Coinbase (NASDAQ: COIN), the US-based cryptocurrency exchange giant, continues to navigate the complex world of digital currencies amid regulatory uncertainties and market fluctuations. The company’s CEO, Brian Armstrong, recently expressed surprise at Bitcoin’s resilience, with the cryptocurrency trading above the $20,000 mark on Thursday, September 28.
In an interview with CNBC the same day, Armstrong highlighted the lack of clear regulation on cryptocurrencies in the United States, which he said has led many industry segments to relocate. He compared this to the favorable stance of several G20 countries towards cryptocurrencies. Countries like Singapore, Hong Kong, the United Kingdom, Brazil, and Australia have adopted crypto as an integral part of their financial ecosystems.
Armstrong also discussed the upcoming Sam Bankman-Fried (SBF) trial, comparing it to past negative incidents like the Mount Gox affair. Despite these challenges, he emphasized that many founders are striving to grow the industry in a responsible and trustworthy manner.
The ongoing SEC v. Coinbase case remains a major topic of interest. Armstrong said he was confident about the outcome, citing three separate court rulings by different judges that criticized the SEC’s approach as ineffective and arbitrary.
As Coinbase navigates these challenges, it continues to expand its offerings. In 2021, Coinbase became the first major cryptocurrency exchange to IPO on Nasdaq. This decision brought more legitimacy and recognition to the world of cryptocurrencies. According to InvestingPro data, Coinbase has an adjusted market capitalization of $17.83 billion, with a negative P/E ratio of -13.49, indicating that the company is currently not profitable.
Coinbase also launched its own network on Ethereum as a layer 2 known as “BASE”. BASE is a layer 2 scaling solution that uses Optimism’s optimistic rollups to solve scalability issues on Ethereum. It provides a secure, cost-effective, and developer-friendly platform for building secure decentralized applications (DApps) on the Ethereum Layer 1 (L1) blockchain. The launch of BASE is part of Coinbase’s efforts to make cryptocurrency and blockchain technology more accessible, user-friendly and profitable, thereby contributing to the growth of the cryptocurrency ecosystem.
However, there are some potential risks worth noting. According to Advice InvestPro, Coinbase shares typically trade with high price volatility and the company’s earnings per share have been on a downward trend. Additionally, the company’s stock price has fallen significantly over the past five years.
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