The main topic is Coinbase's second quarter earnings report. The key points are:
- Coinbase generated total revenues of $707.9 million in Q2, beating market estimates.
- The company had a net loss of $97 million but generated a positive adjusted EBITDA of $194 million.
- Analysts had mixed expectations prior to the earnings report.
- Coinbase's quarterly recurring operating expenses have dropped nearly 50% year-over-year.
- After the earnings report, Coinbase's stock rose 7% in after-hours trading but retracted 2% at the time of publication.
- Coinbase's stock is up about 170% year-to-date.
- As of March 31, 2023, Coinbase had $145 billion in quarterly volume traded and $130 billion in assets on its platform.
Main topic: Coinbase's motion to dismiss SEC lawsuit
Key points:
1. Coinbase claims it does not offer "investment contracts" and therefore the SEC has no authority over its operations.
2. Coinbase cites a separate SEC case involving Ripple Labs' XRP, where a judge ruled that it was not considered a security when sold on exchanges.
3. A different judge disagreed with the Ripple ruling in a case against Terraform Labs, allowing the SEC to proceed with claims involving sales made on exchanges and allegations of fraud.
Cryptocurrency exchange Coinbase is acquiring a minority stake in Circle Internet Financial, dissolving their partnership and bringing the stablecoin USD Coin fully in-house, while also adding native support for USDC on six additional blockchains, bringing the total to 15.
Coinbase receives approval for futures trading in the US and the SEC is considering approving an Ethereum ETF, signaling progress in the crypto industry.
Coinbase's new Base blockchain, which operates as a layer-2 network atop Ethereum, has gained significant traction with its application Friend.tech attracting over 100,000 users and generating $25 million in fees, pushing its total value locked past $200 million and its transactions per second above Ethereum and rival layer-2 projects Arbitrum and Optimism.
Coinbase Assets will suspend trading for six cryptocurrencies, including BarnBridge, DerivaDAO, Jupiter, Multichain, Ooki, and Voyager, due to falling short of the exchange's listing standards, resulting in price plunges for the delisted assets.
Coinbase is in talks with major Canadian banks to gain support for the crypto industry in Canada as it faces regulatory uncertainty in its home country, aiming to have the banks participate in the crypto economy in the near future.
Summary: Coinbase and Circle have dissolved the Centre Consortium due to regulatory clarity issues surrounding stablecoins, with Coinbase taking an equity stake in Circle and Circle assuming enhanced responsibilities for the USD Coin (USDC) stablecoin; Binance.US partners with MoonPay to use Tether (USDT) as its new "base asset" for transactions, while Binance faces challenges with fiat withdrawals in Europe; Shopify now accepts USDC payments on its platform, and Solana Pay plans to add additional altcoins; China launches a blockchain-powered data exchange with over 300 participating enterprises.
The market cap of USD Coin (USDC) has been decreasing rapidly, reaching a two-year low due to a loss of trust after the banking crisis earlier this year and a drop in activity in the DeFi sphere, while its competitor Tether continues to rise in market cap; however, Coinbase remains bullish on USDC's future and aims to expand its adoption.
Coinbase has launched a crypto lending service for institutional investors in the US, aiming to capitalize on failures in the crypto lending market.
Crypto exchange Coinbase plans to focus on non-U.S. markets, including the European Union, the United Kingdom, Canada, Brazil, Singapore, and Australia, due to their clearer crypto laws, as it seeks to expand its operations and establish partnerships with global and local banks and payment providers while ensuring compliance with governance systems. The company also aims to intensify its lobbying and visibility efforts ahead of the EU elections and engage with the G20 to create global crypto standards.
Coinbase CEO Brian Armstrong discusses the company's base layer 2 blockchain network, interest in flatcoin, and the need for regulatory clarity in the crypto industry, suggesting that the courts, congress, and the CFTC could provide clarity and that there could be a new SEC chair in 2024.
The lack of clear crypto regulations in the US has caused significant issues for the industry, leading to collapses and a weakening of America's position as a financial hub, according to Coinbase CEO Brian Armstrong. He emphasizes the need for clear rules that recognize the innovation potential of the technology while protecting consumers. Armstrong also highlights the potential benefits of Bitcoin exchange-traded funds (ETFs) and Coinbase's role as custodian in many ETF applications.
Coinbase plans to halt all exchange services for users in India due to regulatory challenges, prompting existing users to withdraw their funds and disabled new sign-ups, while encouraging users to download Coinbase Wallet instead.
Coinbase has reportedly earned a $1 million profit from the $73 million Curve exploit in July, but has refused to refund victims, highlighting the tension between the decentralized nature of blockchain finance and the lack of recourse for crypto theft.
Coinbase's layer 2 blockchain Base has achieved a record-high number of daily transactions driven by the decentralized social network platform Friend.tech, while the sale of tokens held by bankrupt exchange FTX will not cause a market shock due to controlled liquidations, according to Coinbase.
Coin Metrics' latest report shows that Coinbase's revenues have diversified away from trading fees, now accounting for 77% of total revenues, as other business lines like subscription fees and wallet services contribute an increasing share. However, Coinbase's growth is limited due to its high trading fees and dependence on the U.S. market, making its future uncertain.
Coinbase, the largest U.S. cryptocurrency exchange, is actively engaging with Ohio voters through events, ads, and lobbying efforts, highlighting the potential economic benefits of the crypto industry to the state. They are pushing for the passage of the FIT21 Act, which would provide regulatory clarity for cryptocurrency exchanges. However, the legislation's fate is uncertain, as there are differing opinions among lawmakers regarding crypto regulation.
