The top U.S.-based cryptocurrency exchange, Coinbase, is cautioning investors that U.S. regulators may inhibit its ability to compete with rivals in decentralized finance (DeFi).
“Economic freedom is a necessary, if not sufficient, condition for human progress,” CEO Brian Armstrong noted in a letter embedded within a new prospectus filed Thursday with the U.S. Securities and Exchange Commission (SEC).
One entity that could benefit from a little more freedom, the document implies, is Coinbase itself.
The company dropped its Form S-1 to much fanfare Thursday morning. The prospectus portion of the document is meant to give investors all the information they will need when Coinbase shares begin trading on Nasdaq, likely under the COIN ticker.
The prospectus doesn’t attempt to quantify how much buying of assets useful in DeFi (such as ETH, DAI and USDC) the DeFi boom drove on the platform; however, its overall revenue more than doubled from 2019 to 2020. Doubtlessly, DeFi’s bonanza must have played a part as retail investors converted fiat currencies to crypto in order to participate.
“We are the default starting place for new user journeys into the cryptoeconomy,” the prospectus states. The product has nearly 3 million monthly users and more than 40 million verified users.
Those are numbers any DeFi product would envy.
Indeed, FTX founder Sam Bankman-Fried thinks Coinbase is waving DeFi around as a competitor only because it needs to have one.
“My honest best guess is that it’s intentional misdirection,” Bankman-Fried told CoinDesk via email. “If you say you don’t have any competitors and also just reported $1.1B of revenue, no one will believe you. So they have to list someone. And so I don’t think they listed DeFi as a competitive risk because they were scared of DeFi. I think they listed it because they weren’t scared of it.”