Coinbase exchange goes down under pressure – now we know the bull market is here

In the past few hours cryptotwitter has erupted with Coinbase users complaining that the exchange is down. You know we have entered the bull market when Coinbase has issues, as one tweet said. This is not a new phenomena, and we saw something similar during the last bull market cycle. Is this the bottleneck that strangles bitcoin trading or simply a glitch that can be fixed in a flash?

Coinbase is one of the top cryptocurrency exchanges in the industry and has been for a while. I remember using them to check prices when I first entered the crypto space in 2017. They are also based in USA and compliant with regulations there. This is a good thing, as customers feel safe with them and many are based in the USA anyway.

Add to that the fact that they have their own stablecoin USDC, which is regulated and compliant, compared to USDT which is questionable and has not really been properly audited. There is huge FUD around USDT, even though it is still the most widely used stablecoin. I personally have stopped using Tether and now use USDC.

Despite this, Coinbase is currently undergoing some friction with the US government, who wish to impose further regulations on crypto trading. The usual privacy issue is being attacked as the US Treasury demand forced KYC (know your customer) regulations on all Coinbase users. We all would prefer that our trading and the movement of our money be private. That is the whole bonus of dealing in crypto instead of fiat. But the government want to know all that you do.

Naturally they don’t want money laundering and black market activity by unscrupulous actors. And they want to apparently protect citizens from crime too. Some regulation may be good for safety. And that is a huge debate – where to draw the line between security and privacy? Well Coinbase, presumably on behalf of their customers, is very concerned about the demand for transparency from the US government regulators.

In this tweet by @coinbase, we can see the concern and the battle raging right now for privacy:

“The @USTreasury is proposing crypto regs that will force exchanges to collect, store and share with the gov. personal information associated with crypto transactions. If you believe this to be an intrusion on your privacy, join us in sharing your concerns...”

Coinbase then added:

“The bottom line is that exchanges will need to collect the name and address for anyone that you send crypto or receive crypto from for any transaction worth over $3,000. We disagree with this for many reasons.”

So at least Coinbase CEO Brain Armstrong seems to be on the side of the customer, which makes sense since that is the source of their revenue. Fortunately this proposed demand to know all our details by the government is only for transactions over $3000. This leaves us smaller traders alone to fly under the radar. You could simply make your transactions under that amount by breaking them up into smaller bundles and you will theoretically still be private.

However, many clients may be bigger traders and this will be awkward for them. And they are the ones that really make the money for Coinbase, so naturally they would want to keep their bigger customers happy. It’s not easy running an exchange. After all, you are essentially a bank, holding many millions of dollars for multiple clients, while facilitating 24/7 trading on your platform.

Add to this the recent XRP Ripple débâcle, with the SEC suing Ripple, and then Coinbase announcing their de-listing of XRP, and you already have some disgruntled customers. By January 19 XRP will essentially be suspended from Coinbase for the foreseeable future.

Other exchanges, like Binance, are still up and running, but with the flood of trading now, as bitcoin pumps to daily ATHs, Coinbase is the first to show some sort of overload and disturbing outages. Binance has had them too so may also buckle at times under the strain. Just be aware that these outages do occur sometimes and may affect your trading. As if there is not already enough of a challenge to get your trades right.

As for the SEC regulators clamping down and demanding to know who is trading what and where they live – ultimately government appears to be keen to act as big brother and protect us while simultaneously snooping on our privacy so that they can control us. This battle will go on into the future and will probably always be an issue. And the exchanges which act as our onramp and offramp into crypto, will always be the vulnerable point of the entire crypto industry.

Let’s hope that the leading exchanges like Coinbase can get is right and do what is best for us all. Otherwise there are always other exchanges that may be more private, with less KYC, but will they have the liquidity and volume? That is the question.

(image from coinbase.com blog)

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