Regulation Preparation
The crypto industry is known for many things. You have the innovation aspect, the backing of billionaires and young investors, while also being hated by old-fashioned institutional investors. You’ve also got the disgusting amount of pump and dump schemes, too. A pump and dump scheme, which was the major plot of the Wolf of Wall Street, is when you artificially inflate the price of a stock to sell it at a higher price. Crypto scams have hurt many retail investors as there aren’t many regulations, which is something that US lawmakers and regulators want to change.
Luckily, there is one company that’s already preparing for this. That business is Coinbase, the cryptocurrency exchange that went public in 2021 during the red-hot IPO season. If there’s any “crypto” stock, this is the one you should be looking for along with Riot Blockchain. The recent surge in crypto trading has helped the company a lot as they earned 1.61 billion dollars in Q2, with most of the money coming from trading fees. Coinbase has put most of this money into a cash pile, which is worth about 4.36 billion dollars, an exponential increase from the beginning of 2020. Why? As we said before, entities like the SEC are looking to regulate crypto to the maximum extent possible, which has led to Coinbase playing the safe game. With the amount of business risks in the crypto game like cyberattacks and trading declines, Coinbase holds stress-tests on its balance sheet along with keeping an extra amount of cash for something unexpected. With the business still being successful, it shows how safe your company can be if you plan. What do you think about the Coinbase strategy?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
