Coinbase’s Quarterly Profits Boosted By Rising Crypto Prices And Stablecoins

Coinbase’s Quarterly Profits Boosted By Rising Crypto Prices And Stablecoins

The leading crypto exchange in America revealed that the first quarter of the year saw its sales rise to an impressive $1.6 billion, as the transaction revenue doubled in the last three months.

In the same period a year earlier, the quarterly revenue of Coinbase had stood at $772 million and the $1.6 billion bottom line was certainly higher than analyst expectations of $1.3 billion.

The numbers

Wall Street expectations had put the earnings per share of the San Francisco-based company at $0.90, but it ended up reporting a higher figure at $4.40 per share.

The first quarter also saw the crypto exchange’s transaction revenue rise to $1.1 billion, while it had stood at $374 million in the same period last year.

As a matter of fact, it was double the transaction revenue that had been recorded in the fourth quarter of the previous year at $523 million.

In a letter to shareholders, Coinbase said that trading activity had been revitalized on the platform amongst customers who had joined before 2023.

In addition, it also said that new users had also increased, which included institutional traders. In the final quarter of last year, the crypto exchange had turned green.

The impact

Its profit for the fourth quarter stood at $273.4 million, while the same quarter in 2022 had seen a loss of $557 million.

A year earlier, the crypto exchange had posted a quarterly loss of $79 million, as there had been a downturn in the crypto market in the aftermath of the FTX fiasco.

In February, Coinbase revealed that it had strengthened its balance sheet through a debt reduction of $413 million.

The company had also been able to get bigger gains, thanks to its business of allowing customers to earn interest on their USD Coin (USDC) stablecoin.

The factors

This year also saw the stablecoin services of the exchange garner increasing interest. According to Coinbase, there was a 15% rise in revenue from the crypto product in this quarter from the last one.

The revenue rose to $197 million after the increase. In its shareholder letter, the company said that USDC was the fastest growing stablecoin this year.

Digital tokens that are pegged to a stable asset, such as dollars, are called stablecoins and Coinbase enables its customers to earn interest on these tokens.

These are defined as blockchain rewards by the company. Coinbase also generated $151 million in revenue through its crypto staking service, which is more than double as compared to last year.

Coinbase was also able to make money due to the rise in crypto prices after the approval of 11 spot Bitcoin exchange-traded funds (ETFs) back in January.

This year has seen the price of Bitcoin rally and reach a new all-time high in March at $73,747. At the start of the year, Bitcoin had been trading at a value of about $44,000.

Coinbase is also providing custody services to most asset managers who have launched a spot Bitcoin ETF.

The exchange disclosed that approval of the ETFs had resulted in greater customer engagement for them.