According to overseas media reports, U.S. cryptocurrency exchange Coinbase is currently raising a new round of $500 million in funding, with an overall valuation reaching $8 billion.
The investor for this round, Tiger Global, is a New York-based hedge fund with a 16-year history and $22 billion in assets under management. Tiger Global previously invested in India’s “Didi” Ola and India’s “Amazon” Flipkart, generating hundreds of millions of dollars in net profits.
If the fundraising succeeds, Coinbase is poised to become the world’s highest-valued cryptocurrency exchange and a major player in the blockchain industry.
The Making of a Blockchain “Unicorn”
Coinbase was founded in 2012 in San Francisco, USA, by former Airbnb engineer Brian Armstrong and former Goldman Sachs trader Fred Ehrsam.
Since its inception, Coinbase has attracted numerous prominent investors and venture capitalists: In 2013, Coinbase secured a $5 million investment from Union Square Ventures (USV); in December of the same year, it raised another $25 million jointly from USV, Ribbit Capital, and Andreessen Horowitz (A16Z).
In January 2015, Coinbase closed its Series C funding round at $75 million—the largest funding round in the blockchain industry to date. This round was led by Draper Fisher Jurvetson (DFJ), with participation from the New York Stock Exchange (NYSE), United Services Automobile Association (USAA), Banco Santander, Japan’s NTT Docomo, Valar Capital (founded by former Citigroup CEO Vikram Pandit), and former Thomson Reuters CEO Tom Glocer. The round reportedly valued Coinbase at $400 million.
On January 27, 2015, Coinbase officially launched the first U.S.-licensed cryptocurrency (Bitcoin) exchange—the first of its kind in the United States—and ranked #1 globally in trading volume that year.
In May 2016, Coinbase began offering services on its GDAX platform, including Ethereum trading.
In January 2017, the New York State Department of Financial Services (NYDFS) granted Coinbase a BitLicense, authorizing it to offer Bitcoin trading services; in March, Coinbase received additional authorization from NYDFS to offer Litecoin and Ethereum trading services in New York.
With Coinbase’s explosive growth, within just a few years, its exchange platform surpassed 20 million users—nearly matching Fidelity Investments and double the user base of Charles Schwab, a publicly listed NYSE company with over $67 billion in assets under management. However, in terms of total user asset value, Coinbase remains significantly smaller.
Currently, the majority of Coinbase’s investors remain retail users, while the company is actively pursuing institutional clients such as Goldman Sachs.
In August 2017, reports indicated that venture capital firms had valued Coinbase at $1.6 billion, cementing its status as a “unicorn” in the cryptocurrency space. Subsequently, as Bitcoin’s price surged, Coinbase generated over $1 billion in annual revenue, further boosting its valuation.
Coinbase’s influence on the cryptocurrency market is profound—not only due to its position as the largest U.S. exchange but also because it operates under legitimate regulatory licenses in the United States.
On June 6, 2018, Coinbase announced plans to become a U.S. government-regulated cryptocurrency trading platform, pending approval from federal authorities. Once approved, it will be authorized to provide cryptocurrency trading services under the supervision of the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
For cryptocurrencies—a novel asset class—security is undoubtedly paramount. To minimize the risk of catastrophic data breaches, Coinbase stores approximately 98% of customer assets in offline, air-gapped “cold wallets,” while the remainder serves as liquidity for trading operations.
Additionally, Coinbase has purchased insurance from Aon—the world’s largest insurance services firm—to cover Bitcoin theft resulting from physical or network-layer intrusions into its storage servers, further reducing risks for users trading on the platform.
Becoming the “Google of Crypto”
Within the cryptocurrency space, Coinbase aims to become the “Google of crypto”—building a transparent, open financial system for the world.
To diversify beyond digital-asset trading, Coinbase has intensified its acquisition efforts since 2018.
On April 13, Coinbase announced the acquisition of Cipher, an Ethereum wallet browser. On April 16, Coinbase announced its acquisition of Earn.com (formerly 21.co) for $100 million. Earn helps users earn cryptocurrency by forwarding emails or completing tasks. Per reports, Earn’s founders and investors will receive equity in Coinbase as part of the agreement.
In June, Coinbase acquired securities dealer Keystone Capital, Venovate Marketplace, and Digital Wealth LLC to become a fully regulated cryptocurrency exchange under both the SEC and FINRA. Through these acquisitions, Coinbase obtained an Alternative Trading System (ATS) license and a Registered Investment Advisor (RIA) license.
On August 15, Coinbase announced it had acquired DistributedSystems, a startup headquartered in San Francisco. DistributedSystems will help Coinbase integrate new identity verification methods into its initiative to build an open financial system.
Analysts believe Coinbase’s acquisition strategy aims to accelerate technological advancement by acquiring both innovative products and top-tier talent—ultimately transforming Coinbase into a one-stop platform for a decentralized, open financial system that delivers cryptocurrency trading services to users worldwide.
Recently, Coinbase announced updates to three features: “Coinbase Bundle,” offering weighted bundled trading across five cryptocurrencies; “Informational Asset Pages,” providing asset information on the top 50 cryptocurrencies by market cap; and “Coinbase Learn,” designed to answer users’ fundamental questions. These features simplify the cryptocurrency investment process while delivering more investment-related information to customers.
Compared to Binance—which offers nearly 400 trading pairs—Coinbase currently lists only a handful of major cryptocurrencies, including BTC, BCH, ETH, ETC, and LTC.
Nonetheless, Coinbase is now actively expanding its listing services for new tokens—and may introduce listing fees. New tokens will be evaluated across six criteria: legal and regulatory compliance, technology, market supply, market demand, crypto-economic model, and alignment with Coinbase’s mission and values.
Global Expansion and Next Step: IPO?
Coinbase has consistently pursued growth. After establishing leadership domestically in the U.S., it expanded overseas—launching Bitcoin trading services in over a dozen European countries, establishing a Bitcoin exchange in the UK, and planning further entry into Asian and Latin American markets.
Additionally, Coinbase has actively pursued external partnerships—not only with well-known corporations such as Dell, Expedia, and Overstock, but also increasingly with financial institutions.
As early as May 2017, Skandiabanken—the largest online bank in Norway—announced integration between its online banking platform and Bitcoin accounts, enabling users to directly log into Coinbase via the bank’s website to view their digital asset holdings.
On March 6, 2018, Coinbase launched its first index fund, entering the asset management industry.
Coinbase’s envisioned future roadmap includes: lending (mortgage loans, small business loans, microloans, etc.), venture capital (seed investments, traditional VC, venture debt, etc.), investing (stocks, index funds, savings accounts, etc.), identity & reputation (ID issuance, identity verification, credit scoring, etc.), remittances (cross-border transfers), and merchant processing (retail, online orders), among others.
With its latest funding round valuing the company at $8 billion, some industry observers anticipate Coinbase will no longer seek public fundraising—making this round likely its final private financing before an IPO.
Given Coinbase’s consistent commitment to regulatory compliance, an IPO is widely anticipated.
As Brian Armstrong, Founder and CEO of cryptocurrency exchange Coinbase, stated: “Coinbase has been profitable for a long time, and we aim to operate as a publicly traded company following our IPO.”