{"id":21572,"date":"2023-02-24T12:03:22","date_gmt":"2023-02-24T20:03:22","guid":{"rendered":"https:\/\/coinnetworknews.com\/coinbase-has-a-lot-at-stake\/"},"modified":"2023-02-24T12:03:22","modified_gmt":"2023-02-24T20:03:22","slug":"coinbase-has-a-lot-at-stake","status":"publish","type":"post","link":"https:\/\/coinnetworknews.com\/coinbase-has-a-lot-at-stake\/","title":{"rendered":"Coinbase has a lot at stake"},"content":{"rendered":"

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Crypto assets made their way onto the United States Securities and Exchange Commission\u2019s list of priorities for 2023<\/a>. So far, though, we haven\u2019t tasted the \u201cregulatory certainty\u201d many have been calling for. Instead, the regulator threw the book at Kraken for allegedly failing to register its staking program. Coinbase appears next on the chopping block, but its lawyers are ready to fight.<\/p>\n

This week\u2019s Crypto Biz newsletter delves into Coinbase\u2019s defense of its staking program and its not-too-pleasant quarterly financials. We also look at the latest company to fall victim to Sam Bankman-Fried\u2019s FTX<\/a>. <\/p>\n

Coinbase beats Q4 earnings estimates amid falling transaction volume<\/h3>\n

Q4 was a rough quarter for the cryptocurrency market, and nowhere was this more evident than in Coinbase\u2019s latest earnings report<\/a>. On Feb. 21, the crypto exchange reported a 12% drop in transaction volumes during the quarter as revenues plummeted 57% year-on-year. Although the revenue figures were higher than expected, I wouldn\u2019t put much stock in Wall Street\u2019s projections. (If you set the bar low enough, anyone can \u201cbeat expectations.\u201d) Nevertheless, there was a silver lining: Coinbase\u2019s subscription and service revenues increased 34% during the quarter. However, investors should be aware that Coinbase is being probed by the United States Securities and Exchange Commission (SEC) for its staking products. The exchange is attempting to put out the fire before it even starts (more on that below).<\/p>\n

Coinbase staking \u2018fundamentally different\u2019 to Kraken\u2019s \u2014 chief lawyer<\/h3>\n

With the SEC cracking down on Kraken over its staking products, other exchanges are trying to get ahead of the curve to avoid similar repercussions. This week, Coinbase\u2019s chief legal officer Paul Grewal told shareholders that the exchange\u2019s staking products<\/a> \u201care fundamentally different from the yield products described in the reinforcement action against Kraken.\u201d According to Grewal, Coinbase users always retain ownership of their digital assets. Secondly, users have a \u201cright to the return,\u201d which means Coinbase can\u2019t unilaterally decide not to pay any rewards for staking. The SEC filed a complaint against Kraken<\/a> alleging that the exchange\u2019s users lose control of their tokens when participating in the staking program. Kraken settled with the SEC for $30 million.<\/p>\n

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If I grow oranges myself and harvest them myself, the oranges are not securities. If I grow oranges myself and harvest them using a contractor that charges me a fee, the oranges are still not securities.<\/p>\n

\u2014 paulgrewal.eth (@iampaulgrewal) February 13, 2023<\/a><\/p><\/blockquote>\n

Hedge fund closes operations after losing funds in FTX exchange: Report<\/h3>\n

The crypto market felt FTX\u2019s enduring legacy again this week after hedge fund Galois Capital reportedly shut its doors<\/a>. Galois had sizable exposure to FTX when the exchange went bust in November 2022. According to the Financial Times, Galois\u2019 co-founder Kevin Zhou has already penned a letter to investors apologizing for his firm\u2019s involvement with FTX. Zhou also told investors they would receive 90% of Galois\u2019 remaining assets, with the remaining 10% held at the firm temporarily. Like other FTX creditors, Galois is waiting for the bankruptcy process to begin \u2014 that process could take up to a decade<\/a> to fully pan out.<\/p>\n

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For the record, yes we did have significant funds stuck on FTX. No, we did not use any Bahamian method to move funds out.<\/p>\n

\u2014 Galois Capital (@Galois_Capital) November 11, 2022<\/a><\/p><\/blockquote>\n

Mastercard to allow crypto payments in Web3 via USDC settlements<\/h3>\n

Mastercard\u2019s foray into the digital asset market continued this week after the payments giant disclosed a partnership<\/a> with Web3 payment protocol Immersive. This means Mastercard users wishing to make a direct crypto payment will no longer rely on third parties \u2014 as long as they have a Web3 wallet. Real-time payments for digital and physical goods will be settled in USD Coin (USDC<\/a>), a U.S. dollar-backed stablecoin issued by Circle. Will this partnership be an important milestone in advancing the mainstream adoption of Web3 wallets, or will it be lost in the noise? Only time will tell. In the meantime, much more work is needed to educate people about Web3\u2019s actual meaning<\/a>.<\/p>\n

Before you go: Beware of Bing AI chat and ChatGPT pump-and-dump tokens<\/h3>\n

ChatGPT has taken the world by storm in recent months. Now, scammers want to capitalize on this growing trend by launching a series of fake<\/a> pump-and-dump tokens. Investors, beware! In this week\u2019s Market Report, Marcel Pechman and I dissect the recent explosion in pump-and-dump tokens and share a few words of wisdom on how to stay safe. We also give you the latest pulse of the cryptocurrency market and whether Bitcoin is bullish or bearish. You can watch the full replay below. <\/p>\n