On April 28, Coinbase once again tweeted to postpone USDT trading, and the reason given this time was also an API issue.
It stands to reason that Coinbase has gone through multiple rounds of bulls and bears, and the listing is enough to indirectly show that its team has technical capabilities, so why did it postpone the listing of USDT twice due to API issues?
1. Why did Coinbase postpone USDT trading for the second time?
A reasonable guess is that Coinbase considers compliance issues and market sentiment.
As we all know, the most distinctive label of Coinbase is “compliance”, which caters to regulation and is cautiously listed. In 2017, Coinbase general manager Dan Romero tweeted that he hopes to add several new digital currencies based on customer feedback. However, considering the regulatory situation in the United States, he is more cautious.
For Coinbase, which is highly compliant and seeking to go public, listing the “controversial” USDT is undoubtedly a decision that runs counter to its goals. In May 2020, Coinbase Custody tweeted to announce support for USDT ERC-20 custody. The tweet was subsequently shared by the cryptocurrency exchange Bitfinex and confirmed by Paolo Ardoino, the chief technology officer of Bitfinex and Tether. However, a month later, Coinbase Custody quietly deleted the tweets supporting USDT, and the list of supported assets on the website did not mention USDT. This year is exactly the year Coinbase desperately prepared for the listing.
Now that we are aware of the risks that USDT may bring, why does Coinbase announce the listing of the asset on the 9th day after listing? One of the reasons is that Tether and the New York Attorney General’s (NYAG) office ended a two-year dispute in February this year. The two parties reached a settlement. The former paid $18.5 million in compensation and promised to submit the USDT reserve support every quarter for two years. document.
It is not difficult to see that Tether plans to formally respond to the issue of USDT asset reserves and improve the negative image. This also provides a reasonable explanation for Coinbase to list the asset. But judging from the results, Tether’s attitude does not seem to be able to reverse investors’ negative views on it. Under Coinbase Pro’s tweet about USDT’s listing, many netizens expressed objections, and some even said, “This is a bad decision. I believe you (Coinbase) will regret it”.
It is speculated that, for a listed company that has already landed in the capital market, is responsible to investors, and needs more compliance and supervision, Coinbase will more or less take into account the views of public opinion.
Under the influence of public opinion, Coinbase will surely rethink whether it is appropriate to be so eager to list USDT. After all, Tether has not fully self-certified its asset reserves, nor has it released its first asset reserve report, which is far from realizing a high degree of transparency. This happens to be inconsistent with the image of Coinbase, which is highly compliant and strictly listed.
2. Why is Coinbase “anxious” to list USDT?
According to the timeline, from the listing of Coinbase to the announcement of the listing of USDT, it took only 9 days.
Why is a compliant platform eager to list an asset that has not yet been truly recognized, and the platform itself has launched a compliant stablecoin (USDC)?
The answer is: Coinbase has strongly felt the impact of the booming DeFi on CeFi, and USDT, as an extremely important asset class in the DeFi world, seizes USDT to indirectly seize DeFi users.
By listing USDT, Coinbase can not only provide more diversified deposit channels for its platform users, capture more transaction fees, but also further increase the user retention rate of its wallet (Coinbase Wallet) and earn a certain amount of “drainage fees.” .
More importantly, launching more assets in the DeFi world will not only help listed company Coinbase expand its sources of income and increase revenue, but it is also the only “defense technique” currently available.
In early March of this year, Coinbase stated in a letter submitted to the SEC’s new prospectus, “We are competing with more and more decentralized and non-custodial platforms. If we cannot effectively compete with them, our business May be adversely affected.”
The foreign media Coindesk wrote in an article quoting this content: “Coinbase: DeFi may hurt us, and US regulations make it difficult for us to fight back.”
Not only Coinbase, but other centralized exchanges are also anxious due to the booming development of DeFi, and this is why the three major domestic exchanges accelerated the development of public chains at the end of last year and early this year. For Coinbase, which has been busy with compliance, it has obviously missed the best time to build a public chain. How should it respond to the volatile cryptocurrency market?
At present, the fastest and easiest way to implement is to launch popular assets with a high frequency of online transactions to enrich the platform’s transaction asset categories.
From Coinbase Pro’s eager listing of USDT to Binance, OKEx and Huobi’s full push of their respective public chains, we can see that DEX has begun to reshape the business logic of CEX, and the future competition between DEX and CEX will inevitably revolve around new assets. Conflict and unfold. Trading platforms will evolve from competing for users and market share to competing for new assets.
On the surface, Binance, OKEx and Huobi are entering the public chain market and establishing their own DeFi ecosystem. In essence, they have realized the threat posed by the outbreak of Uniswap, and the lack of currency listing fees, asset priming and other advantages are challenging the CEX profit model. And this can explain why the DEX on the chain exploded when the public chains of these exchanges were launched. All efforts are in the fight for new assets. With new assets, users, traffic, transaction fees…
The transformative effects of DeFi (decentralized finance) have been fermented, the “centralization” has faded, and the “finance” attribute has increased. The future competition between DEX and CEX will inevitably revolve around new assets.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.