Summary of the Article

• US-based crypto exchange Coinbase is facing an “existential risk” as the Securities and Exchange Commission (SEC) continues its crackdown on the crypto industry.
• The change in classification to securities under SEC rules would bring a host of new regulatory requirements with it.
• Coinbase has announced ambitious plans to expand internationally, starting with an international derivatives exchange registered in Bermuda.

“Existential Risk” for Coinbase

The US-based crypto exchange Coinbase is facing an “existential risk” as the Securities and Exchange Commission (SEC) continues its crackdown on the crypto industry, a financial analyst has warned. The warning from the analyst followed renewed concerns among Coinbase investors that tokens listed on the exchange could be considered securities under SEC rules, a change in classification that would bring a host of new regulatory requirements with it, Bloomberg reported on Thursday.

“Potentially Could Require Coinbase to Jettison Its Entire Customer-Facing Business”

Stephen Glagola, an analyst at stock brokerage TD Cowen, warned that if this happens then “the business could be materially different than what they are today”. He said that there is just “existential risk,” adding that he currently recommends investors sell the Coinbase stock. Since the beginning of this year, COIN remains up by about 46%.

“Go Deep, Go Broad” Global Expansion Strategy

At the same time as the regulatory pressure is heating up at home, Coinbase has announced ambitious plans to expand internationally. It calls this move “the next chapter of its Go Deep, Go Broad global expansion strategy”. This will start with an international derivatives exchange registered in Bermuda.

“Wells Notice” Served by SEC

In March this year Coinbase was served a so-called Wells notice – a letter that typically precedes enforcement action – by the SEC. The exchange responded to this letter by claiming that it is actually the SEC which has not “complied with the law” by allowing companies like Coinbase to register. Last week, Coinbase announced that it had taken another step in its battle to bring regulatory clarity to the US and filed its lawsuit against SEC seeking clarity.

“Moment Is Right To Launch This International Exchange”

Coinbase believes “the moment is right” for them to launch their international exchange stating: “As more and more markets are moving forward with regulatory frameworks to become crypto hubs we believe this international exchange.”