Coinbase (NASDAQ:COIN) has released its second-quarter revenue update. The digital assets firm has reported a considerable surge in earnings due in part to the revival of crypto trading activity (among other key developments across the crypto and blockchain space).
Coinbase revealed that it experienced a significant rise in second-quarter revenue on Thursday (August 1st, 2024) as trading volumes at the digital currency exchange recovered due to improved market sentiment (partially attributed to an improved overall regulatory environment).
Digital assets markets have received a boost this year from the US Securities and Exchange Commission’s (SEC) long-awaited approval of an exchange-traded fund (ETF) to track the spot price of Bitcoin (BTC) as well as Ethereum (ETH), the second-largest cryptocurrency in terms of market cap and overall adoption.
Shares in the digital currency exchange initially moved higher in extended trading following the announcement of these results. In pre-market trading, shares are declining alongside a broader market sell-off.
It’s worth noting that Bitcoin and Ethereum spot ETF approvals came following nearly a 10-year-long struggle with the SEC and marked the entry of traditional financial firms like BlackRock and Fidelity into the nascent crypto-assets ecosystem, giving the sector more credibility as some analysts would argue.
Following these unprecedented developments, the market cap of the highly volatile sector has surged to about $2.4 trillion, according to available data from CoinMarketCap and CoinGecko. Despite the recent correction and mostly sideways crypto trading action in the past few months, the crypto markets have been revived by solid YTD gains of roughly 50% and 36% in the prices of BTC and ETH, which remain the two leading virtual currencies.
Notably, Coinbase’s aggregate transaction revenue surged to $780.9 million during Q2 2024, compared with $327.1 million during the previous year’s financial quarter.
As widely reported, the SEC and Coinbase have been going at it without much of a pause, arguing over their mostly divergent views on whether digital currency tokens may be deemed securities and if they need be regulated as such.
Coinbase has alleged that the US SEC is engaging in regulation by enforcement as well as regulatory overreach. Meanwhile, the SEC has stated Coinbase is violating applicable regulations.
As stated in the latest earnings report, the revenue from Coinbase’s subscription and services division, which includes businesses that are outside of cryptocurency trading, grew to $599 million during the quarter from $335.4 million a year back, boosted by steady stablecoin revenue – the interest that Coinbase generates from its collaboration with Circle.
Coinbase’s quarterly custodial fee earnings jumped to $34.5 million from $17 million, thanks to inflows linked to spot Bitcoin ETFs.
The firm’s total revenue stood at a somewhat modest $1.38 billion for the 3 months ended June 30, 2024 compared with $662.5 million a year back.