Crypto + Coinbase = Trouble
Coinbase, the largest crypto exchange in the US, saw its shares tumble 78% since its April 2021 initial public offering (IPO)
In its recent filing mentioned that, in the event of bankruptcy, crypto assets held by the exchange could be considered property of the bankruptcy proceedings and customers could be treated as general unsecured creditors.
An unsecured creditor would be one of the last to be paid in any bankruptcy and last in line for claims.
This is something that the Indian crypto investors have to be aware of. Unlike the stock market where stocks are held in a demat with a depository and have no broker risk. Crypto with exchanges carry a risk.
Adding another perspective by Richard Turrin where he highlights Bitcoin’s positioning as a hedge for inflation not playing out.
“One of Bitcoins major selling points was that it would hedge inflation. Several months into an inflationary period Bitcoin shows no hedge ability. Take away this selling point and you reduce attractiveness as an asset class.”
Is the current rout in crypto across the board a feature of the crypto market, as witnessed over the years. Or is this the beginning of the end for crypto as we know it? Join the discussion here
Until next time!
~ Sajid
(Sajid is a Strategy Consultant and founder at Le Monturé Strategy, who works at the intersection of human behaviour, business design and innovation strategy. He blogs at sknotes and tweets @sajidkhetani)
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