[gip]

Very curious why they haven’t diversified into real world assets. It seems like an obvious move, even if the margins would be lower than their fee business (~85% margins!!).

They’ve added tokens and altcoins to the platform, but I don’t think that’s a particularly strong long-term bet.

[nly]

Because real world assets are heavily regulated and regulation has costs.

The competition is also stiff with decades of experience and network effects

The truth is these crypto shops have a pretty poor reputation in the traditional finance industry. Nobody in trading tech goes to work for them unless they offer insane salaries, because they (we) know it's an unstable place to be.

[mothballed]

It's going the opposite direction. Those offering real world and tradfi assets are moving into the crypto space. That is going to eat Coinbase's lunch.

The worst part of using something like Coinbase is having to do yet another bank transfer, waiting for it to clear, doing KYC/AML yet again, etc etc for what most people is just to buy one or two single asset (BTC or maybe ETH probably). Instead just click buy in Robinhood or Schwab along with everything else.

[nly]

The major prop shops and market makers are all over crypto, for sure. But they're only there because these markets are poorly regulated and there's a lot of retail juice to squeeze.

A friend of mine works for one of the major crypto firms and they're starting to deploy algorithmic trading bots on their own exchange.

The spreads on these markets can be diabolical

[gip]

That makes sense, thank you for explaining. TradFi already offer access (direct or ETFs) to major cryptos who have demonstrated some utility like BTC, ETH, XRP, SOL and a few others.

If interest in tokens and altcoins wanes, Coinbase may be in a weak position.