Coinbase Goes After Wall Street With New Tools For Investors

Coinbase Inc. became the best-known cryptocurrency exchange in the U.S. by bringing Bitcoin to the masses. Now it’s looking to crack Wall Street.

 The San Francisco-based company is developing several tools to lure institutional investors onto its platform. They include custodial services where investors can store large amounts of digital currencies, as well as enhanced trading capabilities, such as risk management and margin trading, which allows customers to use borrowed money.
While some of the products will be available to everyone, most will focus on institutional clients. One such service, called Coinbase Prime, will offer lending, margin financing and over-the-counter trading.

The custody question — how to securely hold digital coins in an era of rampant hacking — has bedevilled money managers ever since cryptocurrencies emerged as an asset class. Coinbase began outlining efforts to provide a solution in November. Coinbase now tells Bloomberg it’s forging a partnership with Electronic Transaction Clearing Inc., a so-called qualified custodian for securities designated by the U.S. Securities and Exchange Commission.

The regulator requires large investment advisers to keep customer assets at qualified custodians to protect clients from theft or losses. Banks and broker dealers are common examples of such safe houses for securities. However, authorities haven’t offered clear rules around what it means to have custody of crypto-assets.

Coinbase’s new partner, Electronic Transaction Clearing, settled with the SEC in March over an alleged violation of customer-protection requirements and was fined $80,000. The agency accused ETC of improperly parking some securities belonging to customers at a clearing firm in late 2015. The firm didn’t admit or deny wrongdoing.



While Coinbase has said it doesn’t consider tokens on its exchanges to be securities, the regulatory view on that is hazy. The lack of clarity from financial watchdogs could explain why Coinbase hasn’t attracted big names to its custody product. The company said it’s holding more than $20 billion in digital assets, and custodial services will be available to investors with at least $10 million in deposits.

Just three years ago, Coinbase was working out of a one-bedroom apartment, and the startup struggled to keep up with the surge in cryptocurrency interest last year. Problems have persisted. Some 1,500 complaints have been filed by customers on the Consumer Financial Protection Bureau’s website since the start of 2018 over slow trading times, delays in processing transactions, high fees and other issues.

Coinbase now has more than $200 million in funding from backers such as Andreessen Horowitz and the New York Stock Exchange. Coinbase recognizes it’ll need to prove the service is reliable if it hopes to win over hedge funds or Wall Street’s elite, said Adam White, vice president of Coinbase Institutional, a division setup to oversee the Wall Street business.

“We realized there is a very different set of expectations between institutions and individuals,” he said. “We just get one shot, one first impression, and we need to make sure it’s a good one.”

 


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Author: Julie Verhage & Lily Katz
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FedEx CEO: Adopt New Tech Like Blockchain or Be Disrupted

“Blockchain has the potential to completely revolutionize what’s across the border.”

Speaking at CoinDesk’s Consensus 2018 in New York today, Fred Smith, chairman and CEO of the U.S. logistic giant FedEx, doubled down on his commitment to embracing blockchain technology as a way for the decades-old company to maintain its game in a rapidly changing digital world.

Smith explained that one major issue that the logistic and transportation industry has faced is the “massive amount of friction” in cross-border logistics, since different countries have different standards, regulations and terminologies.

He told the audience:

“For cross-border shipments, ‘trust’ is legal requirement for every transaction. What blockchain has is a potential for the first time ever to make the information available for everybody.”

As such, the FedEx chief praised the “chain of custody” that blockchain can bring to the entire logistic industry.

All this talk isn’t just hot air, either – FedEx joined the Blockchain in Transportation Alliance (BiTA) in February this year in a bid to explore potential blockchain applications alongside other partners within the logistic industry.

At the time, the firm also launched a pilot program to establish what data would be needed for a distributed ledger to ease disputes between customers sending and receiving goods through FedEx. The shipping giant also wants to use blockchain to store its records.



