Crypto Downturn Highlights Different Business Exposures

The recent crypto downturn has had varying effects on different businesses in the industry. On September 15, the US Senate failed to advance the Digital Asset Market Clarity Act, which would have created federal rules for digital-asset intermediaries and divided oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission.

Coinbase, a leading crypto exchange and financial platform, was among those affected by the news. The company has been expanding its services to include derivatives, stablecoins, and payments, making clearer market rules particularly relevant for its business. In the second quarter, Coinbase reached record crypto trading market share, while average USD Coin held across its products reached $20 billion.

Circle Internet Group's main product is USDC, a digital token designed to stay worth one US dollar. The company benefits from wider use of digital dollars, not just rising token prices or more speculative trading. Circle's key drivers are USDC adoption and interest rates, which can increase the income generated by its reserves.

Strategy Inc, on the other hand, is mainly a Bitcoin exposure, making Bitcoin and its capital structure more important than exchange regulation. The company holds over 843,000 Bitcoin alongside billions of dollars in debt and preferred shares. Its investment case is dominated by its Bitcoin treasury and the financing used to build it.