Crypto Exchange Coinbase Exceeds Q4 2022 Revenue Expectations
- Coinbase shares rose 78% in Q4 2022.
- However, transaction volume continued to decline.
Cryptocurrency exchange Coinbase has surpassed revenue expectations for the fourth quarter of 2022, but transaction volume continued to decline.
The exchange’s net income for the fourth quarter was $605 million, which exceeded estimates of $589 million in the Wall Street Journal. This revenue is 5% higher than last quarter’s revenue of $590 million. The details are shared in the fourth quarter and full year 2022 shareholder letter published by Coinbase.
Transaction volume fell 12% from the previous quarter. However, Coinbase attributed its 5% quarterly revenue growth to a 34% increase in subscription and service revenue.
Along with the increase in Bitcoins [BTC] Coinbase shares are up a significant 78% in 2023, but are still down 67% year-to-date. Subscription and services revenue, a corporate priority, increased 34% quarter over quarter to $283 million in the fourth quarter. Subscriptions and services accounted for nearly half of total revenue in Q4, mainly due to interest income of $162.2 million.
Although Coinbase has stated that its staking products are not securities, staking revenue fell compared to the previous quarter. This was because a fall in crypto prices offset an increase in stake balances across all crypto tokens.
3/ Staking is not a security. Here is a good primer:
— Brian Armstrong (@brian_armstrong) 8 February 2023
Several exchanges are being investigated by the SEC
At press time, Coinbase was under investigation by the Securities and Exchange Commission (SEC) for its betting products. This is similar to the probe that resulted in crypto exchange Kraken agreeing to a $30 million settlement with the regulator.
The SEC shutting down Kraken’s betting service in the US as well as planning to sue Paxos for allegedly selling BUSD as an unregistered security has negatively affected the outlook for other crypto exchanges. That has created uncertainty for Coinbase, which has its own retail business as well as a stablecoin, USD Coin [USDC].
Coinbase also stated that it expects more crypto regulation in the coming year, both in the US and abroad. It cited the completion of the EU’s MiCA framework as evidence of progress, as well as other countries such as Brazil, the UK and India that have drafted specific and clear legislation for cryptocurrency regulation.
It chastised the United States for its disjointed approach to cryptocurrency regulation, but stated that it would continue to work for a more consistent and clear crypto policy.
