Regulation
Coinbase Benefits from Regulatory Hostility, Says Bitwise CIO
Bitwise CIO Matt Hougan has drawn attention to what he perceives as a “hostile regulatory environment” favoring Coinbase following the Securities and Exchange Commission (SEC) issuing a Wells Notice to Robinhood Crypto,
Hougan says this environment has inadvertently created a protective barrier for Coinbase, allowing it to maintain high margins and profitability in the short term.
The hostile regulatory environment creates an artificial “moat” for Coinbase’s business, helping to maintain extremely high margins and allowing them to overprofit in the short term.
What’s impressive is that they are taking advantage of this opportunity to raise cash (now $7.1 billion)…
– Matt Hougan (@Matt_Hougan) May 6, 2024
Despite ongoing tensions with the SEC, Coinbase reported a robust $1.6 billion in revenue during the most recent quarter. first quarter 2024attributed to the increase in transaction fees for institutional and retail clients.
At the same time, the SEC recommended enforcement actions against Coinbase’s direct rival, Cryptocurrency Robinhooddue to alleged securities violations.
Additionally, the SEC sent a Wells Notice to Ethereum Consensys Development Studio and decentralized crypto exchange Uniswap last month. A few crypto lawyers express disapproval in reaction to the recent increase in Wells notices issued by the SEC to crypto companies.
For allegedly operating as an unregistered exchange, broker-dealer, and clearing agency, Coinbase was sued by the SEC last year. The wallet and staking services offered by Coinbase have also attracted criticism from authorities.
Hougan further claimed that Coinbase’s strong returns allow them to raise capital and expand their business operations.
Read also: Coinbase faces new class action over alleged securities violations
He highlighted their ability to capitalize on this opportunity by increasing their liquidity reserves to $7.1 billion and significantly diversifying their trading operations, particularly evident in the growth of USDC, basis and international futures. .