These companies jumped on the crypto train -2-

Baird’s David Koning notes that Visa saw $ 3.5 billion in payment volume last fiscal year related to cryptocurrency card programs, which allow people to link their cryptocurrencies to Visa credentials for consumer purposes. It represented about 0.03% of the company’s total volume, he wrote. “Visa probably also has a modest amount of services related to cryptocurrencies,” Koning noted.

Visa declined to comment further on its crypto exposure.

Mastercard probably has similar exposure, Bairds Koning added, and crypto probably represents “well less than 1% of total revenue” for both companies.

A spokesperson for Mastercard said that the company could not comment on the estimate as Mastercard does not report that number.

Meanwhile, FIS offers merchant services for crypto wallets, but crypto is “very on the margins” for the company, according to MoffettNathansons Ellis. Baird’s King estimates that crypto can account for less than 5% of revenue from the sales segment, and perhaps about 1% of total revenue.

An FIS spokesperson noted that the company does not break out crypto revenues, but pointed to previous comments from President Stephanie Ferris which indicated that FIS earned four of the top five crypto exchanges in the fourth quarter.

Microstrategy

Microstrategy Inc. (MSTR) creates analytics software, but the company has become a cryptocurrency game thanks to its significant bitcoin holdings. The company had around 129,699 bitcoins as of June 28, 2022. It bought them for a total purchase price of approximately $ 3.98 billion and at an average purchase price of around $ 30,664 each, including fees. The price of bitcoin is now below $ 22,000.

PayPal

PayPal Holdings Inc. (PYPL) allows users to buy, sell, hold and transfer cryptocurrencies, and offers a wider range of cryptocurrencies than what the bitcoin-focused Block allows. But PayPal is also a larger business, which helps mitigate the impact of cyrpto exposure for the business.

“PayPal’s exposure to crypto will be lower than Blocks’ (and Blocks is only about 2% of gross profit),” MoffettNathanson analyst Lisa Ellis told MarketWatch, although the exposure is larger than what Visa, Mastercard and FIS see. “PayPal’s return / withdrawal rates on a crypto transaction are similar to Blocks, but PayPal is only larger and newer for crypto, so it is a smaller part of the total revenue.”

PayPal does not break out crypto effects in its economy.

While DA Davidson’s Chris Brendler was “hoping that PayPal’s cryptocurrency launch would be more meaningful for the numbers”, he has not seen any signs of this manifesting itself in the company’s tar rate. Because PayPal does not have large cryptocurrency benefits during better times for digital assets, “the good news is that on the way down, there will be no headwinds for PayPal,” he added.

Robin Hood

Robinhood Markets Inc. (HOOD) generated $ 54 million in crypto revenue during the first quarter, representing 18% of the company’s total. The company noted at its last conference call that it completed the roll-out of its crypto wallets during the first quarter, while adding four new crypto assets to the range and agreeing to buy the British crypto platform Ziglu.

Signature Bank

Signature Bank (SBNY) is “the leading depository bank” for the digital currency ecosystem, according to Raymond James analyst David Long, and shares have fallen more than 40% this year as the crypto industry has come under pressure.

The company had $ 29 billion in deposits from the digital currency ecosystem at the end of the first quarter, Long wrote, accounting for nearly 27% of total deposits.

For his part, he sees Signature’s recent share sale as “exaggerated”, noting that the bank “had more than $ 26 billion in cash on the balance sheet and capacity to borrow.” In other words, “even if every deposit here was withdrawn, which probably means that the value of Bitcoin is approaching $ 0, Signature has the liquidity to meet redemptions.”

Other financial companies involved in digital assets include the investment management firm Galaxy Digital Holdings Ltd., and the cryptocurrency broker Voyager Digital Ltd.

-Emily Bary

(END) Dow Jones Newswires

07-09-22 1035ET

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