As Coinbase is set to officially become a publicly traded company, applying to list their class A stock on the Nasdaq Global Select Market, the cryptocurrency exchange listed several business risks in their IPO filings, the most unique of which was Satoshi Nakamoto’s existence.
The identity of Satoshi Nakamoto may still be a mystery, however what we do know is that the individual, or group, holds a huge amount of bitcoins in a wallet, around 1.1 million – currently worth around $55 billion.
With such a large quantity of Bitcoin currently believed to be sitting in cold storage, should Satoshi ever be identified, and his bitcoins enter the market, it could have the potential to disrupt the market in a drastic way. At least that is what Coinbase claims in their IPO filings, presented to the Securities Exchange Commission (SEC) on Thursday.
“cryptoeconomy… may be adversely affected if the markets for bitcoin and Ethereum (ether) deteriorate or if their prices decline, including as a result of the following factors […] the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin, or the transfer of Satoshi’s bitcoins”
If the mere identification of Satoshi Nakamoto could be enough to rock the markets, the transfer of Nakamoto’s bitcoins could affect the price in a drastic manner. If Nakamoto should prove to be dead, however, the bitcoins would effectively be dormant, and inaccessible to anyone.
Apart from highlighting the identification of Nakamoto as a business risk factor, Coinbase also drew up various other business risks in their prospectus – one of which was the lack of characterisation of a crypto-asset in a jurisdiction.
“A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.”
Coinbase draws attention to the uncertainty surrounding the characterisation of a crypto asset, a key issue in crypto. The lack of regulation of this asset class has led to an uncertainty regarding their consideration as a financial instrument. The lack of clarity in the financial regulatory framework has the potential to not only be harmful to the financial health of exchanges such as Coinbase, but for the market as a whole.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.