Also speaking at the panel session, Robert Carter, FedEx’s CIO and executive vice president of information services, said the firm will first explore that deployment in the freight industry, since one single ship could contain millions of transactions at the same time.

Carter commented:

“We move easily 12 million shipments a day and that more than doubles during the peak seasons. While we absolutely believe this technology is going to scale, right now it makes sense for us to do this in our freight world.” 

Answering a question from the panel’s host, author Don Tapscott, on how he persuaded Smith to approve the decision on blockchain exploration, Carter said, in fact, it was the other way round.

“It’s Fred that dragged me into this,” Carter said, adding:

The application of these custody chains … is so critical to the information aspect. We’re operating on this plane between the physical world and the digital world.”

Speaking on the importance of moving with the times as a company, Smith concluded:

“If you are not operating at the edge of new technologies, you will surely be disrupted. If you are not willing to embrace new technologies like internet of things and blockchain to face those new threats, you are, maybe subtly, at some point … going to extinction.”

 


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Author:  Wolfie Zhao
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Uber Stumbles in Lengthy CFO Search Ahead of IPO

The ride-hailing company’s leading candidate, the CFO at VMware, has indicated he would likely withdraw

Uber Technologies Inc. chief Dara Khosrowshahi is under pressure from the board and investors to find a new finance chief after its leading candidate backed out, adding to the challenges of preparing for an IPO next year.

Mr. Khosrowshahi had hoped to reach an agreement with VMware Inc. CFO Zane Rowe for Uber’s long-vacant role. But Mr. Rowe recently indicated he will turn down the job, according to people familiar with the matter.

Representatives for Uber and VMware declined to comment.

Uber, which hasn’t had a CFO since 2015, needs a finance head to help steward an initial public offering planned for 2019. A new CFO would have the hefty task of shoring up the finances after Uber reported a loss of about $4.5 billion last year.

The company has so far come up short with its latest search under Mr. Khowsrowshahi. Laurence Tosi, who left Airbnb Inc. as CFO earlier this year, also recently passed on the role, these people said.

Mr. Khosrowshahi has asked candidates to commit to staying in the job for five years or more, some of the people said, a relatively long commitment.

Other candidates remain in the running for the position, the people said. The CEO has been working to identify diverse candidates for the post, some of the people said.

At a board meeting on Tuesday, directors pushed Mr. Khosrowshahi to speed the CFO search to help get the company’s finances in order, the people said. The directors also raised questions about why other positions remained open, including the chairman and chief compliance officer, the people said.

Mr. Khowsrowshahi named a new chief operating officer and general counsel a few months after becoming CEO of Uber in September.

He has previously discussed adding media magnate Barry Diller, his former boss at IAC/InterActiveCorp, as chairman of the 11-member board, though that idea fell through, according to people familiar with the matter. Mr. Diller didn’t respond to a request for comment.



Two appointees from SoftBank Group Corp. — Rajeev Misra and Marcelo Claure —have yet to start their board positions amid a review of the firm’s recent $7.7 billion investment in Uber by the multi agency panel known as the Committee on Foreign Investment in the U.S.

Uber hired Mr. Khosrowshahi from Expedia Group Inc. after co-founder and CEO Travis Kalanick was pushed out in June. Since then, Mr. Khowsrowshahi has been finding ways to pare losses and cut costs, including selling divisions such as the money-losing U.S. car leasing business to Fair.com and its Southwest Asian operations to rival Grab Inc.

While Uber has never been profitable, the company continued to boost ridership and revenue throughout last year despite a punishing stretch of scandals. Revenue in the fourth quarter rose 12% to $2.26 billion, while its loss narrowed to $1.1 billion, according to financial statements reviewed by The Wall Street Journal. Its total revenue last year was $7.36 billion.

After facing charges of sexism by a former software engineer last year, Uber tried to find a woman for either its COO or CFO positions, according to people familiar with the matter.

