{"id":109299,"title":"How long can Coinbase Global Inc (NASDAQ: COIN) endure these challenging conditions?","publisher":"Share Talk","author":"sharetalk","published":"2023-08-04T10:40:00+00:00","modified":"2023-08-04T10:40:00+00:00","canonical_url":"https://www.share-talk.com/how-long-can-coinbase-global-inc-nasdaq-coin-endure-these-challenging-conditions/","markdown_url":"https://www.share-talk.com/how-long-can-coinbase-global-inc-nasdaq-coin-endure-these-challenging-conditions.md","json_url":"https://www.share-talk.com/how-long-can-coinbase-global-inc-nasdaq-coin-endure-these-challenging-conditions.json","category":"Blogs","categories":["Blogs","Fintech","Technology","Technology, Media & Telecoms"],"tags":["Assets","bankruptcy","bear","Bitcoin","bonds","BTC","Coinbase","consumers","Crypto","cryptocurrency","customers","decentralized","Exchange","exchanges","GYEN","hard","Market","proceedings","SHARES","stablecoin","Token","Yen"],"featured_image":"https://i0.wp.com/www.share-talk.com/wp-content/uploads/2023/11/Stencil-Google-Chrome-2023-04-19-at-2.47.43-PM.jpeg?fit=1231%2C615&quality=89&ssl=1","format":"news","language":"en-GB","content":"Kudos to **Coinbase Global Inc (NASDAQ: COIN)**, a cryptocurrency exchange listed on Nasdaq, for weathering ongoing regulatory challenges.\n\nThis company, under Brian Armstrong’s leadership, has been consistently in the crosshairs of regulatory bodies, attracting significant criticism and opposition.\n\nJust recently, the US Securities and Exchange Commission (SEC) recommended that Coinbase halt trading for all cryptocurrencies excluding bitcoin, a move that could potentially eradicate over 60% of Coinbase’s transaction revenue instantly.\n\nIn the preceding month, the SEC confronted Coinbase with a lawsuit accusing them of securities law infringements, claiming that Coinbase has illicitly facilitated the buying and selling of cryptocurrency assets since at least 2019.\n\nTo put it bluntly, Coinbase’s business revolves around cryptocurrency, while US regulators seem determined to suppress cryptocurrency operations as much as they can.\n\nDespite these critical threats, Coinbase’s performance isn’t too disappointing, even though this has been at the expense of many employees. Crafty financial reporting has also played its part.\n\nIn terms of losses and trading volumes, Coinbase demonstrated improvements during its second-quarter earnings call on Thursday. The group reported positive underlying earnings (EBITDA) for the second quarter consecutively after a string of harsh losses over three quarters.\n\nOn the contrary, net profit figures painted a different picture, as Coinbase incurred US$97 million in losses, marking the sixth consecutive quarter of losses.\n\nWith Coinbase’s high debt-to-equity ratio nearing 60%, this could pose problems in the forthcoming years when long-term debts are due.\n\nNevertheless, these losses depict a significant improvement from the billion-dollar-plus losses the group faced around the same time last year, largely due to massive employee cuts.\n\nBut there is no way to put a positive spin on Coinbase’s drastically diminishing transaction revenues and volumes.\n\nDespite the rebound in bitcoin and other cryptocurrency prices in 2023, total transaction revenues across consumer and institutional segments in the recent quarter were 10% lower than in the third quarter of 2022, when the crypto market downturn started and prices fell below today’s values.\n\nFurthermore, total transaction revenues in the recent quarter were barely better than those in the fourth quarter of 2022, when the FTX catastrophe led bitcoin prices to a two-year low.\n\nRaw trading volumes depict an even grimmer scenario. At US$92 billion, these are the lowest since late 2020.\n\nAlthough interest income has helped mitigate some of these losses in the short term, with inflation in developed economies starting to decrease, interest rates are expected to decline in 2024 and 2025. This, however, could be beneficial for cryptocurrency prices.\n\nEarnings from staking, listed as blockchain rewards on Coinbase’s balance sheet, have also helped balance out the loss in transaction revenue. Still, there are concerns about the long-term sustainability of this approach.\n\nEarlier this year, US regulators restricted and banned the staking program of Coinbase’s competitor, Kraken. It’s almost certain that Coinbase’s program is also under scrutiny.\n\nThis sums up a dual-threat situation for Coinbase, facing scrutiny from Gary Gensler’s SEC on one side and generally decreasing volumes in the cryptocurrency markets on the other.\n\nNevertheless, amidst these challenges, Coinbase shares have seen a year-to-date increase of over 170%. An impressive feat for a company that seems to be on the receiving end of regulatory blows."}