Breakingviews - Coinbase is a crypto conundrum, squared

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Coinbase Global’s stock has risen from the ashes of last year’s cryptocurrency market conflagration. But the digital exchange’s ascent defies both gravity and logic, says AnitaRamaswamy:

uses the intricate discounted cash flow method; mid-sized investment bank Cowen uses the price-to-book method often deployed when valuing banks. Price targets range widely: analysts polled by Refinitiv think Coinbase is worth anywhere from $8 billion to nearly $50 billion.

Coinbase investors would therefore be unwise to count on a judge delivering Coinbase a win. That’s why Armstrong has been lobbying lawmakers in Washington to craft legislation that would limit the SEC’s ability to regulate crypto by delegating much of that power to the Commodity Futures Trading Commission instead. That would essentially nullify the SEC’s case against Coinbase. But the whims of a sluggish, thinly-spread Congress are no easier to predict than those of court judges.

The trouble is that custody is not a very lucrative business. Coinbase took fees of around 0.1% of assets held in custody on an annualized basis, judging by its first-quarter filings. So if it served as the custodian for all bitcoin ETFs launched in the U.S., it could make some $88 million each year. Value that at the same 2-times multiple at which mega-custodian Bank of New York Mellon

 

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Source: CoinDesk - 🏆 291. / 63 Read more »