Bitwise CIO Matt Hougan has drawn attention to what he perceives as a “hostile regulatory environment” favoring Coinbase following the issuance of a Wells Notice to Robinhood Crypto by the Securities and Exchange Commission (SEC),
Hougan asserts that this environment has inadvertently created a protective barrier for Coinbase, enabling it to maintain high margins and profitability in the short term.
Despite ongoing tensions with the SEC, Coinbase reported robust revenue of $1.6 billion in the first quarter of 2024, attributed to rising transaction fees from both institutional and retail clients.
Concurrently, the SEC has recommended enforcement action against Coinbase’s direct rival, Robinhood Crypto, on the grounds of alleged securities violations.
Additionally, the SEC sent a Wells Notice to Ethereum development studio Consensys and decentralized crypto exchange Uniswap last month. Some crypto lawyers are voicing disapproval in reaction to the SEC’s recent spike in Wells Notices to crypto firms.
For allegedly functioning as an unregistered exchange, broker, and clearing agency, Coinbase was sued by the SEC last year. The wallet and staking services offered by Coinbase have also drawn criticism from the authorities.
Hougan further contended that Coinbase’s strong returns enable them to raise capital and expand their business endeavors.
Also Read: Coinbase Faces New Class Action Over Alleged Securities Violations
He highlighted their ability to capitalize on this opportunity by increasing their cash reserves to $7.1 billion and significantly diversifying their business operations, particularly evident in the growth of USDC, Base, and international futures.
