Coinbase (COIN) has reasons to smile, even as much of the rest of the cryptocurrency industry does not.
The big picture of crypto is bleak even as players in the crypto sphere reiterate that they are the future of financial services.
Investors seem focused on the present, and the present reflects fears about a possible recession prompted by the Federal Reserve’s interest-rate hikes designed to crush an inflation rate at its highest in 40 years.
Experts say that one of the consequences of the policy, and potential so-called hard landing for the economy, is that investors liquidate risky assets, which are often bets on growth.
Cryptocurrencies and other crypto financial products, like nonfungible tokens, are one key subject of this investor mistrust.
The cryptocurrency market has thus lost more than $2 trillion from its record of $3 trillion reached in November 2021, according to CoinGecko.
This drop in the valuations of digital currencies directly affects the platforms on which they are traded. These include Coinbase, which took advantage of cryptomania at its peak in 2021.
Coinbase shares have fallen 73% since January, translating into a decrease in market value of $48.4 billion.
Noteworthy, however, is that Coinbase shares managed to rally in the third quarter. Over the July-through-September period, Coinbase’s stock price gained 37%.
And the firm just received an approval that might help it continue that momentum.
Coinbase Succeeds Where Binance Failed
Coinbase just received a license from the Singapore authorities to offer crypto services on the island. Coinbase thus got a leg up on its rival Binance, which last February withdrew its application to operate in the country.
Binance had explained that the Singaporean authorities were too demanding.
The Monetary Authority of Singapore, the local financial regulator, authorized Coinbase to provide regulated digital-payment token products and services, the firm said in a statement.
“Singapore has a long history of embracing innovation, and positioning itself at the forefront of the financial and technological revolution,” said Nana Murugesan, Coinbase’s vice president of international and business development, in a blog post.
“We look forward to ongoing collaboration with the government on a pragmatic regulatory framework for digital assets, to empowering local and regional builders as they scale use cases, and to continue supporting efforts to consolidate the island state’s position as a global Web3 hub.”
Web3 is the new iteration of the internet, which aims to be decentralized, giving users control of their data.
Coinbase is already present in Singapore, creating an Asia-Pacific hub there to provide crypto-related services to local institutional investors. It’s continuing to expand internationally as part of its growth efforts.
Obtaining a license from the Singapore authorities is very difficult. Coinbase thus joins a very tight circle including Crypto.com, Luno and Paxos.
The island, which is a financial center and has a very favorable tax regime, is very popular with players in the crypto industry.