A blog post by Coinbase’s CEO has raised a fury. Will it affect a potential IPO?

The Block | Frank Chaparro | Sep 29, 2020

Coinbase CEO Brian Armstrong - A blog post by Coinbase's CEO has raised a fury. Will it affect a potential IPO?Quick Take

  • Coinbase’s CEO Brian Armstrong blog post sent shockwaves throughout the tech community

  • Here’s how it could impact its upcoming IPO

Coinbase chief executive Brian Armstrong's doctrine on corporate activism may have ruffled feathers but it likely won't impede the firm's public market debut, according to several professionals in the initial public offering market.

In a blog post released Sunday, Armstrong explained his view that activism and politics should be kept out of the halls of the San Francisco-based exchange operator. Armstrong expressed his desire for Coinbase to be "laser focused" on its mission to build an open financial system while focusing "minimally" on "broader societal issues" and political causes.

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Armstrong's message was met with a cacophony of both support and opposition from the crypto world and beyond. Some praised the former Airbnb executive for attempting to cultivate an ideologically inclusive environment. Others argued that the tone of the piece was cold and out of touch.

The reactions of two former employees illustrate the dichotomy. Dan Romero, an early employee and former lead of the exchange's institutional business, said it was "inspiring" to see the firm "resolutely" pursue its mission. Meanwhile, Reuben Bramanathan, a former product manager, said that a narrow company focus shouldn't preclude Coinbase from "acknowledging the injustice and inequality that affects many current and future Coinbase users."

In any event, several former employees and executives in the digital asset market questioned whether the controversial blog post would have an impact on the company's upcoming public offering.

"I think it depends a lot on whether it keeps blowing up or the dust settles and people move on," said Casper Johansen, founder of crypto advisory firm The Spartan Group. He added: "I don’t think it’s something a potential institutional investor would go out of their way to point out or not take the roadshow meeting."

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Still, it could mean Coinbase might miss out on at least one big opportunity as a public company: the market for so-called Environmental, Social, and Governance (ESG) investments. This month ESG-tied funds, which are comprised of companies that take sustainability and social activism into account as well as profits, hit more than $250 billion as the Covid-19 pandemic continues to grip markets.

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