While the FTX CEO is eyeing Robinhood, will we see crypto exchanges transition to stock trading?

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Because no one parties harder than me, I spent part of my week reading Coinbase’s investor call after the earnings call. The US cryptocurrency exchange answers some questions from non-analysts during its chats, which makes the set of tips and answers a bit more interesting. You can read it all here.

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I mention this because someone asked Coinbase if the company could find “a strategic advantage in acquiring or merging with Robinhood.” You might be shocked to learn that Coinbase hasn’t been too enthusiastic about this idea.

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And then yesterday, Coinbase competitor FTX CEO Sam Bankman-Fried, disclosed that he purchased 56,273,469 shares of Robinhood, which is about 7.6% of the company’s common stock.

Shares of Robinhood rose strongly in premarket trading, climbing nearly 24% after the news. Why? Because investors are hoping that FTX will buy Robinhood at a premium. If FTX were to buy Robinhood, investors would likely expect the exit price to be well above the undervalued stock price. So when the FTX CEO invested in the stock, their potential short-term exit cost skyrocketed, making a buy.

According to Bankman-Fried, he believes Robinhood stock “represents an attractive investment.”

There is an interesting contradiction between the Coinbase and FTX news that we need to uncover. It’s Friday, and we deserve a little thought. Let’s have some fun!

If stocks turn into cryptocurrencies, will cryptocurrencies become stocks?

A common joke on TechCrunch is that all fintech companies, no matter where they start, end up looking pretty much the same.

A good example of this is SoFi, best known for its student loan refinancing work, which now offers credit cards, mortgages, business products, checking accounts, and more. SoFi even offers crypto investments to a degree that might seem like a pretty big stretch in terms of its origins.

The fact that SoFi has grown is not a disadvantage; instead, it’s a reminder that user acquisition in the fintech market is expensive. Such a high cost makes it a profitable business to try to get every user of your fintech company to use as many products as possible after purchasing them. The logic here is simple: CAC is CAC, so if you want to increase a client’s leverage, add more LTV. (In venture parlance, CAC stands for Customer Acquisition Cost, and LTV stands for Customer Lifetime Value.)

This is why we saw how Square evolved into Block and spread its wings in the fiat and web3 economy, why you can buy and sell cryptocurrencies with PayPal, and so on.

And yet, when Coinbase ran its earnings call, President and COO Emily Choi gave the following response to a question about a possible purchase of Robinhood (TechCrunch highlighted):

Credit: techcrunch.com /

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