Author: Coinposters

Needham equity analyst for Coinbase, John Todaro, outlined a bullish case for the cryptocurrency exchange Coinbase in a research note to clients on Thursday.

According to Benzinga, if Coinbase’s new non-fungible token (NFT) business goes as planned, the exchange could see a $1.2B revenue. Benzinga reported that annualized revenue is estimated to be at a scale of [$1.26 billion], which would represent an added EV of $10.1Bn, $12.6Bn, and $13Bn at 8x, 10x, and 13x multiples, respectively.

The analyst based his estimates on comparing Coinbase’s upcoming NFT business to top NFT marketplaces such as OpenSea.

OpenSea is worth more than $13.3 billion and has a total NFT sales volume of more than $20 billion with approximately 1.2 million traders. The platform is the world’s largest NFT marketplace.

Although Coinbase has yet to make its NFT service available to users, the company’s CEO, Brian Armstrong, has stated that he expects the firm’s NFT service to be larger than its current cryptocurrency offerings, according to Benzinga.

Coinbase announced the launch of its NFT marketplace in October of last year. Users were encouraged to join the waitlist in order to gain early access to the platform, which would allow them to mint, trade, and collect various non-fungible tokens.

According to reports, the exchange has a waiting list of over 1 million customers for its NFT marketplace.

While NFT was the hottest topic in 2021, with sales volume reaching $40 billion, the asset class has been relatively quiet this year. An earlier report confirmed that major NFT sales have dropped significantly since the beginning of 2022.

Interestingly, the drop in NFT sales does not appear to be discouraging investors, who are excited about the upcoming Coinbase NFT marketplace and eagerly await its launch. Some customers seem to think that it will be a rival to popular NFT marketplace Opensea.

Three people who purchased cryptocurrency through Coinbase filed a proposed class action in the Southern District Court of New York on March 11 alleging that Coinbase is an unregistered securities exchange. The lawsuit lists 79 tokens as securities that Coinbase is selling in violation of state and federal law, and buyers were not warned of the risks involved in their purchases.

The plaintiffs, Christopher Underwood, Louis Oberlander, and Henry Rodriguez, were represented by the Connecticut law firm Silver Golub & Teitell when they filed the amended complaint, which named Coinbase Global, Coinbase, and CEO Brian Armstrong as defendants. The 255-page document argues that each token in question qualifies as a security under the Howey test as investment of money in a common enterprise with a common purpose.

Furthermore, the suit claims that when an exchange occurs, Coinbase is the “actual seller,” crediting and debiting the parties involved in the transaction in its accounts rather than facilitating a direct exchange between those parties.

“The case is not surprising,” said Philip Moustakis, counsel at Seward & Kissel. After all, the SEC has indicated that it intends to conduct investigations or take action against cryptocurrency exchanges.”

Similar cases arose after the Securities and Exchange Commission, or SEC, cracked down on initial coin offerings in 2018, according to Moustakis.

However, while the SEC has pursued cases against token issuers, such as its current dispute with Ripple, and market participants, such as BlockFi, which offered a lending product based on digital assets, it has yet to take action against an exchange.

The painstaking one-by-one examination of the tokens, according to Moustakis, exemplifies the need for greater regulatory clarity. “Unless and until the SEC provides additional guidance and a path to compliance for token issuers, crypto lending products, exchanges, and other market participants,” he said, “the question of whether any particular cryptoasset or transaction is a security will be litigated one at a time.”

This is because, while the tests for determining whether a token is a security […] are well established, the analysis is based on facts and circumstances, and different evaluators weigh different factors more heavily than others, so the results can vary depending on one’s point of view.

Coinbase launched a new feature called “Coinbase Pay” on Wednesday, allowing users to fund their Coinbase Wallets directly from a Chrome browser extension. Coinbase Pay intends to make it simple for anyone to participate in decentralized finance, or DeFi, swap tokens on decentralized exchanges, or DEXs, and purchase nonfungible tokens, or NFTs, with just a few clicks, according to its staff. They specifically stated:

“Before Coinbase Pay, users who wanted to add funds to their Coinbase Wallet from the browser extension needed to navigate to Coinbase.com, sign in to their account, copy-paste their wallet address, and manually transfer funds from their Coinbase account. The process was not only cumbersome, but also left the user vulnerable to user error.”

With Coinbase Pay, all that is required is to select the currency to add to one’s Chrome wallet, enter the amount, and confirm the transaction. “There will be no more switching between apps, copy-pasting addresses, or manually transferring funds,” a staff wrote.

Users do not need a Coinbase.com account to use Coinbase Wallet, according to the company. However, before using Coinbase Pay as a fiat-to-crypto on-ramp service, they must link their self-custody wallet to their account. Despite coming from a centralized exchange, the extension’s private keys are stored by the user, not by the platform.

The wallets added support for the Ledger hardware wallet last month. By the end of last year, the exchange had grown to store 13% of all cryptocurrency across more than 150 asset types. In addition, the company intends to launch its own NFT marketplace. At the time of publication, 3.86 million email addresses were listed on the platform’s NFT waitlist.