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Is this the end of Coinbase?

By Crypto4you23 | Cryptoanswers22 | 4 May 2023


When Coinbase became the first crypto thing in the US to be public, some people thought it meant that money on the internet was getting more popular and the government liked it.

But, the papers that Coinbase gave to people who wanted to put money in showed that it could be a big risk.

The Securities and Exchange Commission (SEC) might say that some of the things you can buy on Coinbase are like stocks or bonds.

That means they have to follow lots of rules.

Now, two years later, it looks like that's what's happening.

The SEC is trying to make the money on the internet market safer because there were some bad things that happened before.

This fighting over the law could change Coinbase and the whole internet money thing, which is kind of confusing.

It's a big thing and people are keeping an eye on it to see what's going to happen.

TD Cowen investment bank analyst, Stephen Glagola, who has rated Coinbase's stock as "underperform" (equivalent to "sell"), stated that "the business may be materially different from what it is today."

He mentioned that Coinbase has recognized that the current situation "potentially could require Coinbase to abandon its entire retail-facing business." Glagola further stated that "there's an existential risk."

The SEC's crackdown on the cryptocurrency sector has been expedited after the collapse of FTX, which was fraught with alleged frauds that shook the markets at the end of last year.

The regulator has sued other crypto trading platforms, including Beaxy.com and Bittrex, for allegedly operating unregistered exchanges, brokers, and clearinghouses. The regulator has also made an agreement with Kraken over its U.S. staking program.

Coinbase informed in March that the SEC had sent a warning about its planned legal crackdown on the company.

According to Jefferies bank analysts, about 35% of Coinbase's net revenue is potentially at risk depending on the course of the SEC's lawsuit.

The industry has adopted a tougher stance towards regulators due to the threat to the foundations of their business, according to J. Austin Campbell, assistant professor at Columbia Business School.

"So, we're going to go the other way and fight," he said, "because we have nothing to lose."

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