Matt Hogan, chief investment officer at Bitwise, believes the recent regulatory scrutiny could play into Coinbase's favor and benefit the company in its fight against the SEC.
The SEC recently issued a Wells Notice to Robinhood Crypto, indicating a potential enforcement action for securities violations. This regulatory scrutiny plays an important role in shaping the competitive landscape among cryptocurrency exchanges, particularly to Coinbase's advantage, according to Hogan.
In a post on social media platform This feature allows Coinbase to maintain high profit margins and generate significant profits in the short term.
Coinbase, despite its ongoing disputes with the SEC, mentioned Revenue of $1.6 billion for the first quarter of 2024, supported by increased transaction fees from institutional and consumer customers. The company's financial success comes amid broader regulatory action, including a lawsuit filed by the Securities and Exchange Commission last year against Coinbase, which accused the company of operating as an unregistered exchange, broker and clearing agency. The regulator also criticized the staking and wallet services offered by Coinbase.
Robinhood Crypto, a direct competitor, facilitates trading of various cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), and Shiba Inu (SHIB). Other entities have faced similar regulatory challenges in the cryptocurrency space, such as decentralized cryptocurrency exchange Uniswap and Ethereum development studio Consensys, which received Wells Notices from the SEC last month.
Hogan stressed that despite the regulatory hurdles, Coinbase is using this period to strengthen its finances and diversify its operations.
“What is impressive is that they are using this opportunity to raise money and diversify their business on a massive scale,” he said.
Bitwise, which Hougan represents, is also active in the cryptocurrency market, having been the custodian of eight of nine bitcoin ETFs since January 2024.