Coinbase Established Political Action Committee

Cryptocurrency PAC

Coinbase has had a very busy week with the recent acquisition of three firms and on the road to establishing itself as Broker-Dealer and Registered Investment Advisor. Coinbase has taken definite steps to establish itself as the leading soon to be a regulated broker in the United States. This will mean that Coinbase will be able to offer ICOs or Initial Coin Offerings which have recently been nonexistent in the US market.

Ignorant Lawmakers

The move to establish the Political Action Committee is brilliant on the part of Coinbase. Lawmakers tend to be incredibly ignorant when it comes to legislating new technology. This was recently demonstrated when there were hearings on Facebook and all of its data issues. PACs are a necessary component in making sure that any future legislation or regulation will be favorable to the company’s business model. A lobbyist who tends to have a great deal of influence in Washington can be highly effective in shaping new legislation.

History Repeats Itself

It was only ten years ago when another financial product was heavily regulated in the United States. Forex trading was at its peak at that time and growing fast. Forex brokers were slow in forming their own PAC and legislation was already drafted and added to the 2008 Farm Bill. The new law imposed an increase on the net capital requirements from $350,000 to $20 Million. Leverage and trading restrictions were imposed, and the result was the number of brokers dropped from 35 to 2.  Hopefully, any new legislation will be balanced in its consumer protections while still allowing business to operate.

With its, Political Action Committee will be likely to get favorable legislation in the end. The situation between Cryptocurrencies and Forex is a bit different. Regulators were fairly open about their disdain for forex at that time. Regulators now have been very measured with their comments about cryptos which indicates a level of acceptance. The world will be watching as the US shapes its cryptocurrency future.