Coinbase hiring a chief financial officer

Coinbase is hiring a chief financial officer (CFO). This would be a significant move in the company's growth plans but also raises questions about whether the company plans to launch an initial public offering (IPO).

Coinbase

Coinbase is a US cryptocurrency exchange founded back in 2011 by Brian Armstrong and Fred Ehrsan. It has two core products. One is a Global Digital Asset Exchange (GDAX) that trades a variety of digital assets. Coinbase is reported to have had revenue of $1 billion in 2017. The company was valued at $1.6 billion last August.

Hiring a CFO is top priority for Coinbase

Often adding a CFO to a company is looked at as a sign that the company is contemplating an IPO. However, with Coinbase it may simply be that it needs a CFO to properly manage its complicated business model.

Coinbase is already in late-stage talks with several candidates. Tim Laehy a veteran CFO had already joined the company last October but just as an interim CFO. He is not expected to remain.

Coinbase has already hired vice presidents to deal with communications and corporate development. The two will help Coinbase manage its massive growth as interest in cryptocurrencies has soared.

Although Coinbase has refused to comment. Brian Armstrong the CEO said last year that it typically takes him 6 to 12 months to choose the right person.

Investors clamoring for shares

Investors have been pestering the company to allow them to buy shares even though Coinbase told them to desist. The company has been evaluated by investors seeking shares at from as low as $2 billion to as high as $8 billion showing that the market is volatile, unclear, and also not liquid.

Company ponders whether to launch a fund-raising secondary transaction

The company is considering whether to launch a new financing secondary transaction though the company is not wanting for money. The purpose would be mostly intended to allow existing investors who want to, to cash out although the transaction would also include a small primary element to raise money.

The pressure from investors might be alleviated through a sanctioned round of secondary trading. Such trading is not officially allowed. Investors in recent weeks have been negotiating with the company whether to sell or buy shares. This trading could weaken the pressure for an IPO and allow investors to have a piece of the action.

It remains to be seen if Coinbase will offer an IPO this year.

New CFO will have many problems to deal with

As reported in a recent Digital Journal article Coinbase has had many problems with Visa and the banks as customers have experienced duplicate charges, reversals, and extra fees. Visa has admitted it is at fault but Coinbase gave an incorrect explanation of what happened. The appended video discusses some issues. If Coinbase's problems are not solved it will lose customers to other exchanges.

Previously published in Digital Journal

In India several banks curb accounts dealing with cryptocurrency exchanges

Many top Indian banks have either suspended or at least curtailed the functionality of accounts linked to cryptocoin exchanges. The banks justified their actions by citing the risk of dubious transactions.

Banks involved

The State Bank of India (SB) Axis Bank HDFC Bank, ICICI Bank, and Yes Bank all took strong action on accounts that were linked to cryptoexchanges. The Cointelegraph article originally reported that the Metropolitan Bank had put a halt on all wire transfers for cryptocurrency exchanges but later issued a retraction and apology when the bank reported there was no change in its policy.

Why action has been taken

Advocate BIvas Chatterjee has recently filed a public interest litigation in Calcutta to impose immediate regulation on bitcoin and other cryptocurrencies.

Earlier near the end of last year, the Indian Ministry of Finance called bitcoin a Ponzi scheme. Together these two events were partly the cause of the actions of some banks. Other banks appear to be carrying on as before.

The move perhaps reflects what seems to be a general mood internationally of a need to ensure better regulation of cryptocurrency exchanges.

Report claims less than one percent of bitcoin transactions involves money laundering

One of the fears of critics of cryptocurrencies is that since they are anonymous and take place outside the regular financial system they can be used for illegal activities such as money laundering.

A recent analysis team of FDD and Ellicit, a bitcoin forensics company, claimed that less than one percent of bitcoin transactions involved money laundering. The report was written in order to analyze the flow of funds and to discover the degree to which transactions involve money laundering. While the report shows that perhaps the practice is not a big problem for bitcoin, other coins could be being used for money laundering.

The report claims: “The amount of observed Bitcoin laundering [is] small and darknet marketplaces such as Silk Road and, later, AlphaBay are [generally] the source of almost all of the illicit Bitcoins laundered through conversion services.”

Silk Road was closed down back in October 2013 by the Federal Bureau of Investigation((FBI) although several other successor sites were also in operation briefly.

The report claims that most illicit bitcoin transactions were in Europe, five times as many as in North America. It also proposes that the best way to combat money laundering is to have more stringent anti-laundering measures(AML) and that all financial authorities in all jurisdictions increase enforcement of them.

Indian government reported to have sent tax notices to cryptocurrency investors and traders

A recent survey in India found that its citizens had carried out more that $3.5 billion worth of trades and other transactions with cryptocoin traders over the last 17 months. The government collected data from nine exchanges within India. Consequently, tax notices have been sent to "tens of thousands of people"

The government is looking to tax capital gains. It also wants information as to how much people own in cryptocurrencies. After the government collected data last month in an attempt to identify users. The government suspects that cryptocurrency traders were avoiding taxes.

Indian officials are also interested in looking for instances of money laundering.

Indian cryptocurrency regulations unclear

While Indian officials have often been critical of bitcoin, other cryptocurrencies and exchanges, the official position remains murky. At least two petitions and a note by the Indian Supreme Court have all sought guidance as to official regulations.

However, the Indian government has not released any new regulations. According to Reuters, B.R. Balakrishnan said that the tax authority could not wait for an official statement from the government. Balakrishan said:"We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality ... We found that investors were not reflecting [cryptocurrency gains] and in many cases, the investment was not accounted for."

Previously published in the Digital Journal;