Coinbase, the first publicly traded cryptocurrency platform in the US, experienced a dramatic deterioration in its stock price since its April 2021 IPO when Bitcoin was trading at $63,500. Coinbase's stock is currently down 87% from its initial listing price - indicating a notable decrease in the overall crypto market and investors’ trust. Another factor contributing to Coinbase’s ongoing struggles is an increasingly difficult regulatory situation from the Security Exchange Commission (SEC). The SEC has issued multiple formal warnings, most recently in the form of a Wells Notice in 2021, alleging potential violations of federal securities law in regards to Coinbase's staking service, Prime & Wallet products, and its listing process.
CEO Brian Armstrong’s reported 2% sale of his stake in October 2021 further demonstrated the difficulty Coinbase’s stocks currently face and is another indication of the overall industry’s collapse. Bitcoin has dropped as much as 77% since its peak at $63,500, and has only recently found recent growth (up 68% YTD). Other indicators, such as liquidity and interest in the space, have effectively dissipated and continue to present difficulties for the industry.
The SEC’s investigation into Coinbase has been further compounded by SEC chair Gary Gensler’s stance on the lack of regulatory clarity in the cryptocurrency market and the “major programmatic risks” for the exchange. In response, Coinbase has launched the Coinbase International Exchange (CIE) in May 2021 as an institutional platform for international derivatives trading and reiterated its disapproval against the SEC’s decision.
So where does this leave Coinbase and the world of cryptocurrency? Overall the exchange has major problems ahead, both on the regulatory and crypto market front, however, its status as a publicly traded company may provide some form of security and transparency in the increasingly opaque global crypto system. As the market continues to remain unpredictable, it will be interesting to observe how Coinbase, as well as other crypto exchanges, negotiate these pressing issues.
Sarah Walker
- 2023-05-04
Coinbase's Crypto Exchange Struggles in the Market
Coinbase, the first publically traded cryptocurrency platform in the US, has recently experienced a dramatic deterioration in its stock price from its April 2021 IPO when Bitcoin was trading at $63,500. This article explores the challenges Coinbase is facing, the SEC’s approach to regulation in the crypto market, and where this all leaves the flagship crypto exchange.
