CRYPTO MOVERS AND PRICES
Crypto is, for the most part, back on the rise this morning, with BTC touching above USD 19,000. Volumes are only about 60% of those seen last week.
Crypto Story of the Day
Coinbase has shown its hand on U.S. regulatory changes in crypto amid a series of tweets by CEO Brian Armstrong and the decision to end margin financing on their trading platform.
Coinbase drew headlines twice last week in separate instances, which both seemed to respond to the ratcheting of U.S. regulatory involvement in crypto. On November 25, company CEO Brian Armstrong posted a thread on his Twitter noting rumors they had heard about last-minute Trump regulatory plans for the space and Coinbase's opposition to such a proposal.
Ultimately, Armstrong describes the proposed plans as making it illegal for Coinbase (and other regulated U.S. providers) to accept crypto transfers from non-verified private wallets. Armstrong believes the intention of this is to effectively ring-fence U.S. (and friends) from the rest of the largely unregulated crypto market.
Armstrong positions this as putting Coinbase at a major disadvantage and that the Government is effectively eliminating the democratic, censorship-resistant use case of crypto. Additionally, last week Coinbase removed margin trading from their Coinbase Pro platform. This also appears to be in response to U.S. regulatory charges placed on BitMEX, where, amid a slew of other accusations, administrators railed against the platform for allowing outsized leverage to retail investors.
We generally agree with Armstrong's interpretation of the U.S. Government's intentions. Since the regulators took aggressive action against BitMEX in September, language and action have suggested that they are trying to eliminate large offshore platforms but are comfortable allowing a path to BTC ownership on their own terms.
We don't necessarily see the value in his approach here, however. Firstly, Armstrong lays out in plain language several crypto AML issues that are currently more debated than viewed as facts, and in doing so, seems to shoot his own case in the foot. Furthermore, the idea that the Government will support an open and free crypto market that could arguably compete with sovereign currencies one day, we view as a pipe dream.
Armstrong is effectively saying that the Government is operating in a sub-optimal way to the growth of global cryptocurrency. Yet, it seems relatively uncontroversial that governments, in general, would prefer to keep the entire crypto market niche. Ultimately, we view the episode as telling of struggles Coinbase will continue to face as being in the face of American crypto but having goals and incentives that often fly in the face of the U.S. Government.