For COO, Mr. Khosrowshahi ultimately settled on his former employee and Orbitz head Barney Harford. The company had interviewed Karenann Terrell, then the information chief of Walmart Stores Inc., and Helena Foulkes, the former executive vice president of CVS Health Corp., among others, The Wall Street Journal reported.

Uber last year hired former U.S. Attorney General Eric Holder’s law firm, Covington & Burling LLP, to investigate its workplace practices. Among the firm’s recommendations after a monthslong probe were that Uber should recruit more diverse candidates for it senior leadership positions and adopt a version of what is known as the Rooney Rule, a National Football League policy that dictates that teams interview minority candidates for top jobs.

 


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Author:  Greg Bensinger 
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Two Canadian Companies Are Merging in the Biggest Weed Deal Ever

  • Canada’s Aurora Cannabis to buy MedReleaf in all-stock merger
  • Industry consolidation heats up as Canadian legalisation looms

Consolidation in Canada’s nascent marijuana industry is heating up, with two of the largest players agreeing to the biggest merger seen so far in the sector.

Aurora Cannabis Inc. agreed to buy rival MedReleaf Corp. for about C$2.9 billion ($2.3 billion) in stock, the companies said Monday in a statement. The deal will create a producer with the capacity to grow 570,000 kilos (1.26 million pounds) a year of cannabis at nine facilities in Canada and two in Denmark. The merged company will also have distribution networks at home as well as in Europe, South America and Australia.

Canadian marijuana growers are racing to gain market share as Prime Minister Justin Trudeau pushes to legalise recreational use this year. Aurora is leading the effort to consolidate the industry, having acquired more than 10 targets in the past two years.

Aurora Chief Executive Officer Terry Booth said there will be more consolidation in the industry.

“We’re not done,” he told reporters in Toronto. “Over the next couple weeks you’ll see some more activity from Aurora,” but nothing on the scale of the MedReleaf deal, he added.

Chief Corporate Officer Cam Battley said Aurora’s goal is to “become nothing less than the world’s largest cannabis company.” Aurora sees particular growth opportunities in the European Union.

Aurora’s stock rose 1 percent to C$8.15 at 0:40 a.m. in Toronto, while MedReleaf’s gained 2.6 percent to C$25.44.



Global Growth

“The likelihood of another bidder emerging with a superior offer is low in our view, given the size of the transaction and the overwhelming support of MedReleaf’s shareholders,” GMP Securities analyst Martin Landry said in a note. He added Aurora may find it challenging to swallow another large deal so soon after its acquisition of CanniMed, which closed earlier in May.

In another Canadian deal announced Monday, Canopy Growth Corp. said it agreed to buy the 33 percent stake in greenhouse operator BC Tweed Joint Venture Inc. that it doesn’t already own. Canopy said separately it plans to list on the New York Stock Exchange.

Weed companies are also seeking to capitalise on investor enthusiasm. Share prices for producers have soared over the past year: the Bloomberg Intelligence Canada Cannabis Competitive Peers Index, which comprises 54 companies, has almost doubled in the period and has a market capitalisation of $65.4 billion.

For the growers that emerge as industry leaders, the prize isn’t just a legal Canadian market — where sales could reach C$6 billion by 2021, according to a report from Canaccord Genuity Corp. Governments in other parts of the world, particularly Europe, are heading in a similar direction to Ottawa, and several Canadian growers have been keen to advertise their ambitions to grow and distribute cannabis overseas.

Monday’s deal eclipses what had previously been the industry’s biggest deal: Edmonton-based Aurora’s C$775 million acquisition of CanniMed Therapeutics Inc., which was completed earlier this month. Aphria Inc., another Canadian grower, bought Nuuvera Inc. for about C$444 million in March.

Many Canadian growers eke out little or no profit as they push to expand production and revenue. Aurora, which has a market capitalisation of C$4.59 billion, had a loss of C$13 million on sales of C$18.1 million in the year through June 2017.

