Your Cryptocurrency Newsletter for 12 August, 2020

If you are interested in cryptocurrencies, this newsletter is for you. [img]  [Learn more about RevenueStripe...](   [Learn more about RevenueStripe...]( [img]( [FeedBinary Newsletter]( [INSIGHT: Coinbase Could Become First-Ever Public U.S. Crypto Exchange]( Global cryptocurrency platform Coinbase is reportedly in talks with investment banks and law firms about going public, says Louis Lehot, founder of L2 Counsel. This would lend legitimacy to other companies building the cryptocurrency ecosystem and potentially pave the way for future IPOs. It’s considering using a direct listing, which is gaining in popularity, as private companies become less dependent on IPOs as a fundraising mechanism. Rumor has it Coinbase could be the first major player in the U.S. cryptocurrency industry to go public, and using the mechanism of a direct listing, instead of a traditional initial public offering. Popular American-based cryptocurrency trading platform Coinbase has rumored plans to pursue a public debut later this year, or early next year—making the company the latest mega-startup to approach the public markets. The company has not yet officially announced its plans to go public, but has reportedly been in talks with investment banks and has spoken with law firms, which would mark a significant milestone for the crypto market. Founded in 2012, Coinbase is one of—if not the—most well-known cryptocurrency platforms globally, with over 35 million users who trade virtual coins, including bitcoin, ethereum, and XRP. The New York Stock Exchange, BBVA, and former Citigroup Inc. CEO Vikram Pandit are among the San Francisco-based company’s many investors. Additionally, back in 2017, it was one of the top beneficiaries of the bitcoin BTC=BTSP boom, when the original cryptocurrency jumped from $1,000 to almost $20,000. For the last several years, cryptocurrency exchanges and related businesses have been in limbo in the U.S., as traditional banks have shunned the industry, and the Securities and Exchange Commission has issued regulatory guidance that many digital coins are securities, following up with enforcement actions when offerings of securities proceed without complying with securities regulations. A new stock market listing for Coinbase would lend legitimacy to other companies building the cryptocurrency ecosystem, and potentially pave the way for future IPOs. Direct Listing Might Be Pursued According to Reuters, Coinbase may pursue a direct listing for its shares, instead of a traditional initial public offering. A direct listing enables a company’s existing shares of common stock to trade publicly on a national securities exchange without formally pricing a new block of equity through underwriters following a traditional book-building process. In recent years, direct listings have become much more popular to achieve efficient pricing, as private companies became less dependent on IPOs as a fundraising mechanism. Driving this move to direct listings, some of Silicon Valley’s most elite entrepreneurs and venture capitalists have become disenchanted with the underpricing of IPOs, which sometimes force companies going public to leave tens or hundreds of millions of dollars on the table. This is because the customers of underwriters of traditional IPOs expect the IPO price to be discounted to true valuation to enable a first day bump in the post-IPO closing price of 20% or more. Today, Coinbase is archetypal for the sort of company that might consider a direct listing: it is wealthy, having raised over $500 million during its time as a private company, and has a significant brand and following. Coinbase’s most recent private financing of $300 million valued it at $8 billion, according to data published by Crunchbase. The direct listing process, contrary to the traditional book-building IPO, involves existing shareholders of a startup selling secondary shares to the public directly over a national securities exchange, instead of the issuer working with Wall Street underwriters to issue new blocks of shares, and those underwriters selling them on to their preferred accounts. Like other recent businesses that have pursued a direct listing, including Spotify and Slack, Coinbase has a similar profile, with a high valuation, significant cash reserves and a substantial customer following and brand. SEC Blessing Needed Coinbase co-founder Fred Ehrsam recently said the company is “spiritually” built to go public through a token offering, and many of its employees would be disappointed if it pursues a typical Wall Street IPO. However, any blockchain offering, even a hybrid one, would depend on the blessing of the SEC. And, that could perhaps be a hard bargain given