It also wouldn’t be as risky a move as it would be for another company to take this approach to stashing away some of its profits this way. After all, Coinbase operates an exchange that exclusively trades crypto. It’s already connected to the highs and lows of next-gen currencies.

We’re also talking about a considerable amount of money. One of the biggest surprises so far in Coinbase’s early tenure as a public company is how profitable it has become. Margins are insane given the scalable nature of this business and the low overhead. A whopping $771.5 million of the $1.8 billion it generated in revenue in the first quarter of this year made its way down to the bottom line. Nearly half of the $1.6 billion it earned in its latest quarter — of the $2.2 billion it rang up on the top line — was the handiwork of a one-time tax benefit related to its IPO.

the vision of wanting to operate only in cryptocurrency and no longer use fiat currencies.

Coinbase and the new investment policy in cryptocurrency

Listed on the Nasdaq since April 14, 2021, and with over 68 million verified users, Coinbase is a valuable behemoth for the mass adoption of cryptocurrencies.

Not only that, the platform laments that all corporate financial transactions such as paying suppliers, employees, or investing corporate money remain heavily weighted in fiat.

That’s why the decision to update thispolicy of investing heavily in cryptocurrenciesseems like it could become the perfect example to push thecrypto-economy into corporate practices as well.

In this regard, Coinbase describes the following:

“We have committed to invest $500M of our cash and cash equivalents.

Coinbase CEO, Brian Armstrong, announced that the company’s board had approved the crypto spending spree in an August 20 tweet, adding that Coinbase also plans to invest 10% of all profits generated into digital assets moving forward.

Armstrong also indicated the company hopes to increase the percentage of profit it allocates to cryptocurrency purchases over time.

A blog post published by Coinbase on the same day announces that the move will establish the exchange as the first publicly-traded company to hold Ether, DeFi tokens and Proof-of-Stake assets on its balance sheet.

The announcement emphasizes Coinbase’s commitment to making long-term investments in the crypto sector, stating:

“Our investments will be continually deployed over a multi-year window using a dollar cost averaging strategy.

Coinbase invest all future profits crypto-pro

In addition to having these metrics for NFT projects and tokens, the app can also provide premium users with insights on some of the top crypto investors, and breakout projects based on social metrics.

Says CEO Dang: “Coinfeeds was developed around the idea that web3 communities are social first. Pretty much all important information is shared through some sort of social platform, which is openly accessible. The way the crypto community shares and engages with information provides auto-curation.

“By taking advantage of this data, we can not only filter out spam, but we can also pick up on what is important in real time.

Coinbase invest all future profits cryptoapi

We are long term investors and will only divest under select circumstances, such as an asset delisting from our platform.”

The post adds that future investments may be informed by its customers’ holdings, suggesting Coinbase may add an asset to its balance sheet should users make significant custodial deposits of a given crypto cryptocurrency.

Coinbase will make its trades on third-party platforms or via its over-the-counter trading desk to avoid creating conflicts of interest with its customers.

According to Crypto Treasuries, Coinbase is currently the eight-largest public company by Bitcoin holdings on its balance sheet, and the largest crypto exchange by value of BTC held in its treasury.

The news about new expenditures on crypto comes just a day after Coinbase completed its Japanese launch in partnership with Mitsubishi UFJ Financial Group (MUFG).

Coinbase invest all future profits cryptoax

Additionally, Coinbase will also be investing 10% of all future profits into digital assets. They hope to increase that percentage gradually over time.

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

Within the same day, Coinbase has also published a blog post announcing that this move will establish Coinbase as the first publicly traded company to hold Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets that are available for trading on the platform.

The post mentions that the customers of Coinbase will drive their investment strategy.

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.

Increasing its total valuation.

It has previously been disclosed back in February that the exchange held crypto on its balance sheets, which is not a surprise. Their foremost offering is a way for people to exchange their crypto for both fiat and other cryptocurrencies. According to Brett Tejpaul, a Coinbase executive, the company has actually held bitcoin and other cryptocurrencies on its balance sheet since its founding in 2012.
With plans to continue investing in crypto projects that they see long-term potential in.

Related Reading | Crypto Market Goes Into “Extreme Greed,” What This Means For Bitcoin

At the time of this disclosure though, it was not revealed the specific assets that the company held on its balance sheets.

Put it together and it appears the SEC is ramping up enforcement in crypto.

Crypto exchange CoinFlex also announced that it let “a significant number” of people go across the company. The goal is to reduce costs by 50% to 60% in order to try to remain solvent. CoinFlex froze withdrawals when it accused Roger Ver of defaulting on a $47 million loan and the company is scrambling to survive.

It hasn’t helped that U.S.

stock markets are trading lower on Monday. The move isn’t sharp, but this is another big earnings week and investors are worried the news may not be bullish enough to keep funds flowing into crypto.

Now what

Today’s move is little more than normal volatility in the crypto market. But investors can take a few things away from the last few weeks.

One is that the SEC is taking enforcement seriously.

Analysts raised a toast and rejoiced on seeing quarterly earnings that Coinbase reported last week, while they oppose stock’s association to bitcoin’s price and volatility but are still hopeful about its roadmap to lead strategic innovation for a long-term across the whole financial framework.

Haas declared that the investment will be made by crypto balances that the company holds, “over a multi-year window using a dollar cost averaging strategy”. She also said that Coinbase plans a long-term investment and “will only divest under select circumstances, such as an asset delisting from our platform”.

Reacting to the news, Oppenheimer’s Owen Lau played down the new investment policy to weaken the correlation between Coinbase and bitcoin “materially in the future”.

It may take years to actually litigate cases, but with the SEC circling it’s easy to see how crypto investors can get nervous about the future.

A second takeaway is a rapid turnaround in investor sentiment during the crypto winter. A lot of investors likely thought crypto was in for a multiyear downtrend, but that quickly flipped despite a negative gross domestic product figure and rising interest rates last week.

Finally, earnings season is in full swing and that’s going to drive volatility in trading. Silvergate reported on July 19 and said net income had jumped from $20.9 million a year ago to $38.6 million, despite the weak market.
Coinbase will report on Aug. 9 and results may not be great, but investors will be looking for momentum in the services business and cost cuts to start taking effect.

What happened

The crypto market fell on Monday following a strong month for the industry. Coinshares reported that there was $474 million of inflows to the crypto market in July, reversing $481 million in outflows in June.

Bitcoin(BTC0.86%) was a big mover, falling 5% as of 2:30 p.m. ET and Solana(SOL1.22%) fell 5.5% over that time.

The drop in crypto led to Coinbase Global (COIN10.49%) dropping as much as 5.6% and Silvergate Capital(SI2.98%) falling 6%.

So what

Headlines today were focused on the downside of crypto, with an alleged Ponzi scheme getting attention. The Securities and Exchange Commission (SEC) charged 11 people with fraud on Monday and Binance.US pulled the AMP token after the token was deemed a security in the Coinbase employee insider trading case.

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