The decision to add stocks is part of Coinbase’s plan to be an “everything exchange” where users can invest in stocks, prediction markets and more. The move makes strategic sense for Coinbase as a way to diversify its revenue streams and build a broader base of customers—provided it can pull it off. Armstrong doesn’t think so. In a recent interview, he said the company is playing a long game and that, in an era where assets of all sorts are moving to the blockchain, Coinbase will be a cornerstone of the next era of mainstream finance.
“We have deep crypto expertise. We have the most trusted brand in crypto. We’re storing more crypto assets than any other company,” he said. “So I think what we’ll be good at is being the bridge between traditional finance and crypto, and then getting tokenized equities to really take off.”
There’s a lot of work to be done to go figure out the details of that with the SEC and other people. It’s record keeping, rules. Congress is currently debating a piece of legislation known as the Clarity Act aimed at creating a regulatory framework that would help integrate crypto into the broader financial system. The process, however, became bogged down amid a squabble between the crypto industry and the banking sector that escalated when Armstrong said on Wednesday that Coinbase would pull its support for the bill in response to last minute changes, before sounding a more conciliatory tone the next day.
The upshot is that Coinbase is likely to focus for now on offering stocks in a conventional fashion, relying on a firm called Apex Fintech Solutions to handle the backend operations. Currently, stocks are available only to a small group of users, but the company plans to expand the offering to all customers in the coming weeks. “All global markets and tradable assets will move onchain, and no one is better positioned to lead that transition than Coinbase,” said a company spokesperson.
As for when that transition will take place, Armstrong predicts it will begin to occur in the next two years or so, and that it will be newer companies that will be the first to issue stock this way. In the long run, he predicts that every firm will recognize blockchain as a superior technology for managing their shares. Armstrong added that he liked the idea of Coinbase one day being the first company to pay shareholder dividends in the form of Bitcoin.
Leave a Reply