Coinbase Reports Third-Quarter Profit

By Pritam Biswas

(Reuters) – Coinbase (NASDAQ:COIN) Global posted a third-quarter profit on Wednesday, bolstered by strong trading volumes as cryptocurrency gains traction in mainstream investment, following a series of regulatory approvals.

Crypto markets have exhibited volatility this year, with key assets experiencing gains after the U.S. Securities and Exchange Commission approved an exchange-traded fund (ETF) aimed at tracking the spot prices of bitcoin and ether, only to subsequently lose momentum due to economic uncertainties.

This volatility contributed to third-quarter trading volumes expanding to $185 billion from $76 billion at the world’s largest cryptocurrency exchange, benefiting transaction fees.

In recent weeks, sentiment towards the industry has aligned with the prospects of a Republican victory in the upcoming presidential election, with Donald Trump positioning himself as a pro-bitcoin candidate.

> "The upcoming 2024 elections are the next major milestone in our ongoing work to drive regulatory clarity for crypto," the company noted in a shareholder letter.

> "Both presidential candidates are now courting the crypto voter in their statements. Over 350 politicians running for federal office have adopted pro-crypto positions," said Coinbase CEO Brian Armstrong on a conference call.

Coinbase's total transaction revenue nearly doubled to $572.5 million in the third quarter, enabling the exchange to report total revenue of $1.21 billion, an increase from $674.15 million a year earlier.

Revenue from Coinbase's subscription and services division, which includes businesses outside trading, rose to $556.1 million in the quarter, up from $334.4 million a year prior.

Quarterly custodial fee revenue also climbed to $31.7 million from $15.8 million last year, benefiting from inflows tied to spot bitcoin ETFs. Coinbase acts as the custodian for several of these ETFs, including BlackRock's (NYSE:BLK) iShares Bitcoin Trust.

Net income attributable to shareholders was $75.46 million, or 28 cents per share, for the quarter ending September 30, compared to a loss of $2.27 million, or 1 cent per share, a year earlier.