Coinbase is an American publicly traded crypto exchange firm that deals in buying and selling of cryptocurrency including Bitcoin and Ethereum among many others. The firm has maintained popularity in the crypto community in the US as it boasts to offer secure storage for crypto and digital assets in an offline reserve, away from hackers. The firm is also protected by a lucrative insurance policy that covers all cash balances to a maximum of $250 000 compensation. Apart from that, the firm has prided itself in maintaining industry best practices that have earned it over $145 billion in quarterly trade volumes as well as more than 110 million verified users from over 100 countries where the firm is supported.
The firm has enjoyed a relatively easy setup in the US where users create an account on the exchange platform and link it to their bank accounts before they can begin trading in cryptos. However, Coinbase is considering launching a digital asset exchange outside the US citing hostility from regulators within the US. The platform is the largest crypto exchange in the US and has already set plans in motion to move offshore away from a market segment it has enjoyed since its creation. The firm has already began contacting its clients to inform them of the move. While confirming these news, a report has suggested the creation of a global crypto exchange but however, Coinbase has not decided where to base the new operation. Coinbase is determined to move forward with its plans since it has already began talks with jurisdictions with high-bar regulations in their quest to achieve global adoption.
Hostility from US regulators has seen the banking crisis continue to grow as more banks are joining others in the closure list. The authorities have also heightened their scrutiny on crypto products, a move that is turning away many investors. A recent proposal to increase electricity consumption taxes for crypto mining firms to 30% by 2026 has worsened the situation in the sector. This hostility is also evident from the recent settlement between the SEC(Securities and Exchange Commission) and crypto exchange, Kraken whereby Kraken has agreed to seize some of its operations and pay $30 million in settlements. Apart from that, the SEC has also frustrated several crypto firms by blocking their operations and threatening to file law suits against them. In a recent wave, SEC objected a $1 billion transaction by Binance in a bid to acquire the troubled Voyager Digital, a crypto brokerage firm.
Furthermore, Paxos, the issuer of Binance’s stablecoin, BUSD, was recently threatened with a lawsuit from the US regulator over its issuance of BUSD tokens which the SEC claims were not registered as securities.
Brian Armstrong, Coinbase’s CEO expressed concerns over the hostility forcing the crypto industry out of the US. The CEO also concluded that the recent events have seen the US crypto market stall and lag behind other major crypto hubs. Other financial and crypto hotspots like Hongkong, Singapore and Europe have already introduced robust legislations that are more friendly to crypto leaving startups in the US contemplating a move to ease their wounds.
Author’s sentiments
Coinbase accounts for a large market share in the US crypto community. Moving the exchange outside the US will definitely cause a slow down in the growth of the sector in the US. Owing to the fact that Coinbase has made tremendous achievements in building trust with its users and investors, the giant won’t go down without a fallout. For the rest of the world, the move could spark substantial growth in other jurisdictions that welcome the firm. Leave your thoughts below.
