Coinbase’s victory against the U.S. Securities and Exchange Commission (SEC) is seen as a significant milestone for the crypto industry, earning it greater public trust.
Throughout history, trust has been built by servants and lost by fraudsters, yet awareness has always illuminated the truth. Coinbase’s triumph in its legal battle with the SEC stands as one of crypto’s greatest victories, fostering genuine and rational trust in the crypto industry in both the U.S. and globally.
Table of Contents
Two key reasons for the gradual acceptance of Bitcoin and blockchain technology are the lack of marketing due to Bitcoin’s decentralized and stateless nature and the reluctance and fear from banks and governments, driven by concerns over losing their dominance in the global monetary system.
However, what has allowed this technology to steadily gain traction is the growing awareness among the public about the manipulations of traditional economic players. In this context, service providers in the crypto sector play a critical role in paving the way forward.
As the largest cryptocurrency exchange in the U.S., Coinbase recently won one of the most significant battles in crypto history. This victory could be a defining moment for cryptocurrency, with ramifications that will drive regulatory and perceptual shifts, accelerating the growth of this nascent technology. Let’s explore why Coinbase succeeded and how it will impact the crypto ecosystem.
The Coinbase vs. U.S. Legal Battle
For years, the U.S. government scrutinized Coinbase’s activities, questioning the legality of its operations. One accusation involved transactions facilitated by the exchange from October 8, 2019, to March 11, 2022, during which the SEC alleged violations of securities regulations.
In 2022, three Coinbase customers filed complaints, accusing the exchange of violating securities laws. They claimed 79 tokens listed on Coinbase qualified as securities and that the exchange failed to warn users about the associated risks.
Brian Armstrong, Coinbase’s founder and CEO, personally addressed these allegations, asserting transparency in the company’s operations. He declared there was no need to retreat and vowed to fight for crypto rights in the U.S. Armstrong maintained that Coinbase’s transactions complied with SEC laws and that none of the activities breached securities trading standards.
Armstrong’s stance was vindicated when the United States Court of Appeals for the Second Circuit ruled that the buying and selling of digital tokens on Coinbase’s platform did not violate securities regulations. This affirmed the legality of Coinbase’s operations under existing SEC rules and clarified that the traded tokens did not constitute securities.
Crypto industry participants hailed this ruling as a landmark moment benefiting not only Coinbase but the entire ecosystem, significantly influencing public perception and instilling greater confidence among crypto holders.
Following this legal victory, Paul Grewal, Coinbase’s Chief Legal Officer, tweeted: “We are grateful to the Second Circuit Court for affirming what federal securities law makes clear: there is no private liability for secondary market sales of digital assets on platforms like Coinbase. Why? Because contracts matter.”
However, the broader battle between Coinbase, the SEC, and its chairman, Gary Gensler, is far from over. Armstrong remains committed to reshaping regulations to favor the crypto ecosystem.
Armstrong remarked: “The naive view of crypto is that it’s all speculation, and everyone ends up losing their investments. But this misses the bigger picture.
Crypto is not just a financial product; it’s a technology that can continually evolve. It can upgrade all financial products, make settlements cheaper, and allow people to send money to family anywhere in the world. It can provide new ways to pay artists fairly. Regardless of what people think about cryptocurrency, it’s not going away. Most countries have embraced it to enhance their financial systems. What worries me is that we might sit idle for 5 to 10 years and only embrace this technology when it’s too late, just like we did with 5G and semiconductors. We need to recognize this technology’s potential and its future possibilities. The U.S. requires a clear rulebook for crypto regulation.”
Of course, these legal advancements don’t change the fact that decentralized exchanges (DEXs) like Uniswap have been taking market share from centralized exchanges. Uniswap’s trading volume this year has reached a record $2 trillion. This volume encompasses transactions conducted across multiple blockchains supported by Uniswap, including Ethereum, Polygon, Optimism, Celo, BNB Chain, Base, Blast, and Avalanche Network.
