Coinbase Goes Public, Exposure to Regulatory Danger?

Written by:
Aaron Goldstein
Published on:

Coinbase is making its initial public offering of stock April 14 and this has helped push the price of Bitcoin up to near $64,000 as of Wednesday morning.

“The Coinbase IPO is potentially a watershed event for the crypto industry and will be something the Street will be laser focused on to gauge investor appetite,’” Wedbush analyst Daniel Ives wrote this week.

Jordan Atkins of Coingeek.com suggests the news "demonstrates that we are currently at an awkward phase in the digital asset story, caught between two distinct eras".

Atkins points to the excessive fees at Coinbase.

So, what would Coinbase look like in a word where its fees are comparable to that of the Nasdaq? If Coinbase’s average fee for the first quarter of this year was 0.01% rather than 0.5%, Coinbase’s revenues would drop from $1.5 billion to less than $40 million.

In other words, the Coinbase IPO is an offer to buy into a race-to-the-bottom that hasn’t even started yet.

He also argues that an IPO defeats the purpose for which cryptocurrencies are intended, the entire concept of anonymity.

Stretching out ahead of us, is an inevitable future in which the digital asset industry has reached maturation: our service providers are compliant and watched carefully, our lawmakers have adapted or introduced legislation where necessary and regulators and law enforcement the experience to pursue bad actors in the same way they would in any other industry.

There is hope for other companies in the space.

Regulatory and legislative attention are slowly purifying the digital asset lake at a time where the industry is in the mainstream like never before. Competition is going to come thick and fast and will have plenty of room to out-maneuvre Coinbase in terms of fees. At the same time, these new companies are becoming less vulnerable to the great regulatory filter that has hitherto been protecting Coinbase.

Bitcoin incidentally is the most used funds transfer method by those online gambling businesses that operate in grey areas, encompassing more than half the world market. 

Coinbase and similar exchanges should never be used to send and receive Bitcoin and similar cryptocurrencies to and from Internet gambling sites as these transactions are not anonymous.  This is also a violation of Coinbase's terms of services.  It is always recommended from a security standpoint to transfer funds through a separately set up Bitcoin wallet.

- Aaron Goldstein, Gambling911.com

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