Coinbase’s Small Fine Is a Big Warning to IPO Investors
Just because the CFTC can take actions against cryptocurrency companies doesn’t mean they are regulated.
Ante up.
Photographer: Jack Taylor/Getty Images
As Coinbase Global Inc., the largest U.S. cryptocurrency exchange, prepares to go public, some investors will conclude crypto trading has now matured sufficiently to be “safe.” Coinbase’s market capitalization could approach $100 billion, and its settlement of an enforcement action last month with the Commodity Futures Trading Commission suggests there is good regulatory oversight. After all, one expects the occasional fine in a regulated industry, and this one was quite modest at $6.5 million, compared with 2020 revenues exceeding $1 billion.
But that would be precisely the wrong takeaway. This case shows how the regulatory framework is woefully inadequate, as even one CFTC commissioner noted.