The world of cryptocurrency took a dramatic turn recently as Coinbase, the US-based cryptocurrency exchange, announced that it would be pausing its plans to expand Bitcoin services into new markets. This move, while unexpected, has left many in the crypto world to ask – is Coinbase disillusioned with cryptocurrency? In this article we’ll take a look at what Coinbase’s recent decision informs us about the potential of crypto in the long run, and the impact this decision may have on the market.
1. Coinbase Fades From the Cryptocurrency Sphere
Coinbase was once one of the most prominent exchanges within the cryptocurrency sphere. However, the tide has been steadily turning as the company moves away from its role within that industry. Here’s a quick look at the steps Coinbase is taking in an effort to become more of a mainstream finance player.
Retreating from Crypto Exchanges
Coinbase is retreating from the exchanges business. The company is shuttering its Global Digital Assets (GDAX) platforms, planning to leave more than half of its markets offline in the process. Furthermore, Coinbase is rolling the remaining exchanges into Coinbase Pro and Coinbase Prime. Instead of focusing on direct crypto trading, Coinbase’s offering will now center on providing ‘institutional investors’ with a way to enter the crypto world.
Reorienting Focus to Tokens
Coinbase is expanding its offerings in other areas, such as the Security Token Offering (STO) space. It appears that the company is looking to become the go-to source for tokenized security trades. Coinbase is also providing more out-of-exchange services. These include:
- Investor relations,
- Account management solutions, and
- Crypto custodian services.
Coinbase is increasingly positioning itself as a mainstream finance provider, geared towards larger entities and investors. These steps away from its cryptocurrency roots mark a significant shift for the company.
2. Growing Confusion Around Coinbase’s Crypto Activities
In recent weeks, Coinbase’s activities in the crypto space have caused some confusion. The California-based cryptocurrency exchange had quietly shut down several crypto services, and has come under scrutiny for its growing list of services.
Coinbase Services
- In July, Coinbase shut down its Coinbase Earn affiliate service and its GDAX trading tools.
- The company also removed its decentralized finance and stablecoin support services from its Coinbase Pro trading platform.
- Recently, Coinbase announced that it would be disabling deposits and withdrawals of Zcash, an open-source cryptocurrency.
The exchange has also been accused of withholding information about its crypto activities and not being transparent with its customers. It has also been accused of not responding to customer inquiries in a timely manner, leading to further confusion.
3. Is Coinbase Disillusioned With Crypto?
Coinbase, the American digital currency exchange, appears to be re-evaluating its commitment to the crypto space. In recent months, the company has taken several steps that suggest it’s looking to move away from its original mission.
Coinbase announced the sale of its XRP exchange in January 2021, after the US Securities and Exchange Commission brought a lawsuit against Ripple, the company behind the third-largest cryptocurrency. This decision sparked speculation that Coinbase was distancing itself from the crypto markets.
Adding fuel to the fire, Coinbase then announced the closure of its online brokerage service for U.S. customers in March 2021. This move was seen as a shift away from its original focus on digital currencies, as Coinbase had transitioned away from direct trading of crypto assets.
- Coinbase sold its XRP exchange in January 2021
- Coinbase closed its online brokerage service in March 2021
As Coinbase and GDAX strive for further regulation of cryptocurrency, it remains to be seen how their newfound ambitions will shape the industry’s near future. What is clear, however, is that Coinbase remains a major player in the crypto space, and the latest events demonstrate its continued interest in the success of the crypto industry as a whole.