Shares of Coinbase Global Inc. (NASDAQ: COIN) surges over 2.14% in pre trading session on Thursday as Due to the U.S. cryptocurrency exchange Coinbase’s failure to get the proper registration in the Netherlands before to providing services, the Dutch central bank (DNB) fined Coinbase 3.3 million euros that is around $3.6 million.
The DNB’s decision, according to Coinbase, “contained no criticism of our actual services,” and the company stated it disagreed with it and was considering an appeal.
Since May 2020, cryptocurrency businesses doing business in the Netherlands have been required by the nation’s anti-money laundering regulations to register as money transmitters.
The DNB claimed that before successfully registering on September 22, 2022, Coinbase was out of compliance from November 2020 until “at least” August 2022.
It stated that “a significant number of anomalous transactions may have escaped the attention of the investigating agencies” during that time.
According to the DNB, it was taken into account since Coinbase was one of the biggest cryptocurrency businesses and had a “substantial number of consumers in the Netherlands.”
According to JPMorgan analysts, Coinbase’s trading volume increased in the first few weeks of 2023, while other exchanges continued to see reductions. This is evidence that, in the wake of the demise of rival exchange FTX, Coinbase’s reputation as a reliable exchange is beginning to pay off.
The average daily volume (ADV) of the U.S.-based cryptocurrency exchange has increased by 0.3% year over year to $1.6 billion so far in January, a modest but notable gain. According to JPM data, other U.S. exchanges including Kraken and Gemini had drops of 13% and 46%, respectively.
Given that Coinbase’s exchange experienced a consistent fall in activity in 2022, the tiny increase in trading volume also suggests a reversal in trend.
JPMorgan analysts stated, “We think Coinbase has been establishing a reputation as a reliable, trustworthy intermediary for some time.” “We believe that when activity levels increase, reputation is assisting in driving higher market share.”
In light of increased scrutiny over unregulated exchanges in the market brought on by the collapse of FTX, Coinbase is one of the few options left for investors to trade cryptocurrencies without running a considerable risk of fraud. Competitors of Coinbase include Binance and Gemini.
According to JPM, unlike other of Coinbase’s high-profile competitors, Coinbase had no direct exposure to FTX and was shielded from the immediate legal and reputational repercussions of its bankruptcy.
