Coinbase Enters a New Era of Cryptocurrency
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Coinbase Enters a New Era of Cryptocurrency
Not everyone was excited about the committee's actions.
Navigating Web3 tides with focused insightsBy: Yueqi Yang
Translation: Block unicorn
On the Friday before Donald Trump took office in January, Coinbase CEO Brian Armstrong joined his senior executives in Washington for a crypto ball, where tech elites celebrated the dawn of America’s first crypto-friendly president.
But soon after, Coinbase’s chief legal officer, Paul Grewal, was interrupted mid-celebration when Trump unexpectedly posted on X announcing he had launched a meme coin called $Trump. Meme coins are a controversial topic among many cryptocurrency enthusiasts—some view them as fun, collectible forms of digital currency that capitalize on viral trends, while others see them as problematic blemishes on the entire crypto category.
As Grewal ate a chicken lettuce wrap, he overheard guests discussing the launch of some token and pulled out his phone to check X. “Honestly, my first reaction was—wait, is this real?” said Grewal. “Because I’ve never seen someone of Mr. Trump’s stature actually launch a token.”
By the next day, several cryptocurrency exchanges—including Kraken, Bitget, and KuCoin—had already opened trading for the presidential meme coin. But on Saturday, Grewal discussed with Coinbase’s team—a publicly traded company traditionally more cautious about listing meme coins and other new tokens—how they should handle $Trump.
Ultimately, Coinbase listed the token the following Tuesday, but by then most customers had missed out on the brief weekend hype: the token closed the day down about 40% from its peak.
For Coinbase, the episode marked the beginning of having to balance a wave of deregulation and other pro-crypto policies rolling out under the Trump administration. While Coinbase may stand to benefit more than any other company from these moves, it still faces the decision of whether to dive headfirst into crypto’s more speculative corners or proceed cautiously to protect its clients and reputation.
It’s too early to say what the election of the most crypto-supportive president in U.S. history means for Coinbase. Since Trump’s inauguration on January 20, bitcoin—the most widely held cryptocurrency—has dropped 14%, while the S&P 500 and Nasdaq Composite have fallen 4% and 7%, respectively.
Even Trump’s Sunday announcement that he planned to establish a strategic national reserve of bitcoin, Solana, and other cryptocurrencies provided only a temporary boost to those tokens. Since the inauguration, Coinbase’s stock has declined nearly 30%.
Still, Trump’s second term has been a string of wins for both Coinbase and CEO Armstrong. Before the election, the company poured over $75 million into the political action committee FairShake and its affiliates, helping elect nearly 300 pro-crypto lawmakers in 2024.
After the election, Armstrong personally met with Trump to discuss crypto issues. He has become a leading tech voice calling for federal reform, advocating for the elimination of the Consumer Financial Protection Bureau and praising Elon Musk’s Department of Government Efficiency for cost-cutting efforts. On March 7, Armstrong will attend the first-ever White House crypto summit. (According to ProPublica, Armstrong’s sister, Katherine Armstrong Lovin, works for DOGE.)
At the end of February, the Securities and Exchange Commission (SEC) dropped its long-running lawsuit against Coinbase, which accused the company of operating an unregistered securities exchange, brokerage, and clearing agency. This removed one of the biggest regulatory threats facing Coinbase. Other crypto platforms including Robinhood, Kraken, Gemini, and OpenSea also reported that the SEC had dropped similar investigations or lawsuits against them.
Not everyone is thrilled by the commission’s actions.
“The crypto industry got what it wanted in terms of the SEC backing off enforcement,” said Cory Froehlich, director of the nonprofit consumer advocacy group Americans for Financial Reform.
“I think we’re entering a period where crypto scams will proliferate, and I’m deeply concerned about investors entering this market—putting their hard-earned money at risk—who will get scammed because they’re left unprotected,” he continued. Froehlich previously advised former SEC Chair Gary Gensler on crypto matters; Gensler is viewed by crypto executives as their main adversary in government.
The Trump family’s direct involvement in various crypto projects has also raised concerns that donors might use such assets as tools to funnel funds anonymously to the Trumps.
Meme Coin Frenzy
For Coinbase, one of the most immediate impacts of the new Trump era has been a surge in token listings on its exchange—listings the company had scaled back after the SEC sued in 2023. According to data from analytics firm Kaiko, Coinbase added 10 new tokens in February, compared to an average of 2.3 per month in 2023 and 3.4 per month in 2024.
Meme coins have driven much of this increase, accounting for 9 out of the 20 new tokens listed on Coinbase since the election.
But meme coins come with a complicated legacy.
These tokens have no intrinsic value and trade purely on sentiment. They also tend to attract retail investors dreaming of quick riches—and shady actors eager to profit from them.
In a high-profile case in 2021, scammers launched a token called squid, named after Netflix’s series “Squid Game,” whose price surged over 40,000% within weeks. Regular investors later discovered the team behind the token had set rules allowing creators to sell their holdings, while ordinary investors could not. When the creators cashed out, the token’s value collapsed.
Last December, internet personality Haley Welch launched a meme coin called hawk—named after her “hawk tuah” catchphrase—that briefly reached a market cap of nearly $500 million. Within hours, its value plunged over 90%, sparking backlash. (She denies she or her team sold their holdings after launch.)
Coinbase did not list either the squid or hawk tokens.