According to its most recent annual income statement, Markham, Ontario-based MedReleaf had a net profit of C$11 million on revenues of C$40.3 million in the year through March 2017. Aurora’s takeover values MedReleaf at about 163 times earnings before interest, taxes, depreciation and amortisation for that period, according to data compiled by Bloomberg.

  • MedReleaf holders will receive 3.575 shares of Aurora for each share they own. Based on May 11 closing prices, that values MedReleaf at C$28.85 per share, or a 16 percent takeover premium.
  • After completion of the deal, existing Aurora and MedReleaf holders will own about 61 percent and 39 percent of the combined company, respectively.
  • BMO Capital Markets is Aurora’s financial adviser, while McMillan LLP is legal counsel. Canaccord Genuity is advising the special committee of MedReleaf’s board, which also received an independent fairness opinion from GMP Securities and an independent financial diligence report from Deloitte LLP. Stikeman Elliott LLP is legal counsel to MedReleaf and Davies Ward Phillips & Vineberg LLP is legal counsel to shareholders of MedReleaf.
  • MedReleaf was 7.9 percent higher at C$26.80 at 9:02 a.m. in pre-market trading in Toronto while Aurora was 0.9 percent higher at C$8.14.

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The owner of the New York Stock Exchange has been reportedly working on a bitcoin exchange

  • ICE, the owner of the New York Stock Exchange, has been developing an online platform to buy cryptocurrency, a report from The New York Times found. 
  • The trading platform would “allow large investors to buy and hold bitcoin,” the report found. 
  • ICE first entered the crypto market via a crypto data feed, which went live in March.     

Intercontinental Exchange, the parent company of the New York Stock Exchange, has been developing an online platform to buy cryptocurrency, according to a report by The New York Times.

The move, which The New York Times first reported on Monday citing documents and people familiar with the situation, is another example of a traditional Wall Street firm diving into the nascent market for digital coins.

Georgia-based Intercontinental Exchange, or ICE, first entered the market for digital currencies via a cryptocurrency data feed, which went live in March. Notably, Wall Street bank Goldman Sachs said it was working on a cryptocurrency trading desk earlier in April, The New York Times earlier reported. A slew of trading firms have been trading crypto, including Chicago-based HFTs such as DRW and Jump Trading.

As per The New York Times report, the potential crypto platform by ICE would “allow large investors to buy and hold bitcoin.”

The exchange operator, according to the report, has also explored swaps, another financial instrument, which would be linked to bitcoin. To be sure, the plan may not come to fruition. An ICE spokesperson was not available for comment.

Whereas ICE’s exchange competitors — Cboe Global Markets and CME Group — have jumped into the crypto market via bitcoin futures, ICE has focused on data, and adding transparency to the marketplace known for its wild price swings and fraud via its data-feed product.

Nasdaq, which entered into a partnership with crypto-exchange Gemini in April, is also planning on launching a futures market for crypto. Also, Nasdaq’s CEO Adena Friedman said the firm could one day launch a crypto exchange.

Still, if ICE were to follow through on its reported plan, it would be the first established equities exchange operator to launch such a venue in the US.

The venture would potentially have a big leg up over existing crypto-exchange venues which lack the mature market structure of equities exchanges like NYSE and Nasdaq.

 


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Author: Frank Chaparro
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EOS (EOS) Leading the Altcoin Rally to New Highs

EOS (EOS) is currently leading the altcoin rally with an unprecedented zeal and excitement. The price rose all the way from $4 even to surpass its previous high of $18.8, to the surprise of many. It made a new high around $23.5 before correcting. Currently, the price trades around $17. What interests most about EOS is the fact that it is perhaps the only coin that has not only fully recovered from the recent correction but also made a new high! The price action looks extremely bullish on the EOS/BTC chart and eyes further gains with room for a short term correction.

EOS just recently introduced EOSIO Dawn 4.0 which was the big catalyst in pushing its price past the previous all time high. Institutional interest in EOS is also on the rise as a more efficient and scalable Ethereum (ETH) competitor. Their team is also one of the most active on social media and frequently updates their Twitter account. They have also gained some following on Facebook recently. EOS is one of those coins that went into coma after its ICO. It was completely on the sidelines and hence ignored by many analysts and investors. There was a lot of hype around its ICO though and those who participated in the ICO and sold last week would have made a killing.

