- Bitwise executives claim Coinbase is benefiting from hostile U.S. cryptocurrency regulation.
- Cryptocurrency startups will decline, executives predict.
coinbase The cryptocurrency industry is said to be a major beneficiary of America’s aggressive enforcement actions.
Robinhood Crypto is the latest company to receive a Wells Notice from the U.S. Securities and Exchange Commission (SEC).
Recently, MetaMask and Uniswap also received Wells notices, indicating the SEC’s intention to take enforcement action against the companies.
Chairman of CFTC (Commodity Futures Trading Commission) warned This trend is expected to strengthen over the “next 6 to 24 months.”
Interestingly, according to Bitwise CIO Matt Hougan, Coinbase is thriving even amidst the regulatory heat in the US. write his words opinion On X (formerly Twitter), an executive said:
“The hostile regulatory environment is creating an artificial “moat” for Coinbase’s business, helping it maintain very high margins and generate excess returns in the short term.”
Coinbase’s Playbook Amid U.S. Regulatory Fever
Citing Coinbase’s successful diversification ventures such as Ethereum (ETH) Layer 2 — Base, the Bitwise executive added:
“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 also emphasized that high regulatory costs in the U.S. could stifle competition and hinder new entries into the sector.
“The capture is almost perfect. Regulatory costs are too high for cryptocurrency-based startups to compete (imagine Coinbase’s legal bills). And the regulatory risk is too high for incumbents to be tempted (look at what’s happening with Robinhood).”
Regulatory pressure has further strengthened Coinbase’s market share as the leading place to buy or sell digital assets and tokens in the United States.
As of the fourth quarter of 2023, Coinbase had over 75% of the US market share.
but, Uniswap (UNI), MetaMask, and even Robinhood Crypto are ready to fight back from the SEC. Reaction to SEC Wells Notice, Robinhood CEO Vlad Tenev make an oath that,
“If necessary, we will use our resources to challenge this matter in court, with the intent to defend our cryptocurrency business for the benefit of our customers and establish regulatory clarity in the United States.”
It remains to be seen how Coinbase’s market share will be affected if this embattled cryptocurrency company wins against the SEC.