UPDATE: April 14, 2021: When trading in the shares of Coinbase opened just before 1:30 p.m. EST, their price surged higher from the $250 per-share reference rate set by Nasdaq to touch $429.54 before drifting down to a low of $310 and eventually settling at $328.28 at the 4 p.m. close. It operates the biggest bitcoin exchange in the U.S. and was the first major cryptocurrency exchange to go public in the U.S., according to the Wall Street Journal.

That gave the cryptocurrency exchange company a valuation of about $112 billion at the stock's high, before shares declined to yield a valuation of about $85 billion at the closing on a fully diluted basis, which includes restricted shares and unvested stock options.

Coinbase listed class A shares in this first-time offering, though it also has class B shares outstanding that are identical, with the exception that the B shares have more voting power that allow their holders to control the company.

Dive Brief:

• The $65 billion market valuation for cryptocurrency exchange Coinbase was based on a $250 reference price for the new shares set by Nasdaq last night. Trading of the new stock on Nasdaq was slow to get started this morning, but that's not uncommon for companies like Coinbase, that choose to list their shares in a direct listing, as opposed to a traditional initial public offering, according to a Coindesk report. 

• The surge in value follows a press release from the company earlier this month that it expects first-quarter profit will outstrip what it earned for all of last year, underscoring the growing allure of Coinbase as a venue for trading and valuing cryptocurrencies. The company expects first-quarter net income of between $730 million and $800 million, based on trading fee revenue, but also due to the rising value of cryptocurrencies such as bitcoin. Last year, Coinbase posted net income of $322.3 million for the whole year, according to a filing with the Securities and Exchange Commission (SEC) in advance of today's offering.

• Coinbase's expected $1.8 billion in first-quarter revenue is more than half the approximately $3.4 billion it collected in the eight years since it was founded in 2012 through last year, according to the SEC filing.

Dive Insight:

Coinbase's financial results and valuation attest to the viability of cryptocurrencies as an emerging form of worldwide payment. For years, financial industry professionals have argued cryptocurrencies wouldn't last without acceptance from established financial institutions. Now, Coinbase has proven that can happen, with Wall Street titan Goldman Sachs shepherding its direct listing today and financial institutions increasingly using its trading platform.

The $65 billion valuation makes Coinbase worth more than the exchange that's taking it public, given Nasdaq's approximately $26 billion valuation, and it approaches the $69 billion valuation of New York Stock Exchange parent Intercontinental Exchange, which also operates a futures exchange, the Wall Street Journal noted. The Coinbase valuation, which is based on a fully diluted share basis, easily outstrips the $8 billion valuation it achieved after its most recent 2018 private capital fundraising.

Despite the delay in the start of trading this morning, Coinbase's new shares were expected by some to start trading even higher than the reference price, perhaps at $350 per share, according to CNBC.

A significant portion of the exchange's business has been from established financial institutions, according to Coinbase. It said in the regulatory filing that $122 billion of the $223 billion in assets currently held on its platform are assets held by institutions, as opposed to individual retail traders.

Coinbase has also attracted prominent venture capitalists as investors that now are profiting from the company's lofty valuation. Those investors include well-known firms such as New York-based Tiger Global Management; Menlo Park, California-based Andreessen Horowitz; and New York-based Union Square Ventures. The company is using the offering to provide those investors with an opportunity to sell their stock positions and isn't raising any new capital through the offering.

Demonstrating the rising demand for cryptocurrencies, the company projected that $335 billion in crypto assets were traded on its platform during the first quarter, racing past the $193 billion traded on it for all of 2020. Coinbase's trading fee income is based on the volume of cryptocurrencies traded as well as the value of the cryptocurrencies traded.

Bitcoin is by far the most heavily traded cryptocurrency on Coinbase's exchange, making up 41% of trading last year. Ethereum accounted for a lesser 15% with some 40-plus other cryptocurrencies making up the remaining portion, according to the SEC filing. The value of bitcoin skyrocketed over the past year, multiplying about nine-fold to a value today of $63,208 from just under $7,000 a year ago.

The company is led by Chairman, CEO and co-founder Brian Armstrong, a software engineer who also founded and was CEO of Universitytutor.com, an online tutoring subsidiary of Johnson Educational Technologies, according to the SEC filing. He also previously worked briefly for the online travel marketplace Airbnb as well as the auditing and consulting firm Deloitte & Touche.