Investors should expect more regulation of the crypto market as a result of the initial public offering of cryptocurrency exchange Coinbase on Wednesday (14th).
They should also be wary that the listing, which could see Coinbase's valuation reach $100 billion (€83.59 billion), could mark a short-term peak in the rise of cryptocurrencies.
These warnings come on the back of the public debut of US-based Coinbase, the biggest crypto platform in the US, which is launching its IPO on Nasdaq.
According to regulatory filings, Coinbase currently has 56 million users globally and an estimated $223 billion of assets on the platform which accounts for more than a 11% share of the crypto assets market.
The company also has a crypto custody business which was recently appointed by ETF provider WisdomTree for its physically-backed Bitcoin ETP.
Coinbase’s direct listing, the most significant yet of a cryptocurrency company, has resulted in bitcoin reaching an all-time high of $63,000 on April 13.
While noting that the listing is a “truly momentous day for the cryptoverse”, Nigel Green, chief executive of financial advisory firm DeVere Group, said that the likely boost to cryptocurrencies will also bring much greater government scrutiny.
“We should expect considerably higher levels of regulation in the crypto market. Indeed, I believe it is inevitable,” said Green. “However, bitcoin investors shouldn’t be put off by the likelihood of greater government scrutiny.”
Green said that draconian clampdowns are unlikely and proportionate regulation should be embraced.
“It would help protect investors, shore-up the market, tackle criminality, and reduce the potential possibility of disrupting global financial stability, as well as offering a potential long-term economic boost to those countries which introduce it,” said Green.
Investors should also tread carefully in response to the surge in cryptocurrency values as a result of the Coinbase listing, said Adrian Lowcock, head of personal investing at investment platform Willis Owen.
“No matter what the asset class, bubbles can form quickly and are usually driven by people’s emotions and behaviour - not rational decision making. Indeed, today's IPO could mark the peak for cryptocurrencies, at least in the short-term,” said Lowcock.
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