The U.S. government’s relationship with Coinbase, the largest cryptocurrency exchange platform in the nation, has become increasingly complex, with a duality in approach that raises eyebrows. Rob Nelson, Roundtable anchor, and Nick Mancini, director of research for the crypto trading platform Trade The Chain, discussed the dynamics of the government’s engagement with Coinbase.
Nelson pointed out the government’s contradictory stance toward Coinbase: on one hand, Coinbase is in a legal battle with the U.S. Securities and Exchange Commission (SEC) while, on the other, it seems ready to permit major asset managers to introduce bitcoin spot exchange-traded funds (ETFs), with Coinbase as custodian. Additionally, Coinbase’s strategic investment in Circle, the company responsible for the USDC (U.S. dollar coin), has led to speculation that it could lay the foundation for a future central bank digital currency (CBDC).
Mancini noted that bitcoin has even outperformed gold, a traditionally safe-haven asset, and opined that the government’s hesitance to embrace cryptocurrency is a fear perspective. He emphasized that the trillion dollars’ worth of assets funneled into a largely uncontrolled class is bound to invoke apprehension, not only in the U.S., but also among other global superpowers, such as China.
The relationship between the government and Coinbase takes an even more puzzling turn when considering BlackRock, a financial behemoth closely linked with government interests, and its interest in offering a bitcoin ETF. Mancini expressed his perplexity, saying, “Coinbase faces challenges from the U.S. government while simultaneously liaising with the government’s close financial ally, BlackRock.”
In the end, Mancini described the immense opportunities for traditional financial institutions presented by cryptocurrency’s inherent volatility and the higher fees associated with it. He suggested that the government, despite its resistance, could profit and exert influence in the crypto market.
This complex relationship between government entities, financial institutions, and crypto platforms underscores the challenges and potential of the cryptocurrency landscape. As these dynamics continue to shape the future of digital finance, only time will tell what the future holds.