Subscribe to The Ledger for expert weekly analysis on fintech’s big stories, delivered free to your inbox.
Today Coinbase went public on the Nasdaq stock exchange. The ticker? “COIN.” The shares started trading just after lunchtime at $381, well above the reference price of $250.
The market debut represents a coming-of-age for Coinbase, one of the most significant players in the cryptocurrency industry. By dint of its outsized influence, America’s biggest cryptocurrency exchange represents a bellwether for the industry at large. The event is feeding and fueling excitement in virtual assets across the board, causing Bitcoin, Ethereum, and other crypto coins to pop to all-time highs.
Fortune caught up with Emilie Choi, Coinbase’s president and chief operating officer, ahead of the company’s market debut to discuss its implications. The former LinkedIn executive, who sits on the boards of Naspers and ZipRecruiter, noted that the cryptocurrency industry “is not for the faint of heart.”
The conversation ranged from the timing of Coinbase’s listing, to the amenability of the regulatory environment in the U.S., to the possibility that Google or Amazon could enter the cryptocurrency market. Choi also discussed the company’s controversial valuation and the likelihood of another investment-freezing “crypto winter.”
Coinbase’s listing marks the arrival of a once-niche mania colliding head on with the mainstream financial world. “This is the moment for crypto to shine,” Choi said.
Below is the transcript, lightly edited for concision and clarity.
Fortune: You couldn’t pick a better time to go public. Bitcoin is hitting all-time highs. I’m sure there’s something of a feedback loop there, the excitement around Coinbase listing is causing Bitcoin’s price to go up and vice versa. But it’s just impeccable timing.
Emilie Choi: These processes take quite a bit of time. As much as it feels like it’s perfect timing with the way Bitcoin is performing, it really was about just feeling like the company was ready. The management team is here. We’ve built the foundation. We have the business and technology that we think are going to scale. We have green shoots in place for subscription and services revenue that are showing nice signs of life, something we think is going to grow. We have the pillars in place.
Coinbase has lasted through many cycles and a lot of turnover in its ranks. What’s right about this team at this moment?
We’ve had some bumps in our history, as all companies do. But this is the exec team that has everything we wanted in terms of the complimentary nature of everybody’s skill sets, personalities, what we care about. We have a rhythm together. We felt like it was the right time and place to capitalize on the moment. More than anything, we feel like this is the moment for crypto to shine. In some ways, this direct listing is a way for us to capture the world’s attention in terms of bringing it to crypto.
Only a few companies have chosen to go the direct listing route. It’s a fairly new phenomenon. What is appealing about this over a traditional IPO?
The direct listing is so much in the style and ethos of crypto. It’s kind of this—don’t let any human hands get in the middle of it. It’s about math. It’s about letting the market decide what the right price should be, and don’t let anything interfere with that.
Will there be another crypto winter?
We don’t know if there’s going to be winters, summers, if it’s going to stabilize and become boring. I actually think of volatility as a feature, not a bug. It happens with all new technologies. If you look back to what happened in the early days of the Internet, there was lots of volatility, lots of high highs and low lows. These cycles have to work themselves out.
Anybody who wants to get into crypto, whether you’re an investor, whether you’re an employee, whatever, you should be thinking about the long term. It’s just not for the faint of heart otherwise.
Something about this moment really does feel different than past cycles though. I wonder whether we’ve hit a new floor. Do you?
These cycles go up and they go down. When they go down, they tend to hit new higher plateaus on those new lows. If you look at the short-term movements, it looks incredibly volatile. But if you look at the long-term movement, it’s kind of amazing. It smooths itself out.
But again, we just don’t know right? I’m sure there are parts of crypto that are overhyped. I’m sure there are parts of crypto that are underhyped. Sometimes it takes massive hype to get people into the space. You start getting incredible engineers and product folks and designers who think about how to make this more usable for a lot more people. This draws in more and more people, more employees, more people of interest and then, as you’ve seen, corporates and institutions.
A whole bunch of companies recently piled into crypto—Tesla, PayPal, Visa, and others. If you could pick one company you hope gets in the mix next, which one would it be?
Personally, I want to see more of the technology giants. I would like to see how they would support the crypto ecosystem. They have these huge user bases. The more that those folks support it, like the Amazons and Googles of the world, the better it is, I think, for all of us.
When I spoke with [Coinbase CEO] Brian [Armstrong] during the great crypto bull run of 2017, he told me he was concerned that the industry hadn’t earned the valuations it was receiving at that time. Cryptocurrencies were hitting like a half trillion dollars in total market valuation. Is there a sense that it is earned now?
I don’t want to ever say that we earned it because there is going to be centuries of technological progress that happens in crypto. But it, admittedly, feels different this time. It feels like there’s real legs to it.
There’s also a lot of hand wringing about whether the U.S. government is taking crypto seriously. What can it do to better encourage innovation?
Get really smart, really fast. Coinbase definitely has an obligation to help educate regulators and others. One of the cool things about our history is that Brian and Fred [Ehrsam, Coinbase’s cofounder and former president] leaned in early on, to focus on safety, security, and helping regulators understand these things. We want U.S. regulators to not to over-regulate and especially not to mis-regulate. That would be detrimental.
Some people have called out Coinbase’s valuation as being unreasonably high, noting that transaction fees—the bulk of its business—are likely to come down over time. How is the company preparing for that future?
[Our service] is not a commodity. If you’re storing your crypto with us, if you’re transacting with us, custody is embedded within that fee. I think that there’s a lot of kind of misinterpretation of what that fee is.
That said, we’re 100% invested in these different green shoots that I talked about—staking, earn, assets under custody fees, prime brokerage, all these other things that can drive the business forward in a more predictable way. We have a great business, and I think that if we look at any of the other models that exist out there, there’s hints of different things you can see. Look at Adobe’s transition to subscriptions over time. There’s a lot of things that we can think about and emulate if we have the right businesses in place.
More must-read finance coverage from Fortune:
- The mathematical improbability of Coinbase justifying a $100 billion valuation
- Credit Suisse recovers some assets linked to Greensill, but fate of $4.6 billion remains uncertain
- The price of lumber is up 193%—and about to spike even higher
- Home prices are up 16% over the past year. Is it time to sell or buy?
- Looming student loan forgiveness? A provision in the March stimulus bill could set the stage for debt cancellation