United States’ largest digital asset exchange Coinbase has announced plans to buy back a portion of its corporate $1 billion debt.
The repurchase plan will see the company buy up to $150 million of its bond which is expected to mature 2031 following positive earnings in the second quarter of the year amid regulatory pressure by the Securities and Exchange Commission (SEC).
According to a statement released by the exchange on Aug 7, the offer is valid until Sept 1, 2023, with Citigroup’s brokerage arm in charge of facilitating the repurchase as the company looks to reduce interest expenses.
The Nasdaq-listed exchange will initiate the buyback program at a premium across multiple tiers structured into time frames and volume.
According to data from Business Insider, the present bond unaffected price stands at 60 cents on the dollar.
Investors who offer their bonds before Aug 18 have been incentivized with $645 for every $1000 of bonds which equates to 64.5 cents to the dollar. In addition to this, the bondholders will be issued an early tender premium of $30.
Investors who opt to sell after Aug 18 but before Sept 1 will still be offered at a premium of $615 for every $1000 which stands at 61.5 cents to the dollar.
The decision has sparked debate over a change in the market’s outlook in the coming months after Coinbase posted positive financials compared to previous quarters.
The firm kept its net loss at $97 million in Q2 2023 against the huge $1.1 billion loss in Q2 2022 although its revenue recorded a 17% decline.
Can it ignite the bull market?
The crypto market has traded sideways for a couple of months although this year sparked a huge turnaround following terrible incidents of 2022 including the crash of Terra and the infamous implosion of FTX.
As institutional investors flood into the scene with a renewed push, the market will receive more liquidity needed to ramp up key sectors in decentralized finance (DeFi).
Institutional investors are looking to troop in on the back of a potential SEC approval of a spot Bitcoin (BTC) ETF in the United States.
The price of Bitcoin surged to $31,000 boosting other assets as multiple high-profile companies filed their applications to the SEC for a spot ETF.
A major factor that boosted the performance of Coinbase was its inclusion by top firms as a Surveillance Sharing Partner (SSA) in their applications for the spot BTC ETF.
“In Q2, we made further progress toward this bold goal, such as expanded access to derivatives products to customers outside the US, being selected by many leading asset managers to provide critical infrastructure underpinning their proposed spot Bitcoin exchange-traded funds (ETFs) products.”
While projections look set for a bullish market outlook, a major stumbling block remains the lack of regulatory clarity around digital assets in many jurisdictions.