On Friday, shares of cryptocurrency exchange Coinbase rose nearly 4% after the company’s cash pile was increased. Coinbase CEO Brian Armstrong said on Twitter that the board of directors has approved the purchase of more than USD 500 million in crypto currency. Coinbase’s existing crypto portfolio will be bolstered by the addition of digital assets to the balance sheet.
Coinbase has announced a shift in its investment strategy, pledging to spend $500 million in cryptocurrencies from its cash and currency equivalents. In addition, the company would invest 10% of its quarterly net income in diverse digital assets.
Users will ascertain the exchange’s crypto exposure by “matching [Coinbase’s] crypto custodial balances,” according to Armstrong. Coinbase is buying Ethereum and other coins connected to prominent market themes in addition to bitcoin. According to the announcement,
“This implies that, in addition to bitcoin, they will be the first publicly traded firm to hold Ethereum, Proof of Stake assets, Defi tokens, and many other crypto assets supported for trading on our platform on our balance sheet.
Coinbase is continuing to put a lot of money into cryptocurrency.
The corporation reported that it held over $365 million in cryptocurrencies as part of its Nasdaq direct listing application. Despite being a crypto-native firm, Coinbase controls fewer digital assets than Micro Strategy and Tesla, two companies that the exchange has assisted with Bitcoin acquisitions. Coinbase’s CEO wants to incorporate cryptocurrencies more thoroughly into the company’s operations, which are now based on a mix of fiat and cryptocurrency.
In terms of revenue, Coinbase outperformed analyst expectations in Q2, collecting $2.23 billion versus $1.78 billion expected. The company’s net profit was $1.6 billion, up 4,900 percent from the same time the previous year.
With the spectacular spike and subsequent slump, the crypto exchange has benefited from large trading volumes through transaction fees during the last quarter.
According to the declaration, $238 million was spent on cryptocurrencies, with $230 million going to Bitcoin and the remaining $53 million going to Ethereum. The amounts in the declaration also included a ten percent allocation of the company’s income to cryptocurrencies, bringing the total amount disclosed to $500 million. With future revenues, the corporation intends to strengthen its stakes in both Bitcoin and Ethereum. Also, he’s interested in investing in other promising cryptocurrencies.
Coinbase also announced that, in addition to Bitcoin, it would become the first publicly traded company to handle Ethereum, Proof of Stake cryptocurrencies, Defi tokens, and other digital assets supported on its platform.
To minimize any potential conflicts of interest with customers, the firm’s cryptocurrency investments would be made through its over-the-counter desk or a third party.
Coinbase has stated that its allocation may be increased over time. As the market evolves, the business anticipates more corporations to store cryptocurrencies on their balance sheets in the future.
Coinbase is more than a crypto-trading site and will gain in value as it becomes an on-ramp for more activities related to the industry.
Staking, a method that allows crypto owners to donate their assets to pools that assist validate transactions on blockchains and earn money while doing so, is one of the new services Coinbase is offering. Coinbase keeps 25% of the fee paid to people who contribute their assets to the pools and distributes the remainder to users. It’s still a small part of Coinbase’s business, but it grew 271 percent quarter over quarter, according to Todaro, making it “a big growth area for Coinbase.” Coinbase is also creating new yield-bearing accounts to help it expand beyond transactions.
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