Crypto exchange Coinbase logs third straight quarterly loss on trading slowdown

COINBASE Global posted a third straight quarterly loss on Thursday (Jul 30) as a prolonged downturn in cryptocurrency markets dented its trading volumes, sending the digital-asset exchange’s shares 5.3 per cent lower after the bell.

Cryptocurrency markets came under pressure during the April-to-June quarter as investors shunned riskier assets amid uncertainty over US interest rates, geopolitical tensions and persistent outflows from crypto investment products. The weakness extended a retreat from record highs reached in October.

Coinbase’s transaction revenue dropped 21 per cent to US$599 million during the quarter, from US$764 million a year earlier.

“This deep and sluggish crypto winter has continued to put pressure on Coinbase and regulatory clarity is not happening fast enough,” said Third Bridge analyst Jacob Zuller. “Tokenised equities and perpetual futures could offset spot crypto trading volumes, but Coinbase is behind on both.”

Robinhood Markets, a much smaller firm in terms of the number of token offerings, also reported a 38 per cent slump in second-quarter crypto transaction revenue, suggesting softer trading volumes across the market.

Without a crypto market turnaround, Coinbase would hope for accelerated adoption of stablecoins, Zuller said.

In June, a consortium including Visa, Mastercard and Coinbase launched a new joint stablecoin in a bid to broaden adoption.

Clarity Act

Coinbase has been looking to the Clarity Act, introduced in May last year, to provide long-sought regulatory clarity for digital-asset trading platforms.

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Senate Republicans released a revised version of the Act last week, as negotiations on the legislation come down to the wire before Congress departs for August recess.

Coinbase CEO Brian Armstrong said in a call with analysts that he is “pretty optimistic” the legislation will get to a full Senate floor vote.

“There’s a lot of last-minute negotiations happening, which to me is a sign that everyone is invested in getting something over the line.”

Revenue from Coinbase’s subscription and services unit — which includes businesses outside trading — fell 12.2 per cent to US$555.1 million.

The company reported a loss of US$359.5 million, or US$1.36 per share, for the quarter ended Jun 30, compared with a profit of US$1.43 billion, or US$5.14 per share, a year earlier. REUTERS