Coinbase may be adding to its token count.
In a blogpost published yesterday, the San Francisco-based exchange revealed that it was considering adding up to eight new coins – Cosmos, Algorand, Decred, Dash, Harmony, Matic, Waves, and Otology – to the collection of coins it offers to traders. The final decision to support these currencies, however, is subject to the exchange’s digital asset framework, which lists criteria that the exchange uses to evaluate coins.
“Our decision to support any asset requires significant technical and compliance review and may be subject to regulatory approval in some jurisdictions. We therefore cannot guarantee whether or when any above-listed asset will be listed on a Coinbase product in any jurisdiction,” the post states.
Does the Increase in Token Count Serve A Purpose?
Coinbase already supports fourteen cryptocurrencies, up from 10 cryptocurrencies a few months ago. Not all the tokens are available to users in all locations, however. The exchange’s customers are also restricted based on the interface they access. For example, Coinbase Pro customers have access to the full set of tokens as compared to non-pro customers.
The increase in number of tokens available to users is in line with the exchange’s mission to provide access to 90% of the crypto market by aggregate market cap. In September 2018, while releasing guidelines on how it would list tokens on the platform, the exchange wrote that additions of new tokens would become more frequent in the future.
But the trading volume for new tokens is insignificant as compared to those for cryptocurrencies with larger market caps. This has led some commentators to wonder whether the addition of new tokens serves any material purpose in the exchange’s strategy, besides mopping up listing fees.
There is also the fact that the number of tokens is expected to explode in the future as an increasing number of businesses and institutions adopt the crypto approach to increase their reach. As has been the case in the past with ICO tokens, there is a strong chance that several tokens may be scams or end up dying and end up damaging the exchange’s reputation.
The Benefit for Tokens
For tokens, a Coinbase listing can mean instant liquidity.
The exchange has become famous for a phenomenon known as the Coinbase effect. In this effect, a coin experiences a major upswing whenever it is listed on an exchange. A good example of this is Chainlink, which was listed on the exchange at the start of July 2019. Just 12 hours after it was listed on the Coinbase retail interface, the coin saw a spike in market valuation of 63 percent.
It remains to be seen which of these coins will end up on the exchange once the evaluation is done. The coins listed by Coinbase are already enjoying some uptick in valuation. For instance, Harmony recently jumped 20 percent while Matic saw its value rise by 18.5 percent shortly after the announcement.