With Ethereum (ETH) in trouble over its possible status as a “non compliant security”, coins like EOS and Ethereum Classic (ETC) have made impressive gains even while Bitcoin (BTC) was in the red. EOS particularly has a lot going on at the technical side currently and it would not be surprising to see Ethereum (ETH) style gains on EOS during 2018. If Bitcoin rises and stays above $10,000, this would give altcoin investors a lot of confidence. One thing we have seen in 2018 is an astronomical increase in the number of altcoin trades which has also led to a decrease in Bitcoin dominance. Most such investors believe that altcoins have a lot more potential for higher gains compared to Bitcoin (BTC). As such, they only look up to Bitcoin for the general direction of the market. When things look stable for Bitcoin (BTC), money flows into Bitcoin at much faster pace. The same is also true of money going out of altcoins as soon as things start to look bad for Bitcoin.

The recent altcoin rally, led by EOS shows that many cryptocurrencies are due for a bull run against Bitcoin. It usually happens around May-June during which time most altcoins reach new highs.  The current scenario points to a pending rally for most altcoins to rise to new highs just like EOS. Some coins like TRON (TRX) and Stellar (XLM) are already half way there. Normally, this would be happening at a comparatively slower pace but this year also coincides with a major bullish scenario for Bitcoin (BTC) projecting its price at $100,000 and higher. The pace of this year’s altcoin rally also indicates that a 2013 style scenario is very much possible which should yield 10x+ returns on most altcoins.

 


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Author: Fakhan
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Elon Musk will bring humans to Mars, and cryptocurrencies to the moon

Elon Musk, CEO and co-founder of SpaceX and CEO of Tesla has posted a series of tweets about his ambitions to start his own confectionery enterprise, adding that he was “super, super serious” about this new venture to spite sceptics.

And he dropped a hint of what his upcoming venture would be called, or maybe what it might involve: cryptocurrencies; specifically, “Cryptocandy.” Whether he was serious or not, we don’t know for sure. Some people suggested his business should be called chocolate bitcoins or moon rocks, while others stretched the connection between crypto and his theoretical candy business even further: “My candy better be airdropped from a space station or I want my money back,” one person wrote.

The tweets gained over 100,000 likes by Saturday and sent the Twitter sphere into a frenzy. People asked when his company was hiring, and how they could buy stock (or tokens?) as part of the possible venture.



Musk’s candy idea seems to have been part of an exchange between Musk and Warren Buffet. It started earlier this week when Musk, as part of Tesla’s earning report call, stated that economic moats were “lame.” The statement takes a jab at Buffet, and he is known to have coined the term to describe a company’s competitive advantage.

Buffet responded to Musk’s reward at his annual Berkshire Hathaway meeting, stating that moats are still a viable idea, and that one can look at his See’s Candies business as a great example.

“Then I’m going to build a moat & fill it w candy,” Musk tweeted in response. “Warren B will not be able to resist investing!” Musk said in another, provoking Buffet further.

Elon Musk is currently ranked as the 53rd richest person in the world according to the Forbes, and 21st on the list of The World’s Most Powerful People.

 


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Author:  Matthew North 
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Instagram quietly launches payments for commerce

Get ready to shop the ‘Gram. Instagram just stealthily added a native payments feature to its app for some users. It lets you register a debit or credit card as part of a profile, set up a security pin, then start buying things without ever leaving Instagram. Not having to leave for a separate website and enter payment information any time you want to purchase something could make Instagram a much bigger player in commerce.

An Instagram spokesperson confirmed that native payments for booking appointments like at restaurants or salons is now live for a limited set of partners.

