SEC's Response to Challenge Groundbreaking XRP Ruling
MicroStrategy's Significant Bitcoin Impairment Losses May Mislead: Berenberg
Coinbase's Pursuit of Regulatory Clarity Shapes its Global Expansion Strategy
Shares of Coinbase Global (COIN) dropped about 5% after the cryptocurrency exchange said that trading volume dropped a lot in the second quarter.
According to a letter sent to shareholders on Tuesday, the amount of money customers traded during the time period was $217 billion. This is less than the $309 billion they traded in the first quarter of this year. FactSet data shows that Coinbase's total revenue was $803 million, which was less than the average analyst estimate of $873.8 million.
Since its initial public offering (IPO) last year, Coinbase's stock has gone down. This is because the crypto and stock market crash slowed down retail trading, which forced the company to cut jobs and focus on controlling costs. Even though the crypto market is going through a "winter," Coinbase is still working toward its goal of being a one-stop shop for trading crypto. It announced a partnership last week that lets customers of BlackRock, which manages $10 trillion in assets, trade cryptocurrencies through Coinbase.
"A drop in trading volume market share is not something we take lightly," the company said. "However, the shift in Q2 trading volume to high volume retail traders, market makers, and high-frequency trading firms did not have a corresponding effect on Coinbase's revenue, as these customers trade a lot but pay low fees."
Wall Street analysts didn't expect Coinbase to do anything spectacular in the last quarter. However, cryptocurrency prices have recently stabilized, which may make some people wonder if the second quarter was the low point for the crypto exchange.
"Q2 was a test of how well crypto companies could hold up, and it was a complicated quarter overall. Dramatic market changes changed how users traded and how much they traded, which affected transaction revenue but also showed how good our risk management program was "Coinbase said.
During the second quarter, the exchange had a net loss of $1.1 billion. In the first quarter, the loss was $430 million. Also, the adjusted Ebitda for Q2 was a loss of $151 million, while in Q1 it was a gain of $20 million.
Coinbase said that its results were "heavily affected by non-cash impairment charges" that came from investments in crypto and startups.
Coinbase said it doesn't know if the SEC's investigation into securities will turn into a formal investigation or not. "[We are] committed to having productive conversations with the SEC about crypto assets and securities regulation, and to working with all policymakers to build a workable regulatory framework for the crypto-economy that addresses any areas of risk while allowing the development and adoption of digital innovation for the benefit of society as a whole."
-----------
