Coinbase want to become the epitome of the regulated, controlled and honest cryptocurrency exchange. They want to be the go to spot for personal investors and institutional investors alike, offering only trialled and tested cryptocurrencies that will help investors see a return. Because of their legitimacy and friendly neighbourhood approach, it does seem that throughout 2018, they have seen a very significant decline in the volume of trades through their platform, despite being one of the biggest exchanges in the world. Of course, most exchanges have seen huge declines in trading volume through 2018 as a result of retracting markets, overall though it seems that the demise of Coinbase is far heavier than the demise of some of their rivals, such as Bitstamp. Most significantly though, it is reported that other rivals such as Binance and OKEx have actually seen a rise in trading volume, calling to question the success of Coinbase’s honest approach. Why does Coinbase seem to be struggling? There are many reasons for Coinbases’ reduced trading volume (down 83% according to bitcoinnews.com), some of these include pressure from US authorities, a small portfolio and of course the falling markets. By only listing a handful of cryptocurrencies, Coinbase are limiting their customer base, therefore other rival exchanges such as Binance are going to attract investors who want access to different coins. More options means more customers which means a higher trading volume, it’s a simple formula really. Regulations and pressure from the likes of the SEC in the United States has, in the past, means Coinbase have had to give up the personal information and trading efforts of some customers to the authorities, breaching not only trust, but confidence. In their approach to remain totally above board and in line with the law, they may have put some customers off in the process. According to bitcoinnews.com:
“Regulations are probably the biggest problem for Coinbase. It was recently forced to send customer info and trading histories to government authorities, spooking some traders. OKEx and Binance are regulated in different jurisdictions, with a less invasive and more comfortable environment for crypto traders.”
Is it all over for Coinbase?Of course not. Coinbase are still one of the biggest exchanges in the world, with a huge customer base and a very promising future. During the current uncertainty surrounding cryptocurrency though, they do seem to be suffering somewhat. In time, as the markets level out and as regulations become more certain, we can see a very bright future ahead for Coinbase, their personal customers and their institutional customers alike.