Bitwise Chief Funding Officer Matt Hougan believes that current regulatory scrutiny may play a job in Coinbase’s favor and profit the corporate in going through the SEC.
The U.S. SEC has just lately issued a Wells discover to Robinhood Crypto, indicating a possible enforcement motion for securities violations. This regulatory scrutiny is taking part in a major function in shaping the aggressive panorama amongst crypto exchanges, significantly benefiting Coinbase, based on Hougan.
In a put up on the social media platform X, Hougan argued that the stringent regulatory setting inadvertently creates a aggressive benefit for Coinbase by establishing a man-made moat round its operations. This benefit permits Coinbase to take care of excessive revenue margins and obtain substantial earnings within the brief time period.
Coinbase, regardless of its ongoing disputes with the SEC, reported a income of $1.6 billion for the primary quarter of 2024, fueled by elevated transaction charges from institutional and client shoppers. The corporate’s monetary success comes amidst broader regulatory actions, together with final 12 months’s lawsuit in opposition to Coinbase by the SEC, which accused the corporate of working as an unregistered alternate, dealer, and clearing company. The regulator has additionally criticized Coinbase’s staking and pockets providers.
Robinhood Crypto, a direct competitor, facilitates buying and selling for varied cryptocurrencies, together with Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), and Shiba Inu (SHIB). Different entities have encountered comparable regulatory challenges within the crypto area, akin to decentralized crypto alternate Uniswap and Ethereum improvement studio Consensys, which acquired Wells notices from the SEC final month.
Hougan highlighted that regardless of regulatory hurdles, Coinbase is utilizing this era to bolster its funds and diversify its operations.
“What’s impressive is that they are using this opportunity to both raise cash and massively diversified their business,” he mentioned.
Bitwise, the corporate Hougan represents, has additionally been lively within the crypto market, being the custodian for eight of 9 spot Bitcoin ETFs buying and selling since January 2024.
