With Coinbase stepping into Wall Street, brokerages and De-Fi together have the ability to provide serious competition. Talking on similar lines and highlighting Coinbase’s potential threats, Jeff Dorman, Chief Investment Officer at digital asset management firm, Arca, pointed out that it would be ‘foolish’ of other financial institutions not to take the shield themselves from the crypto-threat. In a recent podcast, he said,
“Executives at big financial institutions are well aware of everything that can cut into their business model. They have been getting squeezed for over a decade now, both from the regulatory side and as well as from the fees and margin side.”
He further added,
“Coinbase snubbed all these investment banks by not giving them a chance to become the underwriter. It’s hard to know how that will play out. It’s going to take some time because these are really two different worlds with completely different rules and workflows.”
With the United States eagerly awaiting Bitcoin ETF approval from the SEC, a recent report pointed out how investors in the US were viewing Coinbase’s stock as a fill-in for the same. The report said,
“For some investors, Coinbase stock can serve as a stand-in by providing structured, indirect exposure to Bitcoin.”
Shedding light on the rumor of the executives dumping most of their shares when the company went public, Dorman said that it was a clear case of crypto natives not understanding aspects of traditional finance. He added,
“It’s ironic because everyone’s desperate for more information and less secrecy. Here, in this case, you have full transparency, and just complete inability to interpret it correctly.”
Digital assets are the greatest capital formation and customer bootstrapping mechanism that the financial world has ever seen. Highlighting the importance of the hockey-stick growth for Coinbase, Dorman said,
“Outside of the decentralized projects like Bitcoin, the pass through tokens and asset backed tokens have figured out the incentive model of bootstrapping their own growth by incentivising their customers to use their product more and to evangelise on behalf of the company.”
Shedding light on the US regulatory system, he said,
“As much as it is fun to poke holes at the government and the SEC and how slow moving they are, the reality is they are not trying to crush innovation. They are trying to understand it and protect investors.”
Analyzing the odds of other exchanges listing themselves in the future, Dorman pointed out,
“Finance has always been a copy-cat industry. As soon as you see one sucessful story, you’re going to see five more behind it. I think other crypto-native exchanges are certainly going to try to get themselves listed.”
