Coinbase hoards $4 billion in cash ready for possible crypto bear market

Coinbase has revealed that it has accumulated $4 billion in cash, to be used in the event of regulatory scrutiny, crypto industry risks, and the possibility that the sector might enter a long bear market. 

According to the Coinbase CFO, Alesia Hass, in an interview with the Wall Street Journal, the company is preparing itself fully for any negative eventuality, along the lines of potential cyber-attacks, much tighter regulations or even a decline in trading that would come with a crypto bear market. Hass remarked: 

“We want to ensure that we maintain those cash reserves so that we can continue to invest and continue to grow our products and services in the event that we go into a crypto winter,” 

The question is how far would $4 billion go if the Securities and Exchange Commission (SEC) decided to really crack down on crypto? Something that it has already said that it will do. 

In a letter to shareholders Coinbase stated: 

“The wind is in our sails right now, and it feels good. But crypto is a young volatile industry and there will come a day when times are harder. We know this because we’ve experienced major crypto winters where financing was difficult to get, partners cut us off, and we lost large parts of our employee base. Tension gets high during these times. We’ve sustained by enduring, and not over-reacting. It’s never as good as it seems, and it’s never as bad as it seems,” 

Coinbase net profit for the second quarter of this year was $1.6 million, a massive jump of 4900% from the same period a year earlier. Cathie Wood’s extremely successful Ark Invest has continued to back Coinbase, loading up on Coinbase shares whenever a dip presents itself. 

If the cryptocurrency market continues its bull trend, then Coinbase is very likely going to continue to follow the trend to the upside. However, if governments and regulators can bring enough negative pressure onto the sector, then Coinbase’s cash stockpile will come in very useful. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.