The Coinbase S-1 has a lot of boilerplate plate language on risks. The text is designed to be so boring that you won’t bother reading it.
Here are the four strategic headwinds aka risks that Coinbase faces in non-legal language:
– Regulations vs crypto logic. Coinbase is a regulated on ramp (and off ramp) for an unregulated/permissionless network. There is conflict there. Regulators want data, customers want privacy.
– Institutional clients and Consumers in one company. They have different needs and combining both in one brand image will be tough.
– Cybersecurity. This risk DID make it into the S-1. All. Centralized. Systems. Are. Hacked. There are two types of centralized systems – those that have been hacked and those that will be hacked. Although Coinbase enables trading in fully decentralized coins such as BTC and ETH, Coinbase itself is a traditional centralized system.
–Crypto newbies and enthusiasts in one company. People getting into Crypto for the first time (aka newbies) want the simplicity of a regulated bank like experience. Crypto enthusiasts like unregulated/permissionless/decentralized experience. The enthusiasts market maybe small but they carry a lot of branding weight.
These strategic headwinds are real but Coinbase also has a very strong management team, so I think they will manage them quite well.
Stay tuned for the final instalment in this 4-part post on what will be the impact on the broader crypto ecosystem/
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