After the Securities and Exchange Commission (SEC) issued the Wells Notice to Robinhood Crypto, Bitwise CIO Matt Hougan claimed to X that the “hostile regulatory environment” is benefiting Coinbase, the leading US cryptocurrency exchange.
“The hostile regulatory environment is creating an artificial ‘moat’ for Coinbase’s business, helping it maintain extremely high margins and generate excess returns in the short term,” Hougan said. said in the post.
Coinbase has long been in contention with the SEC, but last week it reported that it generated $1.6 billion in revenue during the first quarter of 2024 as the trading fees it collects from both institutional and consumer customers have risen.
On Monday, Coinbase rival Robinhood Crypto said SEC staff had alleged securities violations and recommended enforcement action against it. Robinhood Crypto supports trading over a dozen cryptocurrencies, including bitcoin, ether, dogecoin, and shiba inu.
Last month, decentralized cryptocurrency exchange Uniswap and Ethereum development studio Consensys also received Wells notices from the SEC.
The SEC sued Coinbase last year for allegedly operating as an unregistered exchange, broker, and clearing agent. Regulators have also raised issues with Coinbase’s staking and wallet services.
Hougan also argued that Coinbase’s ability to generate solid revenues helps it raise money and advance its business interests. “What’s impressive is that they are using this opportunity to raise cash (currently $7.1 billion) and diversify their business significantly (see USDC, Base, growth in international futures),” he said.
Bitwise is the issuer of one of several spot Bitcoin ETFs trading since January.
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