Coinbase currently has 139 tradable assets. The exchange added a whopping 83 assets to its trading list in 2021, nearly double the assets it had amassed in the eight years since its inception.
Is that quick expansion a simple wallet? Are any of these lesser-known tokens and coins securities? Is that irresponsible or too ambitious? What does this rapid wealth expansion through Coinbase mean?
A money robbery?
I think the answer to the first question is a resounding “no!” Coinbase makes a lot of money on trading fees, but adding to the token list is not about the money. Coinbase started with a small booth at a conference “just trying to do something the customers wanted”, pitching t-shirts and a hosted bitcoin (BTC) Wallet. Now Coinbase is the second largest crypto exchange in the world.
It’s a common story that an entrepreneur builds something, succeeds, sells and moves on, but Coinbase founder and CEO Bryan Armstrong stood at this little booth eight years ago and is still at Coinbase today. The exchange remains true to its – and Armstrong’s – core values: economic freedom, property rights, a more efficient global exchange system, and in my opinion just building the things customers want.
Back in June of this year, Armstrong sent a series of tweets indicating the change in Coinbase’s approach to determining which assets to list. In summary, it can be said that Coinbase has moved from a performance-based approach based on internal criteria to a pragmatic approach based on externalities. This new approach allows the market to decide which assets have the highest value – as they should be. As a reminder: Do your research yourself, even if it is a Coinbase listing.
Related: The responsibility behind a crypto lender’s asset listing
Securities?
Coinbase recognizes and accepts its leadership role in the shepherd in a new regulation that will benefit the new economy. The exchange seems genuinely aware of its leadership role in the crypto space and is working hard to ensure compliance. It would therefore make no sense for Coinbase to list a group of assets that could provoke regulators (in the United States, “non-accredited” investors are excluded from early project investments).
While the Securities and Exchange Commission treatment Stablecoins as securities, Coinbase’s listing parade continued almost weekly. It is very likely that Coinbase will add assets to the trading pairs that the SEC would consider securities. However, the barriers that currently exist in the name of “investor protection” could finally fall. Coinbase’s aggressive listing activity is consistent with economic freedom, strong property rights, and the core values it supports, and may even suggest that undisclosed policies are being discussed privately.
As Melissa Strait, Chief Compliance Officer at Coinbase, pointed out:
“We have always believed that compliance must not be an afterthought so that crypto can gain the legitimacy required for mainstream adoption – it has to be at the heart of our way of working.”
She added, “We firmly believe that we need to have a constructive relationship with the regulators and agencies charged with overseeing the crypto ecosystem in order for cryptocurrency to find widespread adoption.”
Almost all of the assets listed this year are ERC-20 token in the Ethereum network. Why? Because they would be considered “sufficiently decentralized”. This phrase comes from a speech given by William Hinman (former director of the SEC’s Division of Corporation Finance) did in June 2018. As long as an asset is as decentralized as Etherum on the day of this speech, it will informally and for the time being not be considered a security. Thank you, Hinman!
Related: Discourage adoption? Balance between security and innovation in crypto
Irresponsible or too ambitious?
If I found anything while researching this topic, it is that Coinbase is very organized and process-oriented. I think it should be obvious considering its success. The Coinbase team knows the legal circumstances under which the exchange operates and has set up decision-making systems designed to keep up with this breakneck industry. Armstrong himself said he wanted to get a billion customers on board. That is now ambitious! But exaggerated? Not if you believe in a free and open financial system that is beyond the control of a central actor.
Coinbase claims to be “agnostic” when listing tokens. This means that Coinbase does not judge the listed projects, but rather rewards the builders who tick all the boxes of the listing criteria. It’s interesting to see how many projects make it onto the Coinbase platform. After all, a Coinbase listing is like making it into the big leagues.
What now?
Coinbase listed 16 DeFi projects in 2021. It’s not a shock that decentralized funding takes the lead. First-layer projects took second place with 12 – again no real surprise, as everyone wants to be the next Ethereum. In third place were eight decentralized exchange tokens, in fourth place were stablecoins and NFT gaming with seven projects each. Fifth place went to Layer 2 Ethereum projects.
Coinbase really stepped on the gas this year. It can mean a number of things depending on who you ask. For me, that’s a very bullish sign for the entire industry. Coinbase gives its customers what they want: more choice and more ways to find this undervalued gem. It is up to each individual to conduct their own due diligence. What some would call the “easiest to use” platform now offers access to a decent number of assets. Having freedom of choice is a responsibility – choose wisely, or you will find the SEC has a need to vote for you.
This article does not provide investment advice or recommendation. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
Stephen J. Mesa is the unofficial “ambassador” of Cointelegraph Markets Pro. He is the Commercial Lawn and Leisure Sales Director for John Deere Equipment and has 16 years of experience as a real estate market analyst and 10 years of experience designing and installing custom automotive audio and alarm systems.
