According to Matt Hougan, Chief Investment Officer of Bitwise, the top US cryptocurrency exchange Coinbase is benefiting from a “hostile regulatory environment”. Hougan believes that this environment is creating a man-made “moat” for Coinbase’s business, helping to maintain extremely high profit margins and allowing them to generate excess returns in the short term. Hougan also believes that Coinbase is able to generate significant returns, which in turn helps them raise funds and further promote their business interests. He stated, “Impressively, they are using this opportunity to raise cash (currently at $7.1 billion) and diversify their business on a large scale (see the growth of USDC, Base, and international futures)”. Despite Coinbase’s long-standing disagreement with the SEC, the company reported last week that it generated $1.6 billion in revenue in the first quarter of 2024, due to increasing transaction fees charged to institutional and consumer customers.
