Coinbase stock future is pretty optimistic for now as the share price of top US-based crypto exchange Coinbase (COIN) has increased by more than 19% in the last five days, following a historic $4 billion punishment imposed by the US Department of Justice (DOJ) on its main competitor, Binance.
Although Coinbase is entangled in certain regulatory disputes in the United States, its position as a generally-compliant crypto exchange appears to be a significant advantage moving into 2024 since large penalties imposed on Binance have made it clear that authorities aim to wrestle the industry.
“The enforcement action against Binance is allowing us to kind of turn the page on that and hopefully close that chapter of history,” Coinbase CEO Brian Armstrong said, alluding to the cryptocurrency industry’s early history of legal crisis. “I think that regulatory clarity is going to help bring in more investment, especially from institutions.”
Aside from the five-day jump in Coinbase shares that is good for Coinbase stock future, the company’s stock has risen about 90% in the previous six months, boosted by its prospective role as a custodian for various spot bitcoin exchange-traded fund (ETF) proposals, including one from big asset management BlackRock.
Its potentially important position in such institutional goods would undoubtedly represent the sort of institutional investment mentioned by Armstrong.
Following Binance‘s huge punishment following a years-long investigation that discovered money laundering, money transferring, and sanctions breaches, the value of its native cryptocurrency has plummeted, and outflows have reached more than $950 million.
The company hopes to continue operations after the departure of its founder and CEO, Changpeng Zhao, but this raid may herald a new, more-compliant age for the cryptocurrency sector.
Businesses supported by authorities, like Coinbase, stand to gain as larger financial institutions strive to offer goods and services based on the crypto asset class.
“Basic regulations and compliance are critical to preventing front running and keeping assets segregated from a firm’s capital with safe custody,” Frank Holmes, executive chairman of HIVE Digital Technologies, noted. “Stock exchanges are not allowed to be brokers, and this lack of separation (in crypto) has contributed to many financial scams.”
Prior to the Binance penalty, major Wall Street corporations such as JPMorgan and Fidelity had been gradually joining the crypto market. Rising open interest in markets such as the Chicago Mercantile Exchange, where it has lately reached all-time highs, has signaled institutional interest.