One of the first equipped is dinner reservation app Resy. Some of its clients’ Instagram Pages now offer this native payment for booking. And in the future, Instagram says you can expect direct payments for things like movie tickets through the app. Instagram initially announced in March 2017 that “we’ll roll out the ability to book a service with a business directly from their profile later this year,” but never mentioned native payments.

The payment settings are now visible; some, but not all, users in the U.S. have it while at least some in the U.K. don’t. A tap through to the terms of service reveals that Instagram Payments are backed by Facebook’s Payments rules.

With its polished pictures and plethora of brands, shopping through Instagram could prove popular and give businesses a big new reason to advertise on the app. If they can get higher conversion rates because people don’t quit in the middle of checkout as they fill in their payment info, brands might prefer to push people to buy via Instagram.

Facebook started dabbling in native commerce around 2013, and eventually started rolling out peer-to-peer payments through Messenger. But native payment for shopping is still in closed beta in the chat app. It’s unclear if peer-to-peer payments might come to Instagram, but having a way to add a credit or debit card on file is a critical building block to that feature.



It’s possible that the payments option will work with Instagram’s “Shoppable Tags,” which first started testing in 2016 to let you see which products were in a post and tap through to buy them on the brand’s site. Since then, Instagram has partnered with storefront platforms BigCommerce and Shopify to get their clients hooked up, and expanded the feature to more countries in March. For now, though, none of Instagram’s previous shopping feature partners like Warby Parker or Kate Spade let you checkout within Instagram, and still send you to their site.

But the whole point of Instagram not allowing links in captions is to keep you in a smooth, uninterrupted browsing flow. Getting booted out to the web to buy something broke that. Instagram Payments could make impulse buys much quicker, enticing more businesses to get on board. Even if Instagram takes no cut of the revenue, brands are likely to boost ad spend to get their shoppable posts seen by more people if the native payments mean more of them actually complete a purchase.

Instagram isn’t the only one who sees this potential. Snapchat started testing its own native payments and checkout feature in February.

 


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Author: Josh Constine 
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Bitcoin Needs Enhancements and Institutional Money to Beat $20K Highs, Say Analysts

The price of Bitcoin has finally picked up since April after struggling to stay above the $6,000 mark earlier in the year. Investor confidence within the cryptocurrency market is getting on its feet as the market cap reaches $450 billion and BTC dominance drops to nearly a third of the market. There are three factors that could prompt a rally in its price capable of printing new highs, according to analysts.

As the price of Bitcoin gets closer to the $10,000 area again, a number not seen since March, analysts take note of what is needed to bring the cryptocurrency back to $20,000 and higher. Adoption as a store of value and as a medium of exchange is paramount to establish Bitcoin in the currency market. A number of changes must happen first in order to promote such adoption.

Christian Ferri, president and CEO of BlockStar, an all-in-one blockchain ecosystem for entrepreneurs and investors, told Forbes that there is a need for a scalable security infrastructure.

“Assuming Bitcoin will be used as store of value going forward (e.g. digital gold), a better security infrastructure overarching the entire crypto ecosystem will be needed for people to place trust in this new financial medium and start using it. Once this happens, more people will jump in, so a scalable infrastructure will be crucial.”



Ferri added that only protocol enhancements are capable of reducing price volatility, which in turn will improve its function as a currency.

“If new enhancements are done to the protocol to allow Bitcoin (or a fork of thereof) to become a medium for everyday transactions (e.g. buy your Latte with Bitcoin), we’ll need a stability mechanism in place, on top of security and scalability mentioned above. This way that Latte won’t cost you $5 today and $50 tomorrow.”

The inflow of institutional money could also help drive the price of Bitcoin to new record highs, but there is a number of concerns that need to be taken care of first, from security to counterparty risk and regulation. The entry of large players could cause the herd to rush in, but it would require a host of regulated exchanges dealing with cryptocurrencies.

