Going Public During a Bull Market
Coinbase, one of the largest cryptocurrency exchanges in the world, has been busy. Established in 2012, the company has expanded its initial offering of solely Bitcoin to many other cryptos, including BAT, XTZ, LINK, and OXT. The expanded coin/tokens offered and an increased interest in alternative investments may be factors in Coinbase’s decision to go public.
As we have previously reported, Coinbase is planning to offer its stocks in late 2020 or early 2021. The company has not listed with the SEC but rumored to be meeting with investment banks and law firms in preparation. While 2019 saw no official earnings release, Coinbase saw a possible $8 billion valuation in 2018.
Making its shares available now may be a smart move. Despite a sinking economy, the stock market has been surprisingly bullish. Due partly to the Federal Reserve’s monetary policies, people are putting money into the stock market and seeing strong returns. Some of this money could be funneled into Coinbase, further increasing the company’s value.
Enter the Secret Service
Perhaps in anticipation of its stock market listing, Coinbase has begun selling data to the Secret Service. This information will come from Coinbase Analytics, a branch of the company dealing with The crypto exchange agreed to provide analytics for four years, ending in 2024 for a price tag of $183,750.
According to the company, Coinbase Analytics does not include its clients’ data. Instead, the company sources “publicly available data” and “does not include any personally-identifiable information for anyone, regardless of whether or not they use Coinbase.” This information-focused part of Coinbase appears to be following in the footsteps of Chainalysis, a company on which we recently reported.
Tax Laws Makes US Unattractive
Unfortunately, this data sharing and unclear tax regulations may drive crypto investors out of the US. At a Unitize panel with other tax leaders, the Chief Tax Officer at Coinbase, Lawrence Zlatkin, explained his opinion on taxation and the cryptocurrency market. The consensus seems to be that confusion surrounding specific tax implications, including staking, creates a murky tax scenario. Put plainly, staking rewards users for holding specific cryptos like Tezos (XTZ) in internet-connected wallets. If the IRS decides to label staking rewards as taxable transactions, users may use their cryptocurrency in other countries not based in the US.
Other exchanges like Binance, which are based overseas, offer staking and rewards for holding cryptocurrency on their exchanges. If the US continues to lag in clear crypto tax regulations, more users may seek to transact elsewhere.