Coinbase, the new Goldman Sachs?

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Coinbase Expands With Deal for Broker-Dealer Keystone Capital

What's the Story?

  • Coinbase purchased Keystone Capital Corp
  • Coinbase now controls a licensed RIA and ATS
  • Pending regulatory approval Coinbase will become an RIA and ATS, which allows them to trade security tokens

Why Does This Matter?

I posted the original blog post below by Coinbase's president which outlines Coinbase's path to expand into trading security tokens. Many blockchain experts believe that security tokens will become a massive market for trading. If you tokenize equities, it provides a lot of advantages such as ease of recordkeeping and more liquidity. Regardless, if you believe that security tokens are superior to today's security offerings, it would be ignorant to suggest that the SEC won't want cryptocurrency exchanges not to have proper licensing. Coinbase is trying to get ahead of the curve by purchasing these licenses from an existing company. Coinbase more and more resembles a bulge bracket bank rather than a startup. Cryptocurrency is going to become a more substantial part of traditional finance rather than a new industry altogether. The question is will Coinbase end up buying Goldman Sachs or will Goldman Sachs buy Coinbase? How will traditional finance players react to these changes?


Blockchain Firm R3 Is Running Out of Money, Sources Say

What's the Story?

  • R3, a private blockchain consortium, is running out of money
  • R3 previously raised $107MM 
  • R3 is expected to significantly miss revenue milestones 

Why Does This Matter?

R3 represents the person who goes, "I don't like Bitcoin, but I love blockchain." Apparently, if people were wagering on Bitcoin vs Blockchain, Bitcoin would be winning. Cryptocurrency is needed for blockchain because it provides incentives for the system and stakeholders to be honest. It still remains unknown if private blockchain will succeed in some form. Based on the article, R3 was not the company to execute on that vision. The executives spent excessively and there was a lack of focus within the firm. This is a risk of overcapitalization (I wrote about this with EOS as well). Expect R3 to fail, but don't expect private blockchain to go anywhere. I expect many companies especially Fortune 500 companies to continue to explore it and see if they can strike gold.