Nonetheless, meme coins hold appeal for a segment of online users and can be a key way for exchanges like Coinbase to attract new customers. They also received a major regulatory boost last month when the SEC stated that meme coins are not securities, meaning issuers or promoters don’t need to register them with the agency. (This also means investors aren’t protected under federal securities laws.)
Yet Coinbase appears conflicted about them. Last month, Armstrong himself wrote a lengthy post on X stating he personally doesn’t trade meme coins, but added, “We should remain open-minded about the future of meme coins, even if some today are silly, offensive, or even fraudulent.”
“If our customers want it, and it’s legal, our goal is to let them make their own choices,” he added. “But our job is to give them the best information we can so they can make informed decisions. If a token is a scam or fraudulent, we’d want to remove it.”
According to a former employee, internal debates have raged over how to approach meme coins. Proponents argue they are an obvious way to boost Coinbase’s trading volume, while skeptics worry they distract from building products with real-world utility, such as payments and lending.
Grewal said such discussions are healthy and reflect “the debate happening outside Coinbase and across the broader crypto space.” “We rarely get to accurately predict which tokens will have real utility and ultimately impact the economy in meaningful ways,” he said.
Before listing new tokens, Coinbase conducts a review process evaluating them against the company’s legal, compliance, and technical security standards. The aim is to weed out tokens regulators might consider unregistered securities, scams, or vulnerable to hacking.
In the past, Coinbase has had to walk back some of its descriptions of meme coins. In 2023, it published a newsletter noting that some viewed Pepe the Frog—a cartoon frog that inspired a meme coin called pepe—as a hate symbol popularized by far-right groups. Pepe supporters were outraged, prompting Grewal to apologize on X for oversimplifying the meme’s history.
Coinbase eventually listed pepe in the fourth quarter of 2024. In a February letter to investors, the company credited the listing of pepe and wif—another dog-in-a-hat-based meme coin—for driving growth in its consumer trading revenue.
But critics argue that despite customer enthusiasm, Coinbase will regret supporting these tokens. Listing $Trump is “shortsighted,” Froehlich said, because it undermines investor trust in the market—especially if Coinbase wants to build a legitimate crypto marketplace.
“Protecting investors using your platform and preserving the integrity of your business means sometimes you don’t offer a product just because there’s demand,” he said.
Embracing Leverage
As regulatory hurdles ease for Coinbase in the U.S., the company is also pushing deeper into areas of crypto long dominated by offshore, freewheeling exchanges.
This includes a form of derivatives trading known as perpetual futures, which dominate global crypto trading volume. The Commodity Futures Trading Commission (CFTC) classifies them as a type of contract called swaps, which can only be legally offered by firms registered with the agency.
Perpetual futures are popular among both retail and institutional investors offshore, fueling the rise of U.S.-based exchanges including Binance, Bybit, and the now-defunct FTX, founded by Sam Bankman-Fried.
Coinbase entered the perpetual futures space late, launching only after securing a license in Bermuda in 2023, enabling it to serve non-U.S. clients. It now holds a small but growing share of the market. But Coinbase has taken a more conservative approach than its rivals: it offers bitcoin perpetual futures with leverage capped at 20x, far below the 100x or higher leverage available on other platforms.
“We’re being conservative on leverage levels,” said Greg Tusar, Coinbase’s head of institutional products. “We’re trying to stay competitive for retail users without taking excessive risks.”
Under the new U.S. administration, Coinbase executives hope they’ll be able to offer perpetual futures to domestic customers. Armstrong said during a recent earnings call that this could bring significant trading volume to the U.S. market.
“We’re excited about how the new regulatory landscape could drive innovation and enable new products in the U.S.,” said Tusar.
Hedging Bets
By diving deeper into some of crypto’s wilder frontiers, Coinbase is hedging against losing control of its relatively staid core business: providing small investors with a way to buy and sell cryptocurrencies—especially bitcoin and ether.
A friendlier U.S. regulatory environment could bring fierce competition to Coinbase’s core offering. Smaller U.S.-based crypto exchange rivals Kraken and Gemini are both preparing for potential public listings, which could grant them the same legitimacy Coinbase touts. Meanwhile, overseas exchanges like Singapore-based Crypto.com are eyeing a larger slice of the U.S. market.
Top Wall Street firms want in too. Charles Schwab and E-Trade, two of the largest retail brokerages in the U.S., are among the stock-trading giants planning to offer crypto trading, likely starting with bitcoin and ethereum. Nasdaq recently petitioned the SEC to create a “level playing field” for traditional exchange titans to launch services competing with crypto platforms like Coinbase.
Coinbase will also face increased competition in stablecoins—tokens pegged to the dollar, a relatively conservative corner of crypto. Coinbase has a major partnership and revenue-sharing agreement with top stablecoin issuer Circle, but payment giants including PayPal have been launching their own stablecoins. Trump is now pushing legislation to clarify the regulatory status of stablecoins, which could encourage more traditional financial institutions—like big banks—to enter the space.
Coinbase argues that greater participation in crypto trading will grow the overall market, benefiting the company too. It also bets that financial institutions like banks, which lack crypto expertise, will need to rely on Coinbase’s custody and other services to quickly roll out crypto offerings.
“I hope they see us as the most attractive option to launch crypto services,” said Brett Tejpaul, head of Coinbase’s institutional business serving large traders. “From there, they can build on top of our platforms and services.”
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