Regulation
How ‘Hostile’ US Crypto Regulations Will Benefit Coinbase, By Executive
- Bitwise executive says Coinbase benefits from hostile US crypto regulations.
- The executive predicts that crypto startups will be abandoned.
Coinbase would be the biggest beneficiary of aggressive US enforcement actions in the crypto space.
Robinhood Crypto is the latest company to receive the Wells Notice from the US Securities and Exchange Commission (SEC).
Recently, MetaMask and Uniswap also received notices from Wells, signaling the SEC’s intent to take enforcement action against the companies.
The Chairman of the CFTC (Commodity Futures Trading Commission) warned that the trend will intensify over the “next 6 to 24 months”.
Interestingly, Coinbase is thriving in the US regulatory heat, according to Bitwise CIO Matt Hougan. Write your complaints on X (formerly Twitter), the executive commented:
“The hostile regulatory environment creates an artificial ‘moat’ for Coinbase’s business, helping to maintain extremely high margins and allowing them to overearn in the short term.”
Coinbase’s Playbook in US Regulatory Heat
Citing Coinbase’s successful diversified businesses like the Ethereum [ETH] Layer 2 — Base, the Bitwise exec added that,
“What’s impressive is that they are taking advantage of this opportunity to both raise liquidity (now $7.1 billion) and massively diversify their businesses (see the growth of USDC, from base and international futures contracts).”
The executive also noted that high regulatory costs in the United States could stifle competition and deter new entrants to the sector.
“The capture is almost perfect. Regulatory costs are too high for crypto-native startups to compete (just imagine Coinbase’s legal costs). And the regulatory risk is too high for traditional companies to indulge (just look at what’s happening to Robinhood).
Regulatory pressure further solidifies Coinbase’s market share as the leading place to buy or sell digital assets and tokens in the United States.
As of Q4 2023, Coinbase had over 75% market share in the United States.
However, Uniswap [UNI], MetaMask and even Robinhood Crypto are ready to hit back at the SEC. Reacting to the SEC Wells review, Robinhood CEO Vlad Tenev sworn that,
“If necessary, we will use our resources to fight this matter in court, with the goal of both defending our crypto business and establishing clearer regulation in the United States for the benefit of our customers.”
It remains to be seen how Coinbase’s market share will be affected if these struggling crypto companies win against the SEC.
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