• JP Morgan analysts believe Coinbase will “meaningfully benefit” from Ethereum’s Merge upgrade. 
  • The bank argues Coinbase’s Ethereum staking offering will drive revenue for crypto exchanges. 
  • Coinbase CEO argues that the exchange is ready to shut down Ethereum staking if threatened by regulators. 

Coinbase CEO responded to crypto Twitter’s speculation as to what the exchange will do in the event of the regulatory threats. Brian Armstrong argued that Coinbase would shut down Ethereum staking to preserve integrity of the blockchain network. 

Also read: Why analysts expect wild rally in Ethereum killer Cardano price

Coinbase could shut down Ethereum staking

Earlier this month, the US Treasury Department sanctioned the coin mixer Tornado Cash. As the Ethereum Merge approaches, crypto Twitter is abuzz with narratives surrounding ETH staking. The Merge, a transition from proof-of-work to proof-of-stake consensus mechanism is a make or break event for Ethereum. Government regulations could negatively impact the fundamental operation of Ethereum and its post-merge proof-of-stake consensus mechanism. 

Brain Armstrong, CEO of Coinbase responded to hypothetical scenarios on Twitter, informing the crypto community that the exchange would shut down Ethereum staking if required to preserve the integrity of the blockchain network. In the event of a regulatory threat or an inconsistency in the Merge, Coinbase will rollback its Ethereum staking service. 

Interestingly, leading investment bank JP Morgan estimated that Coinbase has a 15% market share in Ethereum assets and this trumps the exchange’s 7% share of the overall crypto ecosystem. JP Morgan’s conclusion implies that Coinbase can generate $600 million from Ethereum’s staking as incremental annual staking revenue. This estimate assumes Ethereum price is $2,000 and yield is 5%. 

The bank was quoted:

Coinbase is bigger in [Ether] than was intuitive to us, thus leading directly to a bigger revenue opportunity.

Coinbase has therefore been singled out as a beneficiary of the Ethereum’s Merge, and the CEO’s latest statement on rolling back ETH staking is fueling a negative sentiment among COIN holders. 

COIN suffered a decline, and the tokenized stock on FTX plummeted after news of a likelihood of ETH staking rollback by the exchange. Armstrong responded to a question on crypto Twitter, and addressed the exchange’s plan of action in case a regulator censors the Ethereum protocol. 

The Coinbase CEO argued that the scenario is hypothetical and hopefully one that the exchange won’t face, but if it does, Coinbase will shut down the staking service and preserve the network’s integrity. 

What’s next for Ethereum if ETH staking service is rolled back?

Analysts have evaluated the Ethereum price trend and predicted a decline to the $1,700 level. Ethereum is currently trading around $1,873 and a decline to $1,700 is likely. @NekoZ, a leading analyst, has a bearish outlook on Ethereum. 

ETH-USDT 1-day price chart

ETH-USDT 1-day price chart

Analysts at FXStreet believe Ethereum price consolidation is likely. The Merge narrative fueled initial bearish sentiment among holders, however a decline in ETH price is likely. For more information, watch the video below:

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

US presidential election outcome could shape the future of crypto

US presidential election outcome could shape the future of crypto

US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).

More Cryptocurrencies News
Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.

More Bitcoin News
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.

More Ripple News
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.

More Ethereum News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP