Is Coinbase’s Cryptocurrency Bank Forming Before Our Very Eyes? New Exchange Listings Say Yes
With All of Coinbase’s Listings, Is the Leading Bitcoin Exchange Becoming A Crypto Bank?
The birth of Bitcoin happened in result to the actions of banks during the financial crisis over ten years ago. The banks were cashing in on the needs of consumers, offering high-risk mortgages to anyone that was struggling to make their monthly payments, along with other schemes to take advantages of consumers. As Lehman Brothers ultimately collapsed in September 2008, and Bitcoin’s whitepaper by Satoshi Nakamoto was released six weeks later.
Now, cryptocurrency is still finding its place in the industry, though the majority of crypto trading happens on centralized exchanges, as explained in an article by Crypto Briefing. One example they bring up is OKEx, which presently has about $3.3 billion in trading volume in the last 24 hours. However, the largest decentralized exchange in the space, which is IDEX, only came up with $2.2 million in the same period.
The exchanges are crucial to the cryptocurrency industry, but the problem with them is the centralization. One of the concerns addressed in the article is Coinbase, which raised $300 million in a Series E round. The funding brought the total valuation to $8 billion, thanks to contributions from Tiger Global Management, Wellington Management, Andreessen Horowitz, and others.
Coinbase is a name that every single person in cryptocurrency knows. It has even earned the title of “Qualified Custodian” with the New York Department of Financial Services (NYDFS). With their agreement, the company has the ability to securely store cryptocurrency, list new assets, and add other features, which includes staking. To establish itself as a fully SEC-regulated broker dealer, Coinbase chose to acquire Keystone Capital last summer.
The exchange has been quickly finding a place in the traditional world of finance, and it looks like Coinbase is now looking to get a banking license. They have pursued this path so far that they have already met with the Office of the Comptroller of the Currency last year. With this kind of license, Coinbase could exchange in multiple areas, including asset management, trading, and acquisition. Still, the company has continually worked to establish traditional banking relationships.
According to Fabio Canesin, the co-founder of Nash Exchange, these features establish Coinbase as “a crypto bank.” Canesin added that it should be considered a bank, rather than anything else, because “it is completely centralized.” He pointed out that the acquisition of Neutrino completely eliminates anonymity from the service.
Though there are some proponents of decentralization that may feel worried about this development, it may not be the train wreck that some people are making it out to be.
Cryptocurrency companies and blockchain companies have to self-evaluate frequently, examining if these types of businesses have the power to establish reformation in the traditional world of finance. With the involvement of Coinbase, it could be possible to bridge the gap. However, there is also a chance that these institutions could become too close to what they were trying to change in the first place.
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