Launched in November 2018, Uniswap reached $1 trillion in trading volume by May 2022, a milestone achieved in just 42 months. Subsequently, despite increasing competition in the DEX space, Uniswap reached its second milestone of $2 trillion in less than 24 months. The weekly trading volume record on Uniswap exceeds $21 billion, while its closest competitor, PancakeSwap, which ranks second among decentralized exchanges in terms of trading volume, handles only about $9 billion in weekly transactions. Following them are Curve, Balancer, and Trader Joe, with weekly trading volumes of $800 million and $1.8 billion, respectively. Regardless of the standing of centralized exchanges, the fact remains that DEXs like Uniswap are becoming more flexible, functional, and user-friendly every day.
This indicates that the crypto industry is developing on parallel fronts and dimensions, and there is no stopping it. But how does this relate to the long-term growth of Bitcoin’s value?
A $170,000 Bitcoin
For over 17 months, the cryptocurrency market has been on an upward trajectory following a long bear market. During this period, Bitcoin has repeatedly set new all-time highs. But how far can this rally go?
Anthony Scaramucci, founder of the investment firm SkyBridge Capital, explained in a recent CNBC interview why Bitcoin’s price is rising: “I believe the ETF (exchange-traded fund) is a major factor.
The easing of regulatory barriers for Bitcoin is another key reason. Additionally, when a place like Wall Street gets its hands on a product like this, it operates like a vending machine, creating massive demand for that product. It’s astonishing that $10 billion entered the Bitcoin market in the first quarter of the year, given that it took a year for the gold ETF to reach that same figure, and Bitcoin achieved it in a quarter of the time. I’m not trying to pressure anyone to buy Bitcoin, but the reality is that the Bitcoin network produces 900 coins daily. With the upcoming halving (on April 19, 2024), this figure will drop by half, and you’ll have two to three times the demand with half the supply. Since the approval of the Bitcoin ETF, demand has surged, and at the same time, supply will halve as we approach the halving event. I think this uptrend will persist for a long time.”
Bitcoin’s halving is a pre-programmed deflationary system for the Bitcoin ecosystem. After every 210,000 blocks mined—roughly every four years—the rewards miners receive are halved. With fewer Bitcoin produced after each halving, Bitcoin’s inflation rate decreases. This system will continue until around the year 2140, when the final Bitcoin will be mined.
Scaramucci, when asked whether he has a specific price target for Bitcoin, gave a compelling response:
“I’ve always maintained a consistent view on this. Looking back at the 19 months leading up to the fourth halving in April 2024, Bitcoin’s price has been on an uptrend. If we take a conservative outlook, I’d predict that in this cycle, we’ll see the $170,000 range. However, Bitcoin is a cyclical product. In my view, waves of demand drive market momentum. By the end of this current cycle, I believe Bitcoin will reach $170,000. Altcoins like Solana and Avalanche have also performed well, though Bitcoin has outpaced them all.
Since January 2020, the value of the U.S. dollar has dropped by approximately 22%, while Bitcoin has grown eightfold. You might think I’m biased toward Bitcoin, and it’s true that Bitcoin’s volatile nature could lead to a 50% correction. But I believe it’s designed to act as an anti-inflationary hedge. This doesn’t mean it can counteract inflation in the short term, but if you hold Bitcoin for a four-year cycle, you’ll see its benefits. Anyone who has held onto Bitcoin during such a cycle has never lost money.”
The Role of Exchanges in Crypto’s Future
Behind every emerging technology are opportunists looking to exploit the unaware, who haven’t yet mastered its intricacies. The end of these exploitative periods in any field has always coincided with widespread public awareness.
In the blockchain and cryptocurrency industry, like other early-stage technologies, we’ve seen various fraudulent schemes that have significantly impacted public perception. In the early days of blockchain, many scammers operated under the guise of digital exchanges, causing significant harm to the industry.
However, over time, large exchanges and communities have emerged, aligning with the right path to benefit themselves and the global community.
Before governments make decisions or take stances on this industry, they can easily understand its opportunities and risks by closely monitoring crypto service providers and exchanges. Through wise regulation, this decentralized and free domain could become a platform for revitalizing struggling economies.
