US cryptocurrency exchange Coinbase listed on the Nasdaq stock exchange last week, sparking another rally in cryptocurrency prices worldwide. Mint explains the significance of the listing, how it could change perceptions, and what it means for the industry in India.
Why is the Coinbase IPO important?
Coinbase, founded in 2012, is said to be the world’s largest cryptocurrency exchange as far as converting cryptocurrency to regular currency is concerned. The company started trading on the Nasdaq on 14 April at a valuation of almost $100 billion. The public listing is expected to boost the credibility of crypto trading and traders, who have faced pushback from governments all over the world, including in India. Publicly listed companies are subject to certain regulations and disclosures, increasing trust in what they do, and the sectors where they operate.
How did the industry react to its listing?
Prices of cryptocurrencies like bitcoin and ethereum, which have been climbing steadily in the last year, hit new records as Coinbase went public. Bitcoin hit a record $63,000 (approximately ₹46 lakh) ahead of Coinbase’s listing, and was around the same level at the time of writing. Some say the Coinbase listing will be like a Netscape moment for cryptocurrencies worldwide, which sparked the dotcom boom back in the early 1990s. Even so, cryptocurrency prices before and after the listing do not tell the whole story. Many crypto enthusiasts were disappointed with the Coinbase listing.
Why are some crypto enthusiasts disappointed?
Many see the listing as a fundamental move away from the original promise of cryptocurrencies—that of putting the public back in control of money. While the listing lends legitimacy to the industry, it also brings crypto investors into the purview of regulations. This, for many, negates what cryptocurrencies and blockchain systems were meant for.
What does it mean for the industry in India?
India is expected to putting a complete ban on cryptocurrencies. The listing gives India’s crypto industry another point to add in the representations they have been making to the government, to reconsider its ban. As recently as March, Coinbase selected Hyderabad to set up its physical offices in India, and is expected to create technology jobs in the country. Crypto investors in India have invested billions in crypto assets over the past few months alone, and Coinbase’s IPO will give them more confidence.
What is India’s stance on cryptocurrencies?
The Indian government was expected to introduce a bill in the recently concluded Parliament session, banning all crypto dealings in the country. The Reserve Bank of India (RBI) had also restricted banks from dealing with crypto companies back in 2018, a ruling that was struck down by the Supreme Court last year. Finance minister Nirmala Sitharaman has said, in the past few months, that the government is considering a “calibrated approach” to cryptocurrencies in India.