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Should Coinbase Curate Their Listings?
On Monday evening, Coinbase released a post detailing the coins they are reviewing for possible listing in Q2. Their stated intention for the post was to increase transparency.
And they certainly did. Many within the space protested what they viewed as Coinbase listing low-quality coins and lacking an internal compass regarding which coins should be given access to Coinbase’s platform.
But that raises two questions:
What is Coinbase’s strategy?
What should their strategy be?
So what is Coinbase’s strategy? It is laid out below in this quote from their most recent post.
“As mentioned during our launch of Asset Hub, our goal is to list every asset possible that meets our standards for legal, compliance and technical security. These standards do not take into account the market cap or popularity of a project. This means there are assets that we have concluded do not meet our standards and thus will not be listed on Coinbase at this time.” [Coinbase Blog]
So, like many exchanges, they will list everything they can and take a neutral view on subjective quality. Only internal legal and security frameworks will guide their listing process.
But this raises an important philosophical issue. If one accepts the idea that Coinbase is the port of entry into crypto, where many people first exchange fiat for their cryptocurrency of choice (with many never leaving the platform), then it would follow that should be a subjective qualifier for coins that make it onto the platform. This sentiment applies especially to coins that many in the space know to be extremely low-quality or coins that have sustained massive losses and never recovered.
Coinbase may have already decided that this will not be their path. Instead, they will position themselves as a pure exchange. As an exchange, they should list everything they can, within the bounds of legal and security, and let people buy and sell what and how they please.
The issue is that there is an understanding among those around the space regarding which coins are good and bad (i.e., legitimate or illegitimate). Necessary to Coinbase’s neutral framework is that they won’t give a subjective opinion on their listings, and new users won’t necessarily get this information.
Coinbase has thought this through because they list these lesser-known assets with an ‘experimental’ label. But in my opinion, this doesn’t capture the full reality of these coins.
Look at the chart below.
Student Coin (STC) is among the coins Coinbase is reviewing for potential listing in Q2.
On the one hand, you could say that Coinbase shouldn’t be making subjective listing decisions based on quality and that they should only work to list as much as possible and let the market decide.
On the other hand, this poorly-performing coin has failed to establish product-market fit, has little to no utility, has been disregarded by the market, and likely caused massive losses to investors.
From this point of view, Coinbase should be subjectively selective about the coins it chooses to list—above and beyond simply adhering to legal frameworks. This leads to the real philosophical issue: whether Coinbase should act as a curator of the crypto space because it also seeks to act as the port of entry to crypto itself.
We may all come to different decisions on this issue. At the end of the day, it’s Coinbase’s decision to make.
Here’s hoping they choose wisely.
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