Coinbase, the US crypto exchange that has become a household name in the crypto space, is set to make its stock market debut on Wednesday 14 April via a direct listing. We look at what this means for UK investors, including whether you can buy shares in Coinbase.
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What is Coinbase?
Coinbase is a leading cryptocurrency exchange that enables people to trade digital assets like Bitcoin.
The company was founded in 2012 by Brian Armstrong and Fred Ehrsam. It currently has over 56 million verified customers from 32 countries, including the UK.
Coinbase has become a very popular exchange among fans of crypto because of its simplicity, which often makes it the first option for beginners. It’s also very secure.
Ahead of the share listing, the company’s value currently stands at $91.5 billion (£67 billion).
How is Coinbase going public?
Coinbase’s listing comes in the wake of a very strong and bullish crypto market that has seen the likes of Bitcoin soar to all-time highs in just a few months.
At the moment, Bitcoin, the world’s most popular and famous digital asset, is trading at almost $61,000 (£41,000) from lows of $5,000 (£3,600) in March last year.
Coinbase will list on NASDAQ, the second-largest stock exchange in the world, that is particularly popular with tech companies.
The company will list via a direct listing rather than a traditional IPO. A direct listing lets companies issue stocks on a secondary market without an underwriter.
On the day of going public, founders, existing investors, promoters and even employees who hold shares in the company can simply start trading their shares to the public. There’s no issuance of new shares and the company does not raise any new capital.
Right now, we don’t know how many shares will be available for sale. We probably also won’t know the opening price until Wednesday.
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How can I buy shares in Coinbase?
You’ll be able to buy Coinbase shares the day they list. All you’ll need is a share dealing account from a broker who gives you access to stocks on NASDAQ.
Generally, many online brokerages in the UK allow investors to trade US shares. You can narrow down your choices using our comparison of top-rated share dealing accounts.
Simply log into your account, and search for Coinbase, or its ticker symbol ‘COIN’. Chose the number of shares you want to buy, place your order and that’s that!
Some brokerages will also let you buy Coinbase shares (and other overseas shares for that matter) within a stocks and shares ISA.
The primary benefit of investing via a stocks and shares ISA is that any increase in the value of your investment and income will not be subject to tax.
If this is your first time buying US shares, your brokerage might require you to fill in a W-8BEN form.
This is a form that helps certify your residency. The form could ensure that you only pay a 15% withholding tax on any dividends (or 0% if your shares are held within a self-invested personal pension, SIPP) as opposed to 30%.
Keep in mind, however, that tax rules can change and their effects on you will depend on your individual circumstances.
You will also incur a foreign exchange fee when trading US shares. That’s because your sterling needs to be converted to US dollars first.
You can avoid this by opening a US dollar currency account with your broker and using it to buy shares. Note that this is only allowed for a share dealing account and not an ISA.
Should I buy shares in Coinbase?
This is a decision you will have to make on your own.
As with any stock purchase, you stand to profit if Coinbase performs well over time. Or you could lose some or all of your investment if the business underperforms or fails entirely.
The main thing is to do your homework before you take the plunge.
Ensure that you’ve first researched the company’s history, its company-specific risks and those of the industry it’s in. Also consider how the investment fits with your personal long-term investment strategy.
As always, if you are not sure of the suitability of an investment for your own circumstances, consider seeking independent financial advice first.
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