The price of bitcoin skyrocketed in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to take advantage of rising interest rates. However, Coinbase is not interested in taking its cryptocurrencies for granted. To stay ahead in a much larger cryptocurrency market, the company is returning money to its master plan. By 2017, the company’s revenue was reported at $ 1 billion and more than $ 150 billion in assets were traded by 20 million customers.
The San Francisco-based Coinbase is known as the leading cryptocurrency trading platform in the United States and has consistently topped the CNBC Disruptor list in 2018 with continued success after failing to enter the list in the previous two years.
On its way to success, Coinbase has left no stone unturned in the poaching of key executives on the New York Stock Exchange, Twitter, Facebook and LinkedIn. This year, the size of his full-time engineering team has doubled.
Earn.com was bought by Coinbase this April for $ 100 million. This platform allows users to send and receive digital currency while replying to mass market emails and performing micro tasks. The company is currently planning to bring in former venture capitalist Andreessen Horowitz, founder and CEO of Earns as its first chief technology officer.
According to current estimates, Coinbase was valued at about $ 8 billion when it went to buy Earn.Com. That figure is much higher than the $ 1.6 billion estimate estimated in the last round of venture capital funding in the summer of 2017.
Coinbase declined to comment on its estimate, despite having more than $ 225 million in funding from leading VCs, including Union Square Ventures, Andreessen Horowitz, and the New York Stock Exchange.
To meet the needs of institutional investors, the New York Stock Exchange plans to launch its own cryptocurrency exchange. Nasdaq, a rival to the NYSE, is also considering a similar move.
• Competition is coming
As competing organizations seek to bite out of Coinbase’s business, Coinbase is looking for other venture capital opportunities in an attempt to build a trench around the company.
Dan Dolev, a current Nomura analyst, said Square, a company run by Twitter CEO Jack Dorsey, could eat Coinbase’s stock business because it started trading cryptocurrencies in its Square Cash app in January.
According to Dolev’s estimates, the average trading fees of Coinbase were about 1.8% in 2017. Such high fees could direct consumers to other cheaper exchanges.
Coinbase seeks to become a one-stop shop for institutional investors while hedging its stock market business. To attract an investor in this class of white gloves, the company announced a fleet of new products. This class of investors have been particularly wary of immersing themselves in the volatile cryptocurrency market.
Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.
Coinbase believes there are billions of dollars of institutional money that can be invested in digital currency. He already has $ 9 billion in custody of client assets.
Institutional investors are concerned about security, even though they know that Coinbase has never been hacked like some other global cryptocurrency exchanges. Coinbase’s president and chief operating officer said the impetus for launching Coinbase’s trusteeship last November was a lack of a trusted custodian to protect their crypto assets.
• Wall Street is currently moving from Bashing Bit to Cryptocurrency Backer
According to the latest available data from Autonomous Next Wall Street, interest in cryptocurrency seems to be growing. There are currently 287 crypto hedge funds, while in 2016 there were only 20 cryptocurrency hedge funds. Goldman Sachs even opened a cryptocurrency trading office.
Coinbase also introduced Coinbase Ventures, which is an incubator fund for early-stage startups operating in the cryptocurrency and blockchain space. Coinbase Ventures has already raised $ 15 billion in additional investment. His first investment was announced in a startup called Compound, which allows a person to borrow or lend cryptocurrency while earning interest.
In early 2018, the company launched Coinbase Commerce, which allows merchants to accept major cryptocurrencies for payment. Another bitcoin startup was BitPlay, which recently raised $ 40 million in risky money. Last year, BitPlay processed more than $ 1 billion in bitcoin payments.
Proponents of blockchain technology believe that in the future cryptocurrency will be able to eliminate the need for central banking authorities. In the process, this will reduce costs and create a decentralized financial solution.
• Regulatory security remains intensive
To keep its access limited to four cryptocurrencies, Coinbase has drawn a lot of criticism. But they need to be careful while US regulators consider how to control certain uses of the technology.
For cryptocurrency exchanges such as Coinbase, the issue of concern is whether cryptocurrencies are securities that would be subject to the jurisdiction of the Securities and Exchange Commission. It is acknowledged that Coinbase is slowly adding new coins because the SEC announced in March that it would apply security laws to all cryptocurrency exchanges.
The Wall Street Journal reported that Coinbase met with SEC officials to register as a licensed broker and e-commerce site. In such a scenario, it will be easier for Coinbase to maintain more coins and also to comply with security regulations.