TLDR
- HSBC analysts believe Coinbase’s opposition will not derail the U.S. crypto market structure bill.
- The bill aims to provide regulatory clarity by defining the roles of the SEC and CFTC.
- Institutional investors require a clear regulatory framework to enter the crypto market at scale.
- Despite Coinbase’s withdrawal, the bill remains crucial for market stability and integrity.
- HSBC maintains that the current draft of the bill may offer more benefits than future versions.
Coinbase’s decision to withdraw support for the proposed U.S. crypto market structure bill will not halt its progress, according to HSBC analysts. The investment bank suggested that Coinbase CEO Brian Armstrong‘s preference for no bill over a flawed one doesn’t mean a compromise is out of the question. Despite this, the report maintains that a legislative framework is crucial for institutional involvement in the market.
Coinbase’s Withdrawal Will Not End the Legislative Process
HSBC analysts Daragh Maher and Nishu Singla stated that Coinbase’s exit from supporting the crypto market structure bill will not derail the process. They argued that despite the company’s concerns, the bill remains essential for providing stability to the market. The report emphasized that a clear regulatory structure is necessary to attract institutional investors, which have been hesitant due to regulatory uncertainty.
Brian Armstrong reversed the company’s stance on the bill, citing concerns over consumer protection and market competition. However, the analysts believe that the bill still stands a strong chance of success, noting the support it has from other major players in the industry.
“The withdrawal of Coinbase’s support does not mark the end for the crypto market structure bill,” said the analysts, highlighting that the bill has a path forward, even without the backing of one of the industry’s major exchanges.
Crypto Market Structure Bill Vital for Institutional Involvement
The proposed legislation aims to define the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in regulating the crypto industry. By clearly separating the jurisdictions of the two agencies, the bill seeks to create the regulatory clarity that institutional investors, such as hedge funds and corporate treasuries, require to participate on a large scale. This move is viewed as necessary to establish a stable environment for the crypto market to flourish.
Despite Coinbase’s opposition, HSBC believes that the current draft of the bill might offer more benefits than future versions, which could face stricter regulations under different political administrations. Analysts pointed out that while the bill is imperfect, it provides a foundation that could foster market integrity through CFTC oversight.
“The current bill, though not ideal, offers a compromise that could still benefit the industry,” the analysts concluded.
The continued push for the crypto market structure bill has seen backing from companies like Ripple, which advocate for regulatory clarity over the current chaotic environment. As political discussions surrounding the bill continue, there remains a clear divide between those seeking immediate action and those hesitant to rush a solution.
HSBC analysts remain optimistic about the potential of incremental progress, even if a full resolution is not immediately achieved. The proposed bill’s survival through the legislative process is expected to provide improvements to market structure, even without the full support of every major industry player. In particular, the analysts highlighted the importance of market integrity measures and CFTC oversight as key benefits of the bill, regardless of any compromises.