the SEC’s recent enforcement actions against Telegram and other token issuers. The term “Coinbase effect” describes the price boost many cryptocurrencies have had as a result of being listed on Coinbase, which often occurs because Coinbase is the primary gateway to crypto for many buyers. So, given Coinbase’s status in the crypto industry, a successful IPO could create a ripple effect that boosts the price of Bitcoin, Ethereum, and others. On the other hand, if Coinbase fails, crypto prices could plummet dramatically. Additionally, Coinbase may take into account the state of the broader cryptocurrency market in deciding when to go public—as cryptocurrencies are known to be volatile, and prices and trading activities have been in a slump. Historically, Coinbase’s financial past has been opaque, with media reporting its 2017 revenue at around $1 billion, boosted by that year’s crypto-mania. In 2018, how Coinbase performed is less clear, although media reports described its diminishing performance alongside that of the currencies that it trades. The company’s S-1 filing will provide insight into the company’s historical financial performance, allowing the public to see how Coinbase fared during various crypto-booms and busts. Since being founded in 2012, Coinbase has raised a total of $547 million. In October 2018, its Series E round valued the company at $8 billion. As new companies like Compound and Kyber continue to use innovative methods to provide ownership of platforms to users, a direct listing could be a cost-efficient way for Coinbase to give users access to company shares. With public markets at an all-time high and valuations for tech stocks out-performing the broader indeces, it’s not surprising that valuable unicorns are getting ready for a run on the public markets. [Read Full Newsletter Here]( The post [INSIGHT: Coinbase Could Become First-Ever Public U.S. Crypto Exchange]( appeared first on [Feed Binary](. [Read Full Story]( ------------------ [Russia Backs Away From Total Cryptocurrency Ban]( Russia recently signed a new cryptocurrency law that while stopping short of the previous ban on cryptocurrencies, still imposed stringent restrictions on its use in as form of monetary currency. This followed an earlier regulatory filing that essentially associated any activities involving cryptocurrencies as criminal, and placed them under the lens of anti-money laundering regulations. Starting January 1st, 2021, cryptocurrencies will be allowed in Russia, though they will not be allowed to be used in exchange for any goods or services. There may be more regulation coming in upcoming sessions, but as of now, it seems that Russians can mine, trade cryptocurrencies for other cryptocurrencies on exchanges, and own cryptocurrencies without any legal issues — so long as they don’t spend it on other goods and services within the domestic economy. Russian banks will be allowed to open up cryptocurrency exchanges under the supervision of the central bank — and new digital currencies can be issued, but only again, under the control of the central bank. This represents a more liberal attitude than what some had predicted would be a near-total ban on cryptocurrency activity in Russia, and shows a more pragmatic attitude towards cryptocurrencies and their adoption in Russia. The story of the legislation surrounding Russia’s attitude to cryptocurrency is nuanced, but follows some common themes. Cryptocurrency is portrayed as “criminal” while blockchain is seen in a neutral-to-positive light. This echoes the Chinese state’s view on the binary nature between what are essentially two sides of the same coin: the blockchain, a public ledger upon which cryptocurrencies are built upon that is seen as an essential yet centralizing force to help governments accelerate the benefits of digitization — and cryptocurrencies, which are regarded as eroding domestic power and currency. Indeed, one of the strongest opponents of cryptocurrencies in Russia has been the central bank, which in September 2017, issued a letter warning of criminal acts associated with cryptocurrencies. This followed a 2014 letter where the central bank warned that cryptocurrencies could be used for money laundering and to support terrorism. The central bank came out and said that cryptocurrencies were more like gambling than any kind of investment recently and said that the government should do nothing to encourage citizens to use cryptocurrencies. In the background are Russia’s stringent new Internet regulations, Russia’s Sovereign Internet Bill. Russia’s Internet censor, and even satellite Internet providers are required to use ground relays that are regulated by the Russian state. In this way, Russia’s digital tools allow for a total