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Coinbase and the future of IPOs

May 13, 2020, 3:00 PM UTC

This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to get it free in your inbox.

JPMorgan Chase CEO Jamie Dimon might be Bitcoin’s most famous foe. Over the years, he’s decried it as “a fraud,” “worse than tulip bulbs” and more. That’s why it was remarkable to read this week that Dimon’s bank is taking on two big cryptocurrency companies, Coinbase and Gemini, as customers.

This is a major milestone for the cryptocurrency industry since major banks have long shunned crypto companies, treating them as too risky to be trusted. But now, crypto firms—and by extension Bitcoin—have received an implicit stamp of approval from the financial lords of Wall Street.

The JPMorgan tie-up also raises interesting questions about Coinbase’s plans to go public. I heard rumors in January that the San Francisco crypto giant planned to announce an IPO as early as this year. But like summer vacations and so much else, most companies’ plans to go public are on hold as the world waits out the pandemic.

When the time does comes for Coinbase, which was valued at $8 billion in late 2019, to tap the public markets, the major question will be what form that IPO will take—will some new shareholders receive a blockchain-based token? Or will the offering be just another garden variety NASDAQ listing?

“That would be really boring wouldn’t it?” Coinbase co-founder Fred Ehrsam told me in an interview at Consensus this week. “Coinbase should constantly challenge itself to be as crypto native as possible. If we think the future is all assets exist on the blockchain, why should this be any different?”

Ehrsam qualified his remark by saying that it’s impossible right now to say how or when Coinbase will go public. But clearly an unconventional, blockchain-based IPO has been on his mind.

This would be fitting, and not only because Coinbase is a crypto-first company. In the wake of the 2008 financial crisis, digital payments and new types of finance took a big leap forward. It feels inevitable a similar phenomenon will occur in U.S. capital markets once the pandemic passes. All of a sudden, it doesn’t seem so strange to think JPMorgan could underwrite a blockchain-based shares offering in 2022. What do you think? As usual, we’d love to hear from Ledger readers about what the future of IPOs and finance will look like.

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Finally, if you want to learn more about Coinbase and blockchain, the audio version of my book Kings of Crypto is available on Amazon Audible. It’s chock full of gossip and unreported stories, including about Coinbase’s collisions with Apple and Silicon Valley Bank—and a secret meeting between Dimon and Coinbase CEO Brian Armstrong. If you prefer print, the hardcover will be released by Harvard Business Review Press later this year (you can pre-order here).

Jeff John Roberts

@jeffjohnroberts

jeff.roberts@fortune.com

DECENTRALIZED NEWS

Credits

Hedge fund pioneer Paul Tudor Jones bets on Bitcoin ... Vise raises $14.5 million from Sequoia to join AI with human financial advice ... An Amazon for Animal Crossing takes off ... MakerDAO fully transitions to multi-collateral backing for its stablecoin ... Member's Exchange raises $65 million from BlackRock, Wells Fargo ... Startup Carta plans exchange to compete with Nasdaq ... There are more Bitcoin analogues on Ethereum than on the Lightning Network ... Samsung to launch debit card with SoFi ... Excellent journalist Jeff John Roberts tells the story of Coinbase in a new book.

Debits

Bitcoin dips after 'the halving' ... White House relief ideas include early Social Security withdrawals ... Arrested Dallas hairdresser launched GofundMe before reopening ... There are 133 known coronavirus-related scams (and counting) ... JPMorgan drops out of bidding for Personal Capital ... Tencent's gaming business is up, payments and ads down ... Bitcoin tracks Beyond Meat stock, for some reason.

BUBBLE-O-METER

100,000+

 The number of small businesses that have already closed as a result of pandemic lockdowns.

FOMO NO MO'

The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world ... Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US.

From "What Was TON And Why It Is Over," by Telegram CEO Pavel Durov. TON, or the Telegram Open Network, was to be a blockchain linked to the Telegram app and with its own Bitcoin-esque token, the Gram. Telegram raised $1.7 billion to build TON in 2017, near the height of the vogue for so-called Initial Coin Offerings. It has since battled the SEC over whether that sale, which qualified investors for Gram tokens, constituted an unregistered securities offering. Telegram appears to have decisively lost that fight, and Durov says the company will abandon development of the TON network. Regardless of the legal dimension, that's disappointing for anyone curious about the potential for a "next generation" blockchain connected to a truly popular application.

But Durov's broader point cuts deepest. Telegram is not based in the U.S., yet U.S. courts have enough power over the company to shut down a major project. That extraterritorial power hinges less on direct legal reach than on the desire of international banks to maintain good relationships with U.S. banks, who themselves face greater scrutiny under post-9/11 anti-money laundering laws. The result, in Durov's words, is a "vicious circle: you can’t bring more balance to an overly centralized world exactly because it’s so centralized."

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Why the stock market is up, even though all the economic data is down - Anne Sraders

Mastercard CEO Ajay Banga on stakeholder capitalism - Alan Murray

MEMES AND MUMBLES

The Bitcoin halving early this week was commemorated with a bleak but appropriate bookend. The New York Times headline about the U.S. Federal Reserve's liquidity efforts mirror another headline embedded in a data field of Bitcoin's first block: "Chancellor on brink of second bailout for banks." That bailout, of course, was in response to the 2008 financial crisis, which heavily influenced Bitcoin's launch and reception, as huge government spending fueled the idea that Bitcoin is a "hard money" hedge against runaway inflation.

This edition of The Ledger was curated by David Z. Morris. Contact him at david.morris@fortune.com.