Coinbase Raises $300 Million, Citing Prospect of ‘Thousands’ of Crypto Assets
Coinbase, the most popular cryptocurrency exchange in the U.S., announced on Tuesday a massive Series E funding round that values the company at $8 billion.
The company announced the $300 million investment in a blog post, which said the financing is being led by New York-based Tiger Global, and will be used to accelerate global expansion and the offering of more cryptocurrencies.
“We see hundreds of cryptocurrencies that could be added to our platform today and we will lay the groundwork to support thousands in the future,” wrote Coinbase Chief Operating Officer Assif Hirji in the post.
Currently, Coinbase only offers Bitcoin and a handful of other cryptocurrencies, in part due to concerns that many digital currencies may be securities that must be registered with the Securities and Exchange Commission.
The latest funding round, which follows a $100 million round in August of 2017, is being led by New York-based Tiger Global with contributions from Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain Capital among others.
A source close to Coinbase told Fortune the company will also be bringing on other investors in the near future via a secondary offering worth $200 million or more. This offering would serve as a vehicle for some employees and early investors to cash in their shares, and would not change the overall amount of capital raised by Coinbase.
The Series E funding round also points to Coinbase possibly going public in 2019. While the company hasn’t discussed a specific timeline to go public, CEO Brian Armstrong recently stated he would like to run a public company.
In Search of New Revenue Streams
Coinbase appears profitable but has seen seemingly a sharp drop-off in trading volume in 2018, which has made it more pressing for the company to look for other sources of revenue.
One source of income is likely to be custodial fees from big institutions that turn to Coinbase to hold cryptocurrency on their behalf. The company has long talked about bringing on such investors, and last week announced a key regulatory license to serve as a custodian.
Another future source of revenue for Coinbase could come from listing so-called security tokens, including those tied to conventional assets such as private shares or real estate. The market for such tokens is still nascent but prominent technology figures, including former PayPal executive David Sacks, are betting on them as a way to bring new capital to illiquid markets.
Coinbase declined to provide further detail about Hirji’s reference to the possible addition of “hundreds” and “thousands” of cryptocurrencies to the company’s platforms, including whether these might comprise registered security tokens. It’s also possible Hirji’s comment implies that Coinbase plans to dramatically ramp up its cryptocurrency offerings in markets outside of the U.S. where security regulations are more lax.
The blog post also noted Coinbase will use the new funding round to support new products like a recently-announced “Stablecoin,” which is pegged to the U.S. dollar, and a tool called Coinbase Wallet that helps consumers explore blockchain-based applications.
“Coinbase is, and will remain, a crypto-first company,” stated Hirji. “We see Coinbase’s growth as validation that the ecosystem will only continue to grow in size, influence and impact—ultimately ushering in a more open financial system for the world.”
An earlier version of this story misstated the name of Tiger Global.