested when the company was valued at just $1.6 billion, giving them a more than 50-times return on their money.

The company, in typical unconventional fashion, joined the Nasdaq in a relatively unusual way — forgoing a traditional IPO in favor of a bank-circumventing “direct listing” on the Nasdaq, a new and trendy way of going public pioneered by Spotify and, later, Slack and Palantir. Still, the listing — making Coinbase the first U.S. crypto-only company to go public — marks a collision of digital currency with the mainstream world of finance, of which Coinbase is now undeniably a part.

But Coinbase gave a subtle nod to its roots in the vision of Satoshi Nakamoto, the pseudonymous founder of bitcoin: On the morning of the listing, Coinbase embedded a message, featuring a New York Times headline, into the bitcoin blockchain — just as Nakamoto did in bitcoin’s very first transaction. But while Nakamoto used a headline from that day’s paper, Coinbase chose one from more than a month ago — a possible commentary on Fed money printing that crypto enthusiasts generally oppose: “TNYTimes 10/Mar/2021 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill,” the message reads.

Crypto’s Big, Billionaire-Making Day on Wall Street