Crypto’s Biggest Banker’s Latest Push | Bitcoin Breaks Out

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Nina Bambysheva Staff Writer, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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COINBASE MAKES A BIG BET ON BASE

Crypto evangelists hate the idea of centralized power, but operationally $50 billion Coinbase is more similar to other command-and-control financial institutions like JPMorgan than it is to something like an employee-owned credit union. Its main businesses are trading, custody and co-managing (with Circle) a huge ($35 billion) stablecoin operation that pegs the value of the USDC token to the U.S. dollar. Coinbase’s dominant position allows it to charge high fees. Purchasing $5,000 of Bitcoin on the exchange will cost you $90. On Kraken it costs $20, and on Robinhood it’s free.

But Armstrong is a crypto idealist, and he isn’t entirely happy with this state of affairs. He wants to disrupt his money machine, creating a whole new infrastructure for rapid-fire transactions, which will not only lower fees but also weaken the control of big tech and financial firms. “The whole reason I got into this and the mission of Coinbase is around increasing economic freedom in the world,” he said to Forbes in an interview for the next issue of the Forbes 400. “The vision here is that crypto is going to power more and more of global GDP. [It will] create sound money, sound financial infrastructure for people all over the world with lower fees, lower friction.”

The key element in Armstrong’s latest corporate push is Base, which launched in August 2023. Base is a so-called Layer 2 platform. Instead of being a self-sufficient blockchain like Bitcoin, Ethereum and Solana, it is designed to improve upon Ethereum by potentially processing thousands of transactions per second, costing less than a cent each. Ethereum can handle only about a dozen transactions per second, each costing an average of $1. It’s a huge improvement, but still far less than existing financial networks. Visa’s global processing network, VisaNet, can handle 65,000 transactions a second. But it also comes with some important fine print.

Read the full story on Forbes.

BITCOIN BREAKS PAST $66,000

Core CPI, the Fed’s preferred measure of inflation that strips out volatile items such as food and gas, fell by 2.2% in August. This reading was lower than analyst expectations of 2.3%. Bitcoin immediately surged 1.5% on the news, surpassing $66,000 for the first time since July. This growth accentuates an uptrend that began for the asset in early September and accelerated on September 18 when the Federal Reserve’s Open Market Committee (FOMC) lowered the targeted funds rate by 50bps to between 4.75%-5.00%. With creeping up concern about job numbers and unemployment growth, this soft inflation reading could prepare the groundwork for the FOMC to lower rates by another 25bps at its next meeting in November.

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CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$66,358

5.5%

Ether (ETH)

$2,721

6.5%

Tether (USDT)

$1.00

0.0%

Binance Coin (BNB)

$612

7.9%

Solana (SOL)

$159

8.2%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 1 p.m. on September 27, 2024.

SEC CHAIRMAN GETS ROASTED AT CONGRESS

In a highly anticipated Congressional hearing this week, U.S. Securities and Commission (SEC) Chairman Gary Gensler and his fellow commissioners faced intense scrutiny over the agency’s handling of digital asset regulation. Committee Chairman Patrick McHenry, a Republican from North Carolina, wasted no time in setting the tone, calling out Gensler for what he sees as regulatory overreach. “Chair Gensler’s legacy will be defined by turning the once proud institution of the SEC into a rogue agency,” McHenry said, accusing the SEC of enforcing regulations “often without adequate justification, economic analysis or public engagement.” The SEC’s heavy-handed approach has targeted a broad range of U.S. crypto companies—from exchanges like Coinbase to decentralized finance (DeFi) platforms like Uniswap and NFT marketplaces such as OpenSea.

Gensler defended himself and the SEC’s performance by maintaining his consistent position that most digital assets are securities as defined by the Howey Test–a nearly 100-year-old legal precedent.

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