“At this stage, institutional investors hold the key to Bitcoin’s growth. Concerns around liquidity, security, counterparty risk and custody of assets have so far prevented institutional investors from buying Bitcoin on decentralised exchanges. Only when regulated exchanges–such as tZERO, Coinlist, or even NASDAQ — go live with their secondary crypto trading platforms, will the smart money begin investing directly into Bitcoin”, said CrowdfundX CEO Darren Marble.

Simpler trading through brokerage accounts could eventually take place via crypto-related exchange-traded funds (ETFs). The mainstream adoption of cryptocurrencies within the investment industry may change the paradigm and lead to new all-time highs of Bitcoin.

 


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Author: Richard Esteves
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The Most Likely Next Coinbase Listing

A Coinbase listing is the crypto equivalent of the Holy Grail for the community behind a token. Aside from the obvious benefits – including an exponential spike in the price and volume for any coin lucky enough to make the grade – Coinbase listings expose tokens to a much wider audience, increasing the long-term prospects of mass adoption.

The purpose of this article is to provide an analytical framework for decision-making. Investing purely on the speculation of a listing on any exchange is very short term focused and may be suited for investors with higher risk tolerances, but a Coinbase listing has five immediate benefits for any coin:

Liquidity: GDAX, the trading app owned by Coinbase for professional crypto traders, is a top 8 exchange globally in terms of volume per day. A listing provides immediate liquidity in a cryptocurrency market that does over $310 billion in volume per day.

Access: Over 85% of GDAX’s volume is on USD pairs. It gives a market opportunity to exchange fiat for cryptocurrency, and Coinbase is arguably considered the most responsible platform to do so. Coinbase has been described as the platform you’d share with your grandmother to get into cryptocurrency for the first time due to their exceptional Ux design. There are few avenues for a green, inexperienced, non-technical investor to buy cryptocurrency for the first time, and Coinbase is often the place they are directed.

Familiarity: Having USD pairs makes it easier for your average investor to conceptually understand their investments. People are more familiar with pricing assets in dollars versus satoshis (the smallest denomination of bitcoin), and therefore they are more comfortable using USD as their baseline. For example, buying Cardano (ADA) at $0.35 USD per coin is conceptually easier to interpret than buying ADA at 4000 satoshis.

Advertising: A listing will inherently attract the attention of all mainstream crypto media outlets. In addition, since Coinbase is generally a new investor’s first interaction with crypto, it gives a new group of crypto investors an introduction to the currency. It’s also a cyclical effect that benefits from word of mouth marketing.

Legitimacy: Coinbase aims to be the most trusted cryptocurrency company in the space according to their Chief Compliance Officer, Mike Lempres. A fundamental component of reaching that goal is compliance, and a listing on Coinbase confirms the integrity of a coin to the public. They’re a trusted entity and it’s expected that they’ve done their due diligence in the process of listing.

Let’s take into consideration four examples that show the short-term influential power that Coinbase has over the market.

    1. Litecoin (LTC): Coinbase added support for LTC on May 3rd, 2017. In the next 5 days LTC jumped approximately 57%.
    2. Bitcoin Cash (BCH): Went up over 300% in one day once it was added to Coinbase. This infamous hour of trading saw BCH priced at $8500 on Coinbase and as low as $3800 on other exchanges, such as Binance.
    3. Ripple (XRP): XRP listing rumours are very common, but the coin still hasn’t been listed. Information surfaced that Ripple offered to pay Coinbase to list their coin and they declined. The latest rumour in early March saw XRP spike almost 20%.

Every Telegram channel and Reddit page has someone arguing that their coin is going to be the next listing on Coinbase, but it’s important as an investor to use an analytical lens when making financial decisions.

There are rumours every day, and with the recent announcements of the launch of Coinbase Ventures, added support for ERC20 tokens, the acquisition of Earn.com, filing Form D paperwork with the SEC to sell regulated securities, and high-profile hires to scale their team, speculation of the next coin listing has been extremely rampant.

Below is a framework that investors could use to educate themselves and empower their own decision-making on what they think the possibilities are for the next Coinbase listing.

