Coinbase recently acquired three financial firms in an effort to become a fully regulated financial institution.
These acquisitions give Coinbase an ATS, broker-dealer, and RIA license. With one announcement, Coinbase has gone from a crypto exchange operating on the fringes of the financial industry to the best positioned company in the industry.
Additionally, Coinbase wrote a blog post that explicitly called out their interest in trading regulated assets on the blockchain - also known as tokenized securities.
One of the greatest battles of the next 3-5 years will be Coinbase & Circle vs the existing public equity exchanges (NYSE, NASDAQ, etc). They will all incorporate this new digital technology, but the prevailing winner will be the first organization to gain mass user adoption.
The incumbents have the advantage - they have a large user base & the largest companies in the world on their exchange. It is really their game to lose. But the crypto upstarts won’t go quietly into the night.
You can expect to see strong competition from each exchange as they work to recruit different asset owners who are looking to list on regulated exchanges. This already occurs today between NASDAQ and NYSE but things should heat up with the addition of Coinbase and Circle.
Lastly, the tokenized security plans of Binance and other large crypto exchanges are unknown. Things would take a wild turn if they decided to jump in as well - we would have a truly global race for regulated liquidity, which would ultimately benefit investors & asset owners the most.
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