Many crypto investors distrust centralized crypto exchanges. This is understandable, there have been several instances where centralized exchanges have been criminally negligent with Mt.Gox being the most infamous. Yet, some exchanges deserve more credit. Coinbase seems to have embraced its leadership role as not only a crypto exchange, but also an advocate for and responsible steward of the entire crypto space.

If not careful, at this point in the article we will undoubtedly be accused of “shilling” Coinbase by lifeless internet trolls. So to be clear:

CoinSavage has no business relationship with Coinbase (other than using Coinbase Commerce for payments), nor would we promote anything other than non-biased analysis of the Crypto Asset Market.

We see Coinbase as an industry bellwether. By understanding the strategic initiatives that Coinbase is pursuing, we can gauge the progress being made towards eventual mainstream adoption of cryptocurrencies. By no means is Coinbase the only industry member working on similar initiatives.

For the crypto asset class to truly blossom into the mainstream, several foundational ingredients need to be put in place:

The ability to actually buy and sell goods using Cryptocurrency. A supported ecosystem of entrepreneurs. A diversity of Crypto Assets in which to invest, with many different use cases. Institutional investment. Regulatory clarity.

Coinbase initiatives are in sync with these needs, let’s explore.

Buying and Selling Goods Using Cryptocurrency

Coinbase has a product called Coinbase Commerce that allows merchants to easily setup and accept crypto payments. CoinSavage takes advantage of this product, although since we now provide all of our content for free, to include Token Reports, it doesn’t really feed our crypto greedy pockets.

Supporting the Ecosystem of Entrepreneurs

In March the Coinbase Protocol Team was announced with the mission to “contribute to community-led projects which will move our industry forward”. The team is looking at projects involved in payment channels, off-chain computation, trust-less light clients, and Proof-of-Stake blockchains.

In April, Coinbase Ventures was announced with the goal of financing early stage crypto startups.

Access to a Diversity of Crypto Assets

In late March, Coinbase announced it would soon add support for ERC20 tokens. This is a must for Coinbase. Well run exchanges such as Bittrex, have been offering a much larger selection of crypto assets for some time.

When the announcement was made, CoinSavage released its own prediction of which crypto asset was most likely to be added.

Coinbase is still where most mainstream investors gain their first exposure to crypto. Exposing those investors to a diverse array of crypto projects and letting them explore the myriad of use-cases drives interest. Interest drives investment. Investment drives innovation.

Institutional Investment

During Consensus 2018, Coinbase announced several institutional products. The one most worth mentioning is Coinbase Custody. How to custody crypto assets is a HUGE pain point for institutional investment. Once the custody issue is solved, large inflows of capital will be much closer to start pouring into the crypto market. Many institutions want to get involved in crypto investments, yet have not been able to due to not having a viable means of holding (custody) crypto assets.

So far in its evolution, the crypto asset class emergence has been fueled by retail investors (small money). When institutional investment (big money) begins in scale, the crypto market will appreciate substantially.

Again, investment drives innovation.

Regulatory Clarity

To be credible the crypto asset class needs to exist within a regulatory framework. The days of believing that regulations don’t apply to crypto need to end. In fact the opposite is now necessary. The crypto asset class desperately needs regulatory clarity. Without it the space can’t continue to innovate as projects are left in a regulatory limbo.

Despite the lethargic pace of regulatory clarity, Coinbase seems to be taking a proactive approach. In early April, the Wallstreet Journal reported that Coinbase was in talks to become an SEC-Regulated Brokerage. As mentioned in our own article, What if Cryptocurrencies are Classified as Securities by Regulators, this is an important step to ensure a regulatory misstep doesn’t leave many crypto assets in sudden danger of being abruptly removed from exchanges. That would lead to a forced selling event/crash.

In just the past several days the Wallstreet Journal has reported that Coinbase spoke with U.S. Regulators about acquiring a Federal Banking License. This would allow Coinbase, and the industry as a whole to protect itself from banks abruptly cutting ties and creating havoc. Coinbase would be self sufficient and not reliant on existing banking relationships.

In Summary

The Digital Economy is coming. Investors would be wise to follow the initiatives of an industry bellwether like Coinbase for clues as to the progress of the developing crypto asset class.

All the right investment products and infrastructure are being build out. Once we get regulatory clarity, the asset class will truly blossom.

Invest Savagely.