Some leading exchanges' stock trading operations are lagging, but the CEO stated that the gap is not significant.

Source: CryptoNewsNet Original Title: Coinbase lags behind Robinhood in stocks, but CEO says not by much Original Link:

Major Exchange Begins Offering Stock Trading Services to Some Users

This NASDAQ-listed crypto trading platform has started offering stock trading to a limited user base. It is currently competing directly with established brokerages Charles Schwab, Fidelity, and long-time rival Robinhood, which launched stock and crypto trading earlier than this exchange.

Founded in 2012, the exchange has been providing digital asset services for over a decade and now aims to expand further into the stock sector. However, the stock market is a completely different and heavily regulated field, where the exchange lacks operational history and faces fierce competition.

The company’s CEO revealed last year his ambition to build the company into an “all-in-one trading platform,” where users can trade cryptocurrencies, stocks, and participate in prediction markets.

Major Exchange Trails Robinhood in Stock Sector, but CEO Says Gap Is Small

Robinhood built its brand through commission-free stock trading and decided in 2018 to add crypto trading to its “arsenal.” According to business news outlet The Information, the two platforms have been vying for the same retail traders.

Robinhood’s stock surged 186% last year, outperforming the exchange, whose stock price fell 12% during the same period. Despite a crypto-friendly policy environment emerging in Washington that should have boosted the exchange’s valuation, this did not materialize.

According to data from S&P Global Market Intelligence, Robinhood’s stock has a P/E ratio of 48x (based on expected earnings over the next year), while the exchange’s P/E ratio is 41x.

The stock price of this Bitcoin custodian has been rising for most of last year until October, when it declined amid the crypto market’s largest drop since the FTX collapse in 2022. As the market has not fully recovered, the stock price remains below its IPO high.

In Q3 last year, crypto trading accounted for about 20% of Robinhood’s revenue, providing a buffer as digital asset trading cooled. In contrast, most of the exchange’s revenue still comes from crypto-related activities, making it more vulnerable during market downturns.

“If there’s a crypto winter, Robinhood won’t be affected as much as this exchange,” said Dan Dolev, senior analyst at Mizuho Securities, who has a buy rating on Robinhood and a neutral rating on the exchange.

Major Exchange and CEO Play Long Game on Tokenized Stocks

According to the CEO, the exchange’s entry into the stock market is not late, as it is betting long-term on the fusion of traditional finance and blockchain technology. In a recent interview, he explained that the exchange’s crypto-first foundation will give it an advantage when stocks go on-chain.

“We have deep crypto expertise. We have the most trusted brand in crypto. We hold more crypto assets than anyone else. So I believe our advantage is being a bridge between traditional finance and crypto, and then letting tokenized stocks really take off,” the CEO said.

Currently, the exchange’s stock trading is very similar to other online brokerages, but the CEO expects stocks to soon be issued natively on the blockchain. However, some companies oppose tokenizing their stocks because these tokens look more like derivatives rather than actual on-chain issued equity.

“I think the most interesting thing is tokenized assets, where it truly represents the underlying one-to-one, giving you rights to that asset, whether dividends or voting rights,” the CEO said. “There’s a lot of work to do to coordinate details with the SEC and other agencies. This involves record-keeping and regulatory issues.”

Withdraws Support for US Banking Committee Market Legislation Proposal

Crypto executives and legislators are still debating the “Clear Act,” which aims to create a framework for integrating crypto into the US traditional financial system.

The bill was originally scheduled for markup on Thursday, but some crypto companies, including this major exchange, withdrew their support, causing the Senate Banking Committee to delay its introduction.

Reportedly, the exchange’s CEO stated on Wednesday that after some temporary amendments to the draft, the exchange would withdraw support for the bill, and then Republicans within the committee canceled the planned markup.

When asked whether the exchange’s action would permanently damage the bill’s prospects, he said many in the crypto industry agree with the exchange’s opposition.