Is Coinbase Preparing to Expand Coin Listings on Paradex Decentralized Exchange?


San Francisco-based Coinbase has announced plans to explore adding 31 cryptocurrencies to its main exchange. Now, some users believe that Coinbase’s recent expansion could lead to more coin listings on Paradex, Coinbase’s decentralized exchange.

Coinbase acquired Paradex earlier this year. The platform uses an OTC-like bulletin board trading engine to facilitate decentralized cryptocurrency trading. Now, users have noticed that many of the coins preparing to be added to Coinbase are already listed on Paradex.

Because of this, some believe that Coinbase will look to increasingly integrate the Paradex trading engine into its existing platform.

Last week, Coinbase suddenly and dramatically announced that it was exploring the addition of 31 cryptocurrencies to its platform. The 31 cryptocurrencies include two that were previously announced, including Stellar and Cardano. Many of the remaining 29 cryptocurrencies, however, are already available on Paradex.

Moments after the announcement, Coinbase added four of the 31 cryptocurrencies to its Coinbase Pro platform (formerly known as GDAX). This is the usual path that Coinbase takes before making cryptocurrencies available to retail investors.

Does Paradex Allow Coinbase To Avoid U.S. Regulator Concerns?

Coinbase purchased Paradex back in May. Paradex is a decentralized exchange that uses a unique trading engine called a bulletin board. It works similar to an OTC trading desk. The use of the bulletin board trading system allows Paradex to avoid U.S. regulatory concerns.

That’s why the news from this past week is important: the possible addition of the 29 new tokens to Coinbase suggests that Paradex has found regulatory clarity from the SEC or FINRA. Here’s how Diar.co explained the issue:

“Either Coinbase has found clarity from the US Securities and Exchange Commission (SEC), as well as the Financial Industry Regulatory Authority (FINRA), or the exchange is nearing completion of complex engineering that would address the US and International markets differently.”

There’s a possibility that some of the digital assets listed on the exchange will be available exclusively for buying and selling activity, for example, without users being able to send or receive funds to a local wallet.

The lack of a local storage solution could allow Coinbase and Paradex to avoid KYC-related problems. Again, Dior.co explains the issue better than I can:

“Beyond Paradex being potentially excluded by the SEC as a traditional exchange, the inability for tokens to be stored in local wallets could also indicate a needed work-around to Know-Your-Client (KYC) challenges that Decentralized Exchanges face as solutions addressing the regulatory requirement remain off-chain. But the exchange is aiming to provide such a solution having acquired Distributed Systems that's focusing on decentralized identity.”

Coins Listed On Both Paradex And Coinbase

Last week, Coinbase announced 31 tokens that could be added to its platform in the future. Users quickly noticed a pattern: a number of the currencies scheduled to be added to Coinbase were already listed on Paradex. The two platforms already share a number of tokens:

  • Cryptocurrencies Listed on Both Paradex and Coinbase: 0x, Basic Attention Token, Civic, Decentraland, district0x, Ethereum, and USDC
  • Cryptocurrencies Listed on Coinbase But Not Paradex: Bitcoin, Bitcoin Cash, Ethereum Classic, Loom, and Zcash.
  • Cryptocurrencies Listed on Paradex But Not Coinbase: Aragon, Augur, BreadWallet, Dai, Kin, Kyber Network, Maker, OmiseGo, Request Network, Status, and Storj.

There are also a number of coins listed on Coinbase but not on Paradex, including Aeternity, Cardano, ChainLink, EnjinCoin, EOS, Golem, IOST, Loopring, Mainframe, NEO, Po.et, QuarkChain, Stellar, Tezos, XRP, and Zilliqa.

Will Coinbase Lose Its Reputation For Being Highly Selective With Cryptocurrencies?

Over the years, Coinbase has been famously selective over which cryptocurrencies it lists on the platform. The company has avoided cryptocurrencies with excessively centralized governance systems, for example, and requires listed coins to meet certain strict standards.

That could change in the future, as a number of the 31 coins scheduled for listing may not meet Coinbase’s traditional standards.

Some believe the problem lies with Coinbase’s short-term revenues: the company has witnessed declining revenue from lower trading volumes. Coinbase might list more tokens in an attempt to boost short-term revenue but listing these tokens could come at the expense of its brand.

Ultimately, it remains to be seen how this issue will shake out. However, Coinbase looks to be preparing for big things with Paradex moving forward.

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