These questions contain objective and subjective variables for investors to answer, and different investors may come to different conclusions, but it establishes a structure to avoid the erroneous noise that crypto media is famous for.

The weighting of each criteria can be changed based on personal preferences.

These are the important criteria that an investor needs to ask:

  • Does the coin meet the GDAX framework?
    • Coinbase announced their listing requirements for a coin in Q4 of 2017, but the company still retains full and absolute discretion for listing or delisting any asset, so meeting the requirements is just step 1 of the framework. These requirements include: strong alignment with Coinbase’s mission and values, engineering and product quality, short & long term operating expectations, ability to scale, liquidity, global exchange representation, token demand, and economic incentives to encourage for participating parties.
  • Is the coin considered a security?
    • The asset cannot be classified as a security in accord with US Securities Law. However, Coinbase has filed to become an SEC licensed exchange, and if that does happen I assume they will change their framework to accommodate coins that are classified as securities.
  • Does the asset meet compliance obligations?
    • These obligations include an Anti-Money Laundering Program.
  • Is the coin an ERC20?
    • Coinbase added support for ERC20 tokens in late March. Allocating resources on a task like this suggests that the next listing could likely be an ERC20, but this is not definitive. It’s important to evaluate whether or not the coin has plans to move to their own mainnet in the near future (such as EOS).
  • Does the token reward users for participation?
    • When Coinbase acquired Earn.com, Brian Armstrong, Coinbase’s CEO, tweeted about his interest in investing in platforms that directly rewards users for participation.
  • Are there any Y-Combinator connections?
    • Coinbase is a Y12 alumni and Y-Combinator has a strong alumni network.
  • Are there any employee relationships?
    • Charlie Lee, creator of Litecoin, was the former Director of Engineering at Coinbase. Personal connections to Coinbase are definitely considered to be an added bonus when considering the chance of a listing.
  • Any other considerations?
    • Some other important considerations are geography and the fact that Coinbase announced last month that listings will not merely be according to the market capitalization of a coin, which means it’s likely that coins over a certain threshold all have an equal playing field when evaluating their probability of being listed. There is also no reason that Coinbase only needs to add only 1 asset at a time, and there could potentially be a bundle of ERC20 coins listed.

Based on this framework, the three most probable token listings: 0x (ZRX), Augur (REP) and Quantstamp (QSP).

0x could be the most probable listing. 0x meets the digital asset framework, it has been rumoured that 0x executives have visited the Coinbase office (and their offices are an 8-minute drive from one another in San Francisco), both 0x and Coinbase filed for Form D paperwork with the SEC back-to-back within 2 weeks time, Coinbase could use the 0x protocol to exchange its ERC20 tokens, 0x is an ERC20 token, and they are a top-50 market cap coin.

To top that off, 3 out of 4 of 0x’s advisers listed on their website are ex-Coinbase employees: Fred Ehrsam was a co-founder, Olaf Carlson-Wee was the first hire, and Lina Xie was a project manager.


ICO of the week:
Vanywhere.com:
Working product – ✅
Major player involved – ✅
Experienced team – ✅
Active community and social channels – ✅
Potential of mass adoption – ✅


It may seem strange to list a coin on their platform that could be perceived as a future competitor as Coinbase, but in the announcement of Coinbase Ventures, the company announced that they may “invest in companies that ostensibly look competitive with Coinbase”. Coinbase Ventures investments may not be directly correlated with listings in their exchange, but they also mentioned that they would like to invest in projects that are in everyone’s interest to see the ecosystem innovate by taking a long-term view of the space.

It seems as though Coinbase lists a new coin approximately every 9 months based on the timeline history of listings. With that in mind, one may believe the listing could be soon – but don’t keep your hopes up.

Dan Romero, General Manager of Coinbase, indicated that the company wants to increase its offerings, but the regulatory uncertainty when classifying security and utility tokens is keeping them from rushing into anything. It’s almost certain that no coins will be added until the SEC develops a framework to classify tokens.

 


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Author: Andrew Macdonald
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