What happened
Shares of Coinbase Global (COIN +1.20%) collapsed on Thursday. As of 2:45 p.m. ET, the stock was down more than 7%. To be fair, the market is generally down today, and a 7% drop isn't out of the ordinary. However, the market may be responding negatively to a troubling report today -- a report already refuted by Coinbase.
So what
According to The Wall Street Journal this morning, Coinbase once made a $100 million speculative cryptocurrency trade. The company was looking to generate revenue from actively trading cryptocurrencies instead of simply generating revenue from when its customers trade. The article says this was "proprietary trading."
NASDAQ: COIN
Key Data Points
This is an incredibly problematic statement for two reasons. First, Coinbase told the U.S. Congress in December that it doesn't do proprietary trading. Second, as a cryptocurrency exchange, there's a potential conflict of interest. It could potentially front-run its customers if it was buying and selling for its own benefit.
Coinbase consequently published a blog post refuting The Wall Street Journal this morning. That said, it did acknowledge that it buys cryptocurrencies. However, these aren't intended to generate short-term profits, according to the company. Rather, these purchases are for other things, including the "corporate treasury and operational purposes."
Now what
The debate about Coinbase's trading activity does renew investors' fears regarding U.S. regulation. However, there was also some encouraging news for Coinbase on the regulatory front today. The Netherlands just approved the company's services.
By itself the Netherlands likely won't be a significant market for Coinbase. However, it is encouraging for shareholders who are hoping for growth from many avenues, including ongoing international expansion.
