Coinbase, the US-based crypto exchange, intends to maintain its operations within the country, as confirmed by CEO Brian Armstrong during the Q1 earnings call with investors. During a meeting with shareholders, Armstrong expressed the company’s unwavering dedication to the US market, despite the ambiguous regulatory landscape in the country.
He affirmed that Coinbase is fully committed to its long-term prospects in the US.
Focus On The United States
The CEO of Coinbase noted that the crypto exchange is fully committed to operating in the United States. He added that Coinbase was founded based on the rule of law, a fundamental aspect of the firm’s operation.
Armstrong’s optimistic outlook is based on his belief that Congress will soon introduce a well-defined regulatory framework for cryptocurrency companies operating nationwide. Despite his positive outlook, Armstrong’s statements weren’t entirely optimistic.
He expressed apprehension regarding the Securities Exchange Commission’s (SEC) inconsistent enforcement activities. His concerns are fueled by the recent Wells notice served to Coinbase by the regulator in late March.
Furthermore, Armstrong said that forecasting the timeline of potential litigation with the SEC is particularly challenging. Coinbase’s predicament resulted in the company submitting a petition in a US federal court, demanding that the SEC respond to a pending motion from July.
Meanwhile, Coinbase’s recent launch of its international platform (CIE) recently has led to speculation about the exchange’s intention to move away from the US. However, CIE is available to clients in 30 countries across the globe, such as Singapore, El Salvador, Hong Kong, Thailand, Philippines, and Bermuda, where it recently received an operational license.
On the upcoming European Union’s Market in Crypto Assets (MiCA) regulations, Armstrong commended the bloc’s initiative in ensuring uniform legislation for the crypto space in the region. It is worth noting that the EU plans to implement the MiCA laws in 2024.
Coinbase Records Massive Revenue Loss
Meanwhile, Coinbase Global’s Q1 financial report, released on May 4, revealed a fifth consecutive quarter of losses for the company. These results indicate that clients and investors have lost confidence in the leading crypto exchange, despite a market upswing in the crypto industry in Q1.
During the same period last year, the American crypto exchange recorded a loss of $430 million, which is significantly higher than the $79 million loss reported in the most recent financial quarter. Meanwhile, the current result has beaten experts’ prediction of $316 million in losses.
Coinbase reported a total revenue of $772.5 million for the first quarter, representing a 37% decrease from the $1.1 billion recorded in Q1 2022. Nonetheless, the report states that total operating expenses remained below $900 million, resulting in an operating loss of $124 million.
The 20% reduction in the Coinbase workforce in January helped reduce the effects of the operating loss. Moreover, despite a 50% growth in the crypto markets during the first quarter, Coinbase’s retail trading activity did not significantly increase.
The firm’s total trading volume declined from $309 billion in the same period last year to $145 billion for the current period. Coinbase’s total transaction revenue dropped by 63% to $375 million from the previous year’s figure of over $1 billion.
This decline can be attributed to the decrease in trading volume during the first quarter of this year. Following the release of the Q1 financial report, the price of Coinbase’s stock surged by nearly 9% during after-hours trading.
This increase in value pushed COIN’s price to $53.75 on May 4. Although shares in Coinbase have surged by 60% since the start of the year, they are still 84% below their peak price of $343 in November 2021.
COIN has declined by approximately 36% from its 2023 high of $84 on March 21 due to mounting regulatory pressure. In comparison, the crypto markets have only retreated by 7.5% from a mini-peak in mid-April this year.
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