Article author: Yueqi Yang
On the Friday before Donald Trump took office in January, Coinbase CEO Brian Armstrong joined his top executives at the Crypto Ball in Washington, where the tech elite celebrated the United States' first cryptocurrency-friendly president.
Soon after, however, Coinbase's chief legal officer Paul Grewal was interrupted during the revelry when Trump accidentally posted on X that he had launched a meme coin called $Trump.
Meme coin and other new tokens have taken a more cautious approach — about what they should do with $Trump.
Eventually, Coinbase listed the token the following Tuesday, but by then it was too late for most customers to get their hands on it after the weekend
Nevertheless, meme coins are attractive to a segment of the online population and could be an important way for exchanges like Coinbase to attract new customers. They also received a major regulatory boost last month, when the Securities and Exchange Commission issued a statement announcing that Memecoin, but said, “We should be careful about the Memecoin camp that they are raising the price of Coinbase.” Coinbase has been a major player in the cryptocurrency space for a while, with skeptics worried they would distract from Coinbase’s efforts to develop products with real-world utility, such as payments and lending. Grewal said such discussions are healthy and reflect “debates outside of Coinbase and in the cryptocurrency space as a whole.” “We can rarely really predict with any accuracy which tokens will have real utility and ultimately impact the economy in a meaningful way.” ”
Before listing a new token, Coinbase conducts a vetting process to evaluate the token against the company's legal, compliance, and technical security standards. The goal is to root out tokens that regulators may deem to be unregistered securities, scams, or vulnerable to hacking.
In the past, Coinbase has had to withdraw its listings on the Coinbase app.
Meme
Coin pepe="">Memecoins critics argue that despite consumer enthusiasm for the tokens, Coinbase will regret supporting them. Freire said if Coinbase wants to build a legitimate cryptocurrency market, listing $Trump is "short-sighted" because it undermines investor trust in the market.Memecoins critics argue that despite consumer enthusiasm for the tokens, Coinbase will regret supporting them. Freire said if Coinbase wants to build a legitimate cryptocurrency market, listing $Trump is "short-sighted" because it undermines investor trust in the market.
“Protecting the investors who use your platform and maintaining the integrity of your business means that sometimes you don’t offer a product simply because there’s demand for it,” he said.
Embracing leverage
As regulatory barriers to Coinbase’s business in the U.S. ease, the company is also looking to push deeper into other areas of cryptocurrency that have long been dominated by free exchanges overseas.
That includes a form of derivative trading called perpetual futures, which dominate global cryptocurrency trading volumes. The Commodity Futures Trading Commission classifies them as a type of contract called a swap that can only be legally offered by dealer firms registered with the regulator.
Perpetual futures have become popular among both retail and institutional investors offshore, fueling the rise of U.S.-based exchanges including Binance, Bybit and the now-defunct FTX, which was founded by Sam Bankman-Freed.
Coinbase got a late start on perpetual futures, launching only after receiving a Bermuda licensein 2023, enabling it to serve customers outside the U.S. It now has a small but growing market share of the business. But Coinbase has also taken a more cautious approach than its rivals: It only offers up to 20x leverage on bitcoin perpetual futures, far less than the 100x or more offered by other exchanges.
“We’re conservative on our leverage levels,” said Greg Toussar, head of institutional products at Coinbase. “We try to be competitive with retail users but not overly risk-averse.”
Under the new U.S. administration, Coinbase executives hope they can offer perpetual futures to domestic customers. That could bring a lot of volume to the U.S. market, Armstrong said on an earnings call last month.
“We’re excited about how the new regulatory landscape will drive innovation and bring new products to market in the U.S.,” Toussar said.
Hedging its bets
By moving deeper into some of the wilder areas of the cryptocurrency market,Coinbase is protecting itself from losing ground to its relatively staid<span leaf="" para",{"tagName":"p","attributes":{"style":"margin-right: 8px; margin-bottom: 0px; margin-left: 8px; letter-spacing: 0.578px;"},"namespaceURI":"http://www.w3.org/1999/xhtml"}]'>Core
Control of the business: Providing small investors with a way to buy and sell cryptocurrencies, particularly bitcoin and ether.
A friendlier regulatory environment in the U.S. could bring stiff competition to Coinbase’s core business. Smaller U.S. cryptocurrency exchange rivals Kraken and Gemini are both preparing for potential public listings, which could give them the same legitimacy that Coinbase boasts. Meanwhile, overseas exchanges such as Singapore-based Crypto.com are also looking to grab a share of the U.S. market.
Top Wall Street firms are also looking to get in on the action. Charles Schwab and Morgan Stanley’s E-Trade, two of the largest U.S. retail brokerages, are among the stock trading giants planning to offer cryptocurrency trading, possibly starting with bitcoin and ether. Nasdaq recently petitioned the Securities and Exchange Commission to create a “level playing field” for traditional exchange giants so that they, too, can launch services that compete with crypto platforms like Coinbase. Coinbase will also face more competition in the stablecoin space, which is a relatively conservative area of cryptocurrency and is a token pegged to the U.S. dollar. Coinbase has a major partnership and revenue-sharing agreement with top stablecoin issuer Circle, but payment giants including PayPal have been launching their own stablecoins. Trump is now pushing for legislation to clarify the regulatory status of stablecoins, which may encourage more traditional financial institutions, such as big banks, to enter the market. Coinbase believes that having more companies involved in cryptocurrency trading will boost the overall market, which is also good for Coinbase. It is also betting that financial institutions like banks that lack cryptocurrency expertise will need to use services such as Coinbase's custody to quickly launch cryptocurrency trading.
"I hope they will see us as the most attractive option to launch a cryptocurrency service," said Brett Tejpaul, head of Coinbase's institutional business, which serves large traders. "From there, they can build on our platform and services step by step."
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The information provided in this article is for general guidance and information purposes only, and the contents of this article should not be considered investment, business, legal or tax advice under any circumstances. We are not responsible for personal decisions made based on this article, and we strongly recommend that you conduct your own research before taking any action. Although every effort has been made to ensure that all information provided here is accurate and up-to-date, omissions or errors may occur.
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