Coinbase to future profits in crypto

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coinbase to future profits in crypto

Sword of Damocles over this trillion dollar industry,” said Jay Verret, professor of law at George Mason University and a critic of the SEC’s approach to crypto, who said the issue has hung over the industry for the past five years.

But the industry was not looking for the sort of guidance that came in last week’s insider trading complaint against a former Coinbase employee, which declared that several crypto tokens offered by the exchange qualify as securities — or the sort that could come from the logical consequence of that finding: The investigation of Coinbase for possible listing of unregistered securities, whose existence Bloomberg reported on Monday.

Even before this week’s news, industry representatives had been complaining of “regulation by enforcement,” in which the agency makes clear its interpretation rules by punishing crypto firms that run afoul of them.


Derek Robertson

  • A handful of anti-tech Republican Senate candidates happen to have deep ties to the industry.
  • El Salvador is standing behind its Bitcoin bet despite the downturn.
  • Martin Shkreli is back, pitching his own vaguely-defined Web3 company.
  • Alphabet’s DeepMind is releasing an AI-driven database of nearly every protein that exists.
  • The Senate is passing its chip manufacturing bill just in time… for demand to dip.

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]).

Coinbase to future profits in crypto

However, back out that gain and you still have a company that has clocked in with a net margin north of 40% in back-to-back quarters.

As crazy as it may seem that the niche-propelled Coinbase commands a $52 billion market cap, it’s actually trading at a trailing earnings multiple in the teens right now. Coinbase using 10% of its net income to buy crypto is a big deal. If Armstrong is right about that percentage growing over time — as Coinbase itself ideally grows — it’s going to be a lot of different types of cryptocurrencies bought and owned by Coinbase.

Investing in Coinbase was always about buying the entire crypto basket.

Coinbase to future profits in cryptocurrency

That means, for example, no more full-scale re-creations of Nintendo games.

The kind of modifications that will now be banned comprise a large part of the game’s lifeblood. Until now VRChat mostly turned a blind eye to the code workarounds users deployed not just for cultural chaos, but for everything from improving accessibility to speeding up the game’s somewhat archaic graphical engine.

VRChat’s tweet announcing the update inspired a… robust response from fans, with upwards of 3,000 replies and just as many quote retweets. VRChat’s rationale for the change is that it will make the game a safer and smoother experience, and they’ve tried to respond to some of the most pointed criticisms in a follow-up blog, but the incident is another reminder that the incentives toward growth in virtual worlds are sometimes directly at odds with what their most dedicated users want.

Coinbase to future profits in cryptography

Armstrong announced on Thursday that Coinbase has board approval to purchase $500 million in cryptocurrency, earmarking 10% of future profits for adding to its digital assets. Armstrong isn’t as flashy as Musk. He’s not as obsessed as Saylor. However, he’s the CEO that crypto needs right now.

Image source: Getty Images.

A token of affection

We recently received board approval to purchase over $500M of crypto on our balance sheet to add to our existing holdings.

And we’ll be investing 10% of all profit going forward in crypto. I expect this percentage to keep growing over time as the cryptoeconomy matures.

— Brian Armstrong (@brian_armstrong) August 19, 2021

It makes sense for Coinbase to hold at least a chunk of its loose change in Bitcoin and other leading digital currencies. It would be hypocritical for this not to be the case.

I look at the lessons of that, and see there’s finally a way to monetize open source software through the combination of the community, payment rails, and whatever you want to call it, Web3 or crypto incentivization — there’s got to be a way to use it for more than just Bitcoin, and build a new way for people to to work and collaborate. — Derek Robertson

afternoon snack

A huge change is coming to one of the most vibrant and long-running VR spaces.

VRChat — a metaverse-like space known for its copyright infringement-skirting avatars, bizarre role-playing, and problematic memes — announced this week that its next update would crack down on the user-driven modifications to the game’s code that made such things possible.

It’s an open-source, bottom-up phenomenon, so trying to build it in a top-down way is probably not going to end well.

“Snow Crash” is both a dystopian novel and a parody of dystopian novels. There’s nothing inherent in the metaverse that makes it dystopian or utopian… I am not a believer in the argument that you sometimes see on the internet that there’s something inherently dystopian about the metaverse. It is what we make it.

Neal, the blockchain community is more explicitly ideological than others you’ve advised.

How did that influence your approach to this project?

NS: I’ve known people who are interested in forms of cryptocurrency since the mid-1990s, and a lot of them got into it specifically because they were thinking about metaverse-style applications.

Coinbase to “further facilitate and influence both retail and institutional adoption” by merging cryptocurrencies into its own operational stream for purpose such as making payment to vendors and for paying salaries to employees.

Similar report featured in Wall Street Journal too this past week, where it was claimed that Coinbase has accumulated $4 billion in cash to brave regulatory headwinds. Albeit, Mr. Lau is content about more money in hand with company even after such a deal.

His words, ”Share repurchases and dividends appear to be off the table at least near term, but we believe management will use excess capital to reinvest in the business and make acquisitions, especially in international presence and subscription-based business”.

Interestingly enough, Elon Musk too, in recent past, has tried to tide over the bitcoin in his own unique ways.

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Ben Schreckinger covers tech, finance and politics for POLITICO; he is an investor in cryptocurrency.

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How big of a problem has become clear over the past week: Coinbase stock is down by about 20 percent, representing billions of dollars in market cap.

At least the company’s investors were warned. Because Coinbase stock definitely is a registered security, the company had already declared the risk that the SEC would disagree with its view that it does not list securities — subjecting the company to potential investigations and penalties — in a disclosure on file with the SEC.

a novel approach

The novelist Neal Stephensonyes, the one who coined the term “metaverse”has a knack for explaining technologies before they actually exist.

As such, he’s in high demand from actual tech companies, having advised Jeff Bezos’ Blue Origin and the virtual reality company Magic Leap.

Although Coinbase is a crypto-native company, it holds fewer digital assets compared to MicroStrategy and Tesla, two companies that the exchange has helped with making Bitcoin purchases.

In terms of revenue, Coinbase beat analyst estimates in Q2, generating $2.23 billion compared to the forecast of $1.78 billion. The firm’s net profit resulted in $1.6 billion, a 4,900% increase compared to the same period last year.

The crypto exchange has benefitted from high trading volumes over the last quarter through its transaction fees, with the explosive rally and a crash that followed.

Coinbase has announced a change in its investment policy, with a commitment to invest $500 million of its cash and cash equivalents in cryptocurrencies.

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