Coinbase looking to improve credibility through $1.5 billion bond sale

Karthik Subramanian

Coinbase, one of the largest crypto exchanges in the world, is looking to raise $1.5 billion in a junk-bond sale and if it goes through, it will help to push the crypto ecosystem further towards the mainstream.

The exchange has recently been involved in a battle with the SEC over its lending products and its authorization but through the bond sale, the exchange would be looking to further enhance its status within the crypto world and outside as well. The bond has been rated as BB+ by the S&P global ratings and Ba1 by Moodys which is just below the investment grade and this has helped to spur a huge amount of interest in the bond sale. It is reported that it has received $2.4 billion in demand from various investors so far which gives us an idea of how valuable the bond is being viewed by the investors.

The crypto world has been seeking mainstream acceptance for a long and that has been lacking since its launch about a decade ago. But the industry has seen some fast-paced developments over the last couple of years and despite increased scrutiny from regulators like the SEC, we are seeing companies like Coinbase pushing through with their fundraises and with their mission of making crypto mainstream. Of course, there are others like Binance who continue to struggle with compliance and regulation but eventually, it is believed that all the crypto companies would come around to the idea of getting regulated just like how all the regulators seem to be getting around to the idea that it is easier to regulate crypto than trying to wish it away.

“We regard the company’s very low leverage, strong liquidity, a solid market share of crypto assets on its platform, and a strong track record of avoiding security breaches since inception as rating strengths,” S&P said in a statement on Monday. “These are balanced by its reliance on retail transaction revenue, elevated volatility in the asset class, and competitive risk in a nascent asset class.”

It may also be noted that Coinbase went public a few months ago and a successful bond sale would help to add more funds to its kitty which can be used for corporate and product development and also investing in new business as well as mergers and acquisitions in the future. This will help the company to take on the competition and also keep itself abreast of the fast-moving developments in the crypto space with investors ready to pour in funds to startups and other companies in this industry that continues to evolve and disrupt the financial ecosystem.

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