US Coinbase 4Q Earnings Earnings Exceeds Earnings Forecast, But Trading Volume Declines

Coinbase Q4 performance

On the 21st, major US crypto asset (virtual currency) exchange Coinbase issued a shareholder newsletter for the fourth quarter and full year of 2022 and reported financial results.

According to the announcement, net revenue for the fourth quarter (October to December) was about 81.6 billion yen ($605 million), an increase of 5% from the previous third quarter ($590 million). This surpassed analyst estimates of 79.3 billion yen ($588 million). Earnings per share were also a loss of $2.46, beating expectations (loss of $2.52).

Looking at the breakdown, transaction revenue was about 43.4 billion yen ($322 million), down 12% from the previous quarter. Coinbase attributed the drop in trading revenue to lower total trading volume in Q4.

Total trading volume in 4Q decreased 9% from the previous quarter to 19,547 billion yen ($145 billion). On the other hand, the company expanded its market share in the current period, significantly exceeding the trading volume of the global crypto asset (virtual currency) spot market, which decreased by 21% from the previous period.

Although transaction revenue decreased, subscription and service revenue increased by 34% year-on-year to about 38.1 billion yen ($283 million). Interest income, which accounted for more than 60% of this revenue, increased 79% year-on-year to approximately ¥24.5 billion ($182 million), of which 80% ($146 million) By tablecoin USDC.

Coinbase explained that participation in the USDC ecosystem contributes to the increase in interest because it has an agreement with USDC issuer Circle, Inc. to share the revenue generated from USDC.

Regulation will be the focus in 2023

Coinbase, in a shareholder newsletter, predicts that 2023 will be a pivotal year for cryptocurrency policy in the United States and abroad.

First, in Europe, the EU’s comprehensive cryptocurrency regulation MiCA was finalized in October last year, and efforts to operate and implement it are progressing. Coinbase stresses that it is of great significance as it will bring regulatory clarity and stability to the local industry as it applies across 27 member countries, which account for about one-sixth of the global economy.

He also said that Brazil, the UK, India, Australia, Switzerland and Hong Kong are also developing legislation to regulate cryptocurrencies, which will benefit consumers and industry participants.

At the same time, he said, “Regulators are not necessarily welcoming of transparency and public participation in rulemaking.” U.S. regulators, in particular, have taken a “disjointed stance” on cryptocurrencies, and the industry continues to grapple with the U.S. Securities and Exchange Commission’s (SEC) “approach to regulate by enforcement.” criticized.

Coinbase points out that in the absence of federal law, formal rule-making is essential for regulators to oversee the industry. He emphasized that the need for federal legislation to solve the regulatory “disjointed approach” problem is more important than ever.

The SEC forced the suspension of the staking service of the major US exchange Kraken through enforcement action (Kraken settled), and most recently issued a “Wells Notice” to the issuer Paxos, claiming that the stablecoin “BUSD” was a security. ” and indicated the possibility of prosecution.

connection:Paxos CEO ‘has constructive discussions with SEC’: report

Coinbase claims that the staking service it offers is not a security, and has threatened to fight the SEC in court.

connection:Coinbase Chief Legal Officer Warns SEC Over Staking Controversy

Additionally, as the earnings show, the USDC stablecoin accounts for a large portion of Coinbase’s revenue, and any moves by the SEC to tighten regulation of stablecoins should be sensitive. you won’t get it

According to a report by the nonprofit OpenSecrets, Coinbase spent about 460 million yen (about $3.4 million) on cryptocurrency lobbying in 2022, the highest in the U.S. industry. (Approx. 2.9 billion yen ($21.55 million) spent by the industry as a whole)

connection:Crypto industry lobbying spending hits record high in 2022 led by Coinbase