Crypto Biz: Coinbase has a lot at stake

cointelegraph.com:

Crypto assets made their way onto the United States Securities and Exchange Commission’s list of priorities for 2023. So far, though, we haven’t tasted the “regulatory certainty” many have been calling for. Instead, the regulator threw the book at Kraken for allegedly failing to register its staking program. Coinbase appears next on the chopping block, but its lawyers are ready to fight.

This week’s Crypto Biz newsletter delves into Coinbase’s defense of its staking program and its not-too-pleasant quarterly financials. We also look at the latest company to fall victim to Sam Bankman-Fried’s FTX.

Q4 was a rough quarter for the cryptocurrency market, and nowhere was this more evident than in Coinbase’s latest earnings report. On Feb. 21, the crypto exchange reported a 12% drop in transaction volumes during the quarter as revenues plummeted 57% year-on-year. Although the revenue figures were higher than expected, I wouldn’t put much stock in Wall Street’s projections. (If you set the bar low enough, anyone can “beat expectations.”) Nevertheless, there was a silver lining: Coinbase’s subscription and service revenues increased 34% during the quarter. However, investors should be aware that Coinbase is being probed by the United States Securities and Exchange Commission (SEC) for its staking products. The exchange is attempting to put out the fire before it even starts (more on that below).

With the SEC cracking down on Kraken over its staking products, other exchanges are trying to get ahead of the curve to avoid similar repercussions. This week, Coinbase’s chief legal officer Paul Grewal told shareholders that the exchange’s staking products “are fundamentally different from the yield products described in the reinforcement