In its quarterly report to shareholders, Coinbase posted a 64% jump in transaction revenue to take in $529.3 million in Q4, 2023.
The increase in transactions was due to anticipation for the launch of spot Bitcoin exchange-traded funds (ETFs).
Widely considered an important step in Bitcoin’s path to wider adoption, ETFs are products that enable investors to purchase Bitcoin through a proxy—by buying shares in publicly traded funds that directly hold the asset issued by giant asset managers like BlackRock and Fidelity.
Bitcoin ETFs began trading in the US on January 11 and have continued to drive crypto prices higher since, due to increased visibility for the sector.
The ETFs appear to signal a new period of prosperity for Coinbase.
The exchange not only profits from crypto trading, it also offers the ETFs and serves as the crypto custodian for many of them.
However, one analyst told Cryptonews yesterday that the ETFs bring an added layer of competition.
Senior Researcher at Leverage Shares, Sandeep Rao, wrote: “Several funds offering fee waivers for the next few months will seemingly reduce Coinbase’s fees, but reduced trading volume since approval is likely to sting more over the next few quarters.”
Rao added: “Now that Bitcoin ETFs have such a strong precedent, other exchanges are well-positioned to compete, collect ETF transaction fees, and even devise structures to perform custodian services. Coinbase cannot assume that it will remain America’s only real crypto exchange unless it indicates a move towards measures will help it stay central to the crypto market.”
Coinbase’s Revenue By Numbers
In total, Coinbase’s revenue spiked 51% over the quarter as the publicly-traded exchange took in a total of $953.8 million, surpassing an average estimate of $828 million from analysts surveyed by Bloomberg. This was its first quarterly profit in two years.
Revenue from its subscription and services unit grew 12% to hit $373 million. Zooming out, the same unit’s revenue grew 78% year-on-year to $1.4 billion.
Total revenue for 2023 hit $3.1 billion, down 3% on last year. The profitability of the exchange’s operations (EBITDA) was $964 million, up $1.3 billion from negative $371 million in 2022.
It also reduced debt by $413 million and grew its cash and cash equivalent resources, including USDC, by $217 million over the year. The exchange’s war chest of cash and cash equivalents now amounts to $5.7 billion.
After all this, the net income, or income after expenditures, taxes and interest, amounted to $95 million.
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