COIN shares are down more than 85% from their all-time high. Coinbase is considering relocating offshore, but analysts are skeptical of the plan. 84% of Coinbase’s total revenue came from US markets in 2022.

Experts are bearish on Coinbase stock as the exchange struggles with regulations and competitive challenges. Along with the crypto market rally, Coinbase shares COIN are also up more than 80% in 2023. Although the stock is trading at $57, it currently has a long way to go to recover from the damage inflicted by the bear market.

COIN reached an all-time high of $429 in April 2021 and has since seen a significant decline of more than 85%. Coinbase shares face resistance in the $85 price range, on the weekly time frame. It needs to close weekly above the $85 mark, on strong volume, to continue its 2023 uptrend.

Additionally, COIN shares should hold their support at around $50. If not, it could signal a reversal of the 2023 uptrend.

Will the Offshore Relocation Hurt Coinbase?

The lack of clear regulations in the United States has frustrated Coinbase CEO Brian Armstrong, who at Fintech Week in London said that “Everything is on the table, including relocation or whatever it takes.”

In fact, the exchange has managed to obtain a license to operate in Bermuda. However, according to the WSJ, some analysts are skeptical about the stock moving abroad. Dan Dolev, a senior analyst at Mizuho Securities, told the WSJ:

“This is not going to help them if the US market is not going to be what it was in 2021. There are a lot of international players out there. Coinbase only has an advantage in the United States because they are so dominant.” About 84% of Coinbase’s total revenue came from US markets in 2022.

Battling with the SEC

Coinbase received a notice of Wells from the Securities and Exchange Commission (SEC) threatening enforcement action in late March. In retaliation, the exchange responded by suing the SEC, hoping to force the federal regulator to clarify positions on cryptocurrencies, as well as to explore the possibility that current securities processes and rulemaking could be applied to the cryptocurrency industry.

Due to the legal turmoil involving Coinbase, experts are bearish on COIN stock. Jason Kupferberg, a research analyst at Bank of America, has this to say:

“The Wells Advisory is the latest data point to illustrate that there are some pretty significant regulatory headwinds and uncertainties that are likely to continue to be a drag on the company and on the stock.”

COIN stocks represent the broader crypto market, as explained by The Motley Fool;

“Investors who are optimistic about the future of cryptocurrencies can buy Coinbase as a bet on the growth of the entire industry. And by doing so, they wouldn’t have to choose individual tokens for their wallets.”

Earlier this month, Coinbase was reported to have rebounded by 90% on the stock market so far this year, but the turmoil caused by the SEC has caused the value to plunge 12% in the last month. According to Barclays, the worst outcome of the regulator’s action would be listed as a stock exchange if various crypto assets are deemed as such by the SEC.

By Audy Castaneda

Stablecoins must be programmable to resist central bank digital currencies (CBDCs).

When it comes to providing stable value, stablecoins, and CBDCs seem to serve as two sides of the same coin. However, stablecoins can provide completely different use cases, and CBDCs simply cannot compete.

Particularly, the key is programmability through Smart Contracts that automate and add new functions to money. Programmability allows for asset backing as well as decentralization which is not possible with current CBDC designs. Developers should take advantage of the programmable opportunities that stablecoins offer, instead of trying to compete with CBDCs.

What are CBDCs?

They are the acronym for Central Bank Digital Currency. As described by the Bank of Spain: “it is a new form of money issued electronically by a central bank.” Unlike cryptocurrencies, which are decentralized, in this case, it is a digital currency where each transaction is monitored by a central bank.

The best-known example is the e-Yuan, a true pioneer in this field. Although we also have the digital euro or digital yen, which although they have not yet materialized, the different central banks have been working on its creation for years.

In fact, analysts at the New York Stock Exchange consider central bank-issued digital currencies to be a “natural evolution” of current monetary and payment systems.

Stablecoins

They are a type of digital asset whose price is linked to that of another asset through a parity relationship. The most popular cases have a 1 to 1 relationship with the US dollar, while others are paired with gold or other assets. Thus, the main motivation to create a stablecoin is to try to give investors refuge in times of volatility.

Stablecoins are linked to a fiat currency, while CBDCs are fiat currencies themselves, although created on a Blockchain. Stablecoins are issued by private companies, while CBDCs can only be issued by Central Banks, linked to national governments.

The deputy director of the International Monetary Fund, Bo Li, has explained that more than 30 countries are already immersed in the creation of these digital currencies, in what he describes as “unprecedented worldwide interest.”

Stablecoins Must Be Truly Programmable to Resist CBDCs

In particular, Bank of America points out that both CBDCs and Stablecoins are the natural evolution of money and payments. Analysts from the US bank described them as “potentially the most significant technological advance in the history of money.”

In this sense, the issuers of the Stablecoins express that they can improve the current monetary system in different ways such as those described below.

First, stablecoins can help reduce the costs of traditional financial activity.

Second, people in countries experiencing hyperinflation use stablecoins as a means to protect their income and stabilize payments.

Finally, stablecoins can be used for more privacy-oriented payments.

These purposes for stablecoins fall within the framework of the current financial system. Consequently, it should be noted that the problems that stablecoins address could also be solved, in theory, with CBDCs.

Decentralization also fosters greater programmability. Users determine and govern the execution of programmable money. In turn, it can give greater power to stablecoin holders, fostering transparency in issuance and management, as well as the development of new features driven by user needs.

Finally, stablecoins are not predestined to compete with CBDCs but function as something completely different.

By Audy Castaneda