surveillance state of digital activity. The new cryptocurrencies regulation borrows from a similar approach — a strong centralized government institution (in this case, the Bank of Russia) through which all transactions flow, and a begrudging acceptance of the pragmatic reality that many Russian citizens have adopted and used cryptocurrencies, from the dramatic rise of Russia-hosted ICOs, to Russia-based social media network VK considering its own cryptocurrency. In many ways, the story of cryptocurrencies follows some themes of Telegram overcoming censorship through popular adoption. Eventually, government officials started using Telegram to transmit messages themselves, and while Roscomnadzor set up multiple IP blocks — Telegram engineers worked around the clock to ensure that security, privacy and uptime were as guaranteed as possible under the circumstances. Finally, the Russian government bowed to the inevitable and used Telegram to transmit critical health information during the COVID-19 pandemic. Similarly, cryptocurrency protocols are built to be as resilient and are incentivized to be usable for many local contexts despite its global focus. Attempts to censor or control the flow of cryptocurrencies will be countered somewhat by their popular adoption and also by government projects seeking to use adjacent blockchain ideas to digitize and scale their control. It’s a bottoms-up way of articulating democratic principles in technology choices, which forces top-down approaches to moderate. This may just be another case of this. As cryptocurrency adoption continues proliferating in Russia, it seems to have stopped the decree of a total ban — for now. [Read Full Newsletter]( The post [Russia Backs Away From Total Cryptocurrency Ban]( appeared first on [Feed Binary](. [Read Full Story]( ------------------ [How Much Ether Is Out There? Ethereum Developers Create New Scripts for Self-Verification]( Ethereum and Bitcoin advocates have engaged in spirited Twitter exchange since Friday to answer an ostensibly simple question: What’s the total supply of ether? It’s not quite clear where the question originated. But providing one agreed-upon value for Ethereum’s native currency, ether (ETH), proved contentious enough to warrant new code. “Adding a proper total supply command to the client seems like a low-cost and reasonable thing to do,” said Ethereum co-founder Vitalik Buterin in the Ethereum R&D Discord channel last Friday Multiple independent developers jumped on the opportunity to set the “world computer’s” supply schedule straight. The coin supply brouhaha takes place in the context of Bitcoin’s more-easily verifiable coin supply, Due to its distinct design features, Ethereum lacked such a command, hence the impetus behind independent developers writing code to calculate its supply. The total supply of ether is 111,562,994 as of publishing time, according to Messari. Ether, bitcoin and verifiability The verifiability of assets is both a strong and novel feature of blockchains. Only rough supply counts exist for other assets such as gold or dollars. The supply of a given cryptocurrency, on the other hand, can be parsed down to the exact unit. This is valuable for modeling or auditing, among other reasons. Bitcoin proponents – notably Kraken developer Pierre Rochard – recently pointed out that Ethereum had no simple method for verifying the supply of its native unit. Bitcoin’s value and perception as “digital gold” emphasizes its supply characteristics – namely scarcity – moreso than Ethereum, which aims to serve as a developer platform for decentralized financial applications. Beyond simply running the numbers, however, an additional concern voiced after the fact was the difficulty of running a full Ethereum node. Users who run their own nodes can “self-verify” not only the number of ethers in existence but also the validity of transactions on the Ethereum network. Self-verification is a popular social concept, as well as an ethical touchstone, for Bitcoin proponents. The argument mainly relies on the ease of bootstrapping a Bitcoin node. Running an Ethereum node, on the other hand, is a much more time- and memory-intensive undertaking, one that’s led to the emergence of a small class of infrastructure service providers. Third-party scripts As attention paid to the supply discussion on Twitter grew, Ethereum developers started building scripts to calculate the supply. Developers were quick to note that many data sites posted wrong figures because of faulty modeling of coin issuance. [Read Full Newsletter]( The post [How Much Ether Is Out There? Ethereum Developers Create New Scripts for Self-Verification]( appeared first on [Feed Binary](. 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