After posting on Reddit yesterday’s article that highlighted the new service by Coinbase that is geared towards high net individuals and Institutional investors, a Redditor was quick to ask how such a service affects ‘the little guys’ like you and I.
The exact question by the Redditor was as follows:
This is great i guess but what does it mean for regular non-institutional investors like me?
So what does this new service mean for the regular non-institutional investor?
Firstly, and as the first article about the Coinbase Custody service mentioned, this new service offers a gateway for the Institutional investors and high net individuals to get into crypto. This new service probably guarantees their funds are safe and are subject to some form of an insurance policy similar to how banks in the US are backed by the FDIC. This means that on top of cyber security, there is some guarantee of a reimbursement of funds if the crypto gets hacked. The big money from Wallstreet in the trillions will surely makes its way into the crypto markets with such a double guarantee.
Secondly, Coinbase currently only supports Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ethereum Classic (ETC) and Bitcoin Cash (BCH). One thing to note, is that these 5 digital assets have been cleared by the SEC as being not securities. Bitcoin and ETH were cleared by the SEC meaning LTC, ETC and BCH get a direct green light by this declaration based on similar technology to both BTC and ETH.
Therefore, since Coinbase supports these 5 coins, they will be the ones to most likely benefit from the bulk buying by the high net individuals and institutional investors such as hedge funds. This means the circulating supply will drop, boosting the price of each of these 5 assets. Once BTC skyrockets, so does the rest of the crypto markets including other digital assets such as ZIL, IOST and TRX. Therefore, it is a win for every digital asset out there: including the ones in your portfolio.
Thirdly, the fact that Coinbase has been aligning itself to SEC recommendations can only mean the exchange wants to probably get a banking license. This is pure speculation but let us entertain the thought. Once Coinbase gets a banking license and is offering assets under the directive of the SEC, this means the exchange might convince the same government body, or the Federal Reserve, to regulate crypto exchanges the same way they regulate commercial banks. This is what is happening in South Korea and it will break the regulatory stalemate that will usher in more institutional investors with the said Trillions in USD.
There is actually one branch of the Federal Reserve in St. Louis that is very crypto friendly.
In conclusion, this new service by Coinbase will not only benefit the high net individuals and institutional investors, but also the regular trader like you and I. Think of it as a chain reaction during a chemistry experiment. The initial energetic reaction does not end in a split second. It brings about more and more reactions until some sort of an equilibrium is reached.