Coinbase shares are emerging as a potential strategic tool for traditional financial institutions seeking comprehensive exposure to the cryptocurrency sector, according to Will Clemente, co-founder of Reflexivity Research.
Clemente highlighted this perspective during an interview with Bitcoin advocate Anthony Pompliano on December 21.
He suggested that traditional finance firms might consider Coinbase (COIN) as an “index play” for the crypto industry due to its diverse range of offerings.
In Clemente’s view, investors entering the cryptocurrency space who are unsure about which digital assets to choose may find Coinbase an attractive option.
The exchange’s multitude of services and extensive asset selection can provide a relatively secure avenue for broad crypto exposure.
Matt Hougan, the Chief Investment Officer of Bitwise, a cryptocurrency asset management firm, also expressed optimism about Coinbase’s future during the same discussion.
Bitwise recently predicted that Coinbase’s revenue would double by 2024, but Hougan hinted that this estimate might be conservative, emphasizing the company’s impressive execution in the financial services sector.
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Bitwise operates the Bitwise Crypto Industry Innovators exchange-traded fund (ETF), which holds Coinbase shares as part of its portfolio.
While Wall Street tends to view Coinbase primarily as an exchange, Clemente pointed out that the company has diversified its revenue streams by venturing into staking, serving as a Bitcoin ETF custodian, and acquiring a stake in Circle.
Additionally, Coinbase introduced its Ethereum layer-2 solution named “Base” in August.
Despite these positive developments, Coinbase faces challenges on multiple fronts. It is currently embroiled in a contentious lawsuit with the United States Securities and Exchange Commission (SEC).
Moreover, several U.S. senators are actively working on legislation that could impose restrictions on cryptocurrency activities within the country, potentially impacting Coinbase’s operations.
Coinbase’s “Base” platform has also experienced security issues, with incidents like the $6.5 million Magnate Finance rug-pull and an $865,000 exploit on RockSwap.
Additionally, ARK Invest, managed by Cathie Wood, recently sold 237,000 Coinbase shares worth $331 million across three different funds on December 5.
Data from ARK CEO Cathie Wood’s official website reveals that the ARK Innovation ETF has sold over 900,000 Coinbase shares since December, signaling a shift in the investment landscape surrounding the exchange.
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