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coinbase The company on Thursday announced new products that allow customers to provide price exposure to private companies before they go public, starting with a perpetual futures contract tied to SpaceX (better known as a “purp”).
Pre-IPO Perps allow traders to speculate on the value of private companies without owning any shares. Coinbase’s first product is SpaceX Pre-IPO Perp, a USDC stablecoin-settled derivative that tracks the private market valuation of Elon Musk’s space company. This product is only available to traders outside the United States
The announcement comes amid growing demand from retail investors seeking exposure to high-profile private companies before they enter the public markets, as companies continue to go private for an extended period of time. This opportunity has historically been limited to venture capital firms, private equity funds, and accredited investors.
“Access to high-conviction uncorrelated exposure has never been more valuable for traders,” said Coinbase Head of Derivatives Liz Martin. “We built the most trusted platform for cryptocurrency trading, and now we’re applying those same rails to price exposure to some of the world’s most exciting private companies before they hit public exchanges. This is a new asset class built for this market era.”
Binance, the world’s largest cryptocurrency exchange, also entered the pre-IPO PERP market along with SpaceX last month.
The launch also comes against the backdrop of weak crypto prices, which hit new lows this week. Bitcoin price on Thursday fell to $61,340.71, its lowest since February 6th. The pre-IPO benefit gave Coinbase the means to extend its vision of an “Everything Exchange” that always offers users what they want to trade, even when spot prices are under pressure. The idea is that diversifying its trading services will allow the company to continue generating revenue even if spot cryptocurrency trading slows.
Perps are a type of futures contract that allows investors to speculate on the price of an asset with no expiration date and with leverage, without owning the underlying asset. According to CoinGecko, these are one of the most popular ways to trade cryptocurrencies, accounting for over 70% of all trading volume on centralized global crypto exchanges.
According to Coinbase, when SpaceX goes public (expected next week), pre-IPO perpetual futures will be converted to regular perpetual futures on SpaceX.
A criminal land grab is underway after the Commodity Futures Trading Commission, the US derivatives regulator, approved the first regulated US-listed criminal for Kalsi last week.
Coinbase says SpaceX is the first in a planned pipeline of pre-IPO deals covering hot areas such as AI, energy and space.
