Crypto users trust Coinbase with 12% of world’s supply, equal to $292B
Coinbase’s chief finance officer recently claimed the platform custodies around 12% of the world’s crypto supply.
If true, that would mean Coinbase customers are trusting the platform with $290 billion worth of crypto — up from $90 billion (11%) last year.
Coinbase’s Alesia Haas was one of six execs from leading crypto companies to appear before the US House Committee on Financial Services on Wednesday.
FTX and Alameda Research’s Sam Bankman-Fried, Bitfury chief Brian Brooks, and Paxos founder Charles Cascarilla were also summoned by congresswoman Maxine Waters.
The hearing intended to explore “accountability of large financial institutions and emerging tech products and services,” particularly across decentralized finance and other crypto ecosystems.
Can crypto find its utility? Haas thinks so
Haas asserted that almost half of Coinbase’s “transacting customers” do things aside from buying and selling cryptocurrency.
“We serve more than 73 million customers globally, including 10,000 institutions and 185,000 application developers,” explained Haas in her speech.
“This indicates to us that crypto is moving beyond its initial investment phase into the long-expected utility phase.”
Crypto’s supposedly destined “utility phase” refers to the hypothetical point at which digital assets evolve into more than an investment; when consumers regularly pay for real goods and services with crypto.
But while Haas practically bragged about Coinbase securing more than a quarter-trillion in crypto without FDIC or SIPC Insurance — the answer to why so much crypto is left with Coinbase isn’t entirely clear.
Read more: [What is cryptocurrency?]
It may be that some consider it easier to manage crypto on Coinbase than storing private keys in a cold wallet.
Or, they might keep crypto with the firm via its formal Custody offering. Others might intend to trade, liquidate, or add to their holdings in the short-term.
Coinbase wants crypto regulation on its own terms
Haas also gave the House her thoughts on the future of crypto regulation in the US.
She called for the US to adopt Coinbase’s pitch for a four-pillar approach to regulating crypto. Haas said the company’s Digital Asset Policy Proposal (which cutely becomes ‘dApp’) will fuel crypto adoption and innovation.
- government regulation under a new framework that would focus on unique technological innovations underpinning crypto,
- a single federal regulator to establish registration processes for intermediaries like crypto exchanges,
- goals to empower and protect crypto holders (greater transparency, fraud and manipulation protection, greater efficiency),
- solutions to promote interoperability and fair competition within the crypto space.
Haas warned that failure to implement Coinbase’s proposal could see crypto pushed underground and to offshore exchanges with lax or non-existent compliance programs.
Let the bald man handle it
With so much crypto kept with one company headquartered in Delaware for tax purposes, there’s no better time than to remind readers of “not your keys, not your coins.”
When keeping crypto with Coinbase — or any crypto exchange — you effectively give control of your digital assets to a centralized entity.
In October, hackers attempted to steal cryptocurrency from around 6,000 Coinbase accounts using a social engineering attack on employees.
Read more: [Brian Armstrong on track for $3.4B payday as Coinbase goes public]
Many reputable crypto exchanges maintain funds to reimburse users should the platform fall victim to cyberattack.
But for at least for those that own 12% of all cryptocurrency on the market, they’d rather let Brian Armstrong handle the keys to their ‘financial freedom’ than be their own bank.
Edit 10:34 UTC, Dec 11: Coinbase managed 11% of the world’s crypto supply as of Q4 2020 (per Messari), not March this year as was originally reported.