Regulation
How ‘hostile’ US crypto regulations will benefit Coinbase, according to executive
- Bitwise exec claims Coinbase benefits from hostile US crypto regulation.
- The executive predicts that crypto startups will fall by the wayside.
Coinbase is reportedly the main beneficiary of the United States’ aggressive enforcement actions in the cryptocurrency industry.
Robinhood Crypto is the latest company to receive 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 in the “next 6-24 months”.
Interestingly, according to Bitwise CIO Matt Hougan, Coinbase thrives in the US regulatory environment. Penning his affirmations on X (formerly Twitter), the executive commented,
“The hostile regulatory environment is creating an artificial ‘moat’ for Coinbase’s business, helping to sustain extremely high margins and allowing them to earn too much in the short term.”
Coinbase’s program in the US regulatory heat
Citing Coinbase’s successful diversified initiatives such as Ethereum [ETH] level 2 – Basic, the Bitwise executive added that,
“What is impressive is that they are using this opportunity to both raise cash (now $7.1 billion) and massively diversify their businesses (see growth in USDC, Base, international futures).”
The executive also highlighted that high regulatory costs in the United States could stifle competition and discourage new entrants into the industry.
“The capture is almost perfect. Regulatory costs are too high for native crypto startups to compete (just imagine Coinbase’s legal fees). And the regulatory risk is too high for traditional companies to be tempted (just look at what’s happening to Robinhood).”
Regulatory pressure further solidifies Coinbase’s market share as the primary place to buy or sell digital assets and tokens in the United States
As of the fourth quarter of 2023, Coinbase held over 75% of the US market share.
However, Uniswap [UNI], MetaMask and even Robinhood Crypto are ready to react to the SEC. Reacting to the SEC Wells notice, Robinhood CEO Vlad Tenev sworn That,
“If necessary, we will use our resources to contest this matter in court, with the intent of both defending our cryptocurrency business and establishing regulatory clarity 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 troubled crypto firms win against the SEC.