American cryptocurrency exchange platform Coinbase Global (NASDAQ:COIN) is shifting focus from the current crypto contagion to the regulatory requirement for stablecoins. Coinbase supports USD Coin (USDC), and hopes to make it America’s “de facto central bank digital currency,” a WSJ report said. The exchange earns revenue from the trading fees of transactions carried out on its platform. Hence, the regulation of USDC will boost its trading and, indirectly, Coinbase’s revenue stream.
Last week, the company announced that it would not charge a fee for converting customers’ holdings of another stablecoin, Tether, to USDC. Coinbase considers USDC to be more “trusted and reputable” than the others and wants customers to increase trading in the currency. Currently, Tether is the largest stablecoin in terms of market capitalization, followed by USDC. Year to date, USDC’s market cap has remained relatively stable.
In a recent interview, CEO Brian Armstrong said, “If we can get regulatory clarity, I think it will sort of shepherd in or grandfather in some of these stablecoins that have been following best practices around being audited and regulated.”
A sound regulatory framework will enhance customers’ trust in cryptocurrencies and stablecoins and hopefully increase the trading of digital assets.
Is Coinbase Safe to Invest in?
Wall Street analysts have a Moderate Buy consensus rating on Coinbase Global stock. This is based on nine Buys, six Holds, and four Sell ratings. Also, the average Coinbase Global price target of $73.88 implies 83.6% upside potential to current levels. Meanwhile, the COIN stock has lost nearly 84% so far this year.
At the same time, short-selling ace Jim Chanos remains short on Coinbase, and it is not because of the recent crypto fallout. Chanos said, “This isn’t about crypto prices. That’s not why we shorted the stock and that’s not why we remain short. I mean, crypto prices will obviously fluctuate. It’s really the business model that I don’t think people appreciate here.”
