How Westpac (ASX:WBC) is set to cash in on Bitcoin

Westpac Banking Corp (ASX:WBC) could be about to make a killing from Bitcoin. But not in the way you might think. It instead involves Coinbase

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published April 8, 2021 10:02 am AEST

When mentioning Westpac Banking Corp (ASX: WBC), it probably doesn't conjure up images of Bitcoin (CRYPTO: BTC) trading. Westpac is Australia's oldest bank after all.

Yet Westpac looks set to benefit from Bitcoin and other cryptocurrencies very soon. Perhaps to the tune of $500 million, no less.

How? Well, it's complicated (and no, Westpac isn't about to sell bitcoins itself).

Westpac is one of the largest backers of a venture capital fund by the name of Reinventure – "Westpac's $150m venture capital fund committed to early stage ventures". The two businesses are heavily intertwined, with Westpac telling us that:

"[By] working with Reinventure, Westpac gains deep insight into technologies and business models that may drive new customer experiences and disrupt traditional financial services. The Reinventure portfolio companies gain access not just to Westpac capital, but may strategically benefit from Westpac resources and expertise to enable the company to scale more rapidly

One of Reinventure's early investments was a US company called Coinbase. Coinbase is now one of the largest cryptocurrency exchanges in the world. Coinbase tells us that Reinventure made an investment into Coinbase in 2015 during a Series C funding round. Well, it might be time to reap for Westpac.

asx share price reacting to bitcoin represented by hand placing bitcoin in gold piggy bank — Image source: Getty Images

Westpac set for a Bitcoin payday

According to Coinbase, the company is set to list on the US Nasdaq exchange. The listing will occur on April 14. Clearly, Coinbase doesn't believe in superstition because that's the same day the Titanic hit its iceberg. Its ticker code will be COIN for its Class A shares. As seems to be the norm these days, its Class B shares (which allow 20 votes per share) will not be publically traded and will remain with company insiders.

Coinbase has been chumming up the waters too. Just this morning, it released an earnings report for the 2021 calendar year. In this report, Coinbase reported 56 million verified users, trading volume of US$225 billion, revenue of US$1.8 billion and adjusted earnings before interest, tax, depreciation and amortisation (EBITA) of US$1.1 billion.

We don't yet know the listing price that COIN shares will go for. But according to a report in the Australian Financial Review (AFR), that will be released next Wednesday. The report estimates that Coinbase will be valued at between US$70-100 billion when it does go public. If that were the case, Reinventure would be looking at a profit of roughly $450 million on its original $50 million investment.

No doubt Westpac will be very pleased with its efforts if that does come to pass.

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