Why Could Coinbase Become A Dominant Participant In Crypto?

Why Could Coinbase Become A Dominant Participant In Crypto?

Coinbase, which is a leading cryptocurrency exchange in the world, could extend its dominant market position in the near future once the trading revenue explodes. There is little time left for Wall Street to stop the exchange from extending its dominant position as bigger financial institutions continued to remain on the sideline. Though the virtual asset might witness sluggishness currently, there is every possibility that it could explore once the regulators start clearing the ambiguity or uncertainty affecting the sector.

Trading Revenue

In a research report on cryptocurrency trading and the next big thing, Sanford C. Bernstein & Co expects trading revenue from digital currency to more than double in the current year. The report believes that fees that the digital currency exchange charge for every trade could hit $4 billion this year. This is despite the fact that the gross trading volume has dropped in the recent period since the prices of most of the virtual assets have dropped, ccn.com reported.

The estimated trading revenue could mean that it will account for a jump of over 120 percent from the level seen last year. The brokerage firm pointed out that the exchanges had combined trading fees revenue of $1.8 billion in 2017. However, this works out to only eight percent of the total fees generated from the conventional stock exchanges. Analysts led by Christian Bolu believe that the digital currency markets offer an excellent opportunity to gain from the emerging asset class.

As conventional companies are looking for opportunities to widen their revenue base, the analyst thinks that the crypto-asset class offers a plethora of opportunities. This included market-making, demand from institutions and regulated custody of virtual assets. It is a fact that more institutional investors are shunning the digital coin sector mainly due to the lack of regulated custodian services. As a result, they are more active in space like any other asset class.

There is still some amount of hesitancy on the part of Wall Street financial firms to jump into the digital currency sector. This is despite the fact that the New York Stock Exchange (NYSE) owner, Intercontinental Exchange (ICE) has initiated concrete efforts to create or develop themselves as a leader in the crypto-coin marketplace. There are also other firms like ICE taking an interest in the sector.

Pursuing Cautiously

There is no second thought that Wall Street companies are following a cautious course of action when it comes to digital currencies. As a result, they are only putting themselves in a dangerous spot. The analysts have warned that the enterprises could lose a big opportunity to take a dominant position in the cryptocurrency market citing that the window is closing rapidly.

In the absence of Wall Street firms refusing to act quickly, Coinbase will reach an “unassailable competitive position.” That would make it difficult for even the biggest players to top it. The brokerage expects Coinbase to generate close to 50 percent of all trading revenue from brokerage and professional exchange platforms. Though there were some indications of some big companies launching their trading desk, it failed to happen.

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