COINBASE GLOBAL REPORTS HEAVY LOSS

Coinbase Global Inc. (COIN.O) reported a loss for the fourth quarter on Tuesday as a result of the cryptocurrency industry-wide downturn bro...

Coinbase Global Inc. (COIN.O) reported a loss for the fourth quarter on Tuesday as a result of the cryptocurrency industry-wide downturn brought on by a string of high-profile bankruptcies, putting pressure on trading volume at the cryptocurrency exchange.

The digital assets market suffered from gloomy sentiment over the past year, but the bankruptcy of Sam Bankman-Fried's major crypto exchange FTX in November dealt the sector the biggest blow.
On a conference call with analysts, Chief Executive Brian Armstrong stated, "We have seen increased regulatory scrutiny in the wake of FTX and other crypto company failures," but added that the development will ultimately benefit Coinbase.

The cryptocurrency exchange's fourth-quarter trading volume decreased from $547 billion a year earlier to $145 billion in the midst of the market downturn.
Retail traders also took a big hit, with their trading volume falling nearly 89% to $20 billion in the quarter.
Subscription and services revenue, which benefited from substantial rises in interest rates, increased by approximately 33% to $282.8 million in the fourth quarter.
In volatile after-hours trading, Coinbase shares gained a little bit.

Refinitiv data indicate that the cryptocurrency exchange anticipated subscription and services revenue in the first quarter of $300 million to $325 million, exceeding Wall Street estimates of approximately $285.7 million.

"I believe that it is a pretty good report with positive outlook. "We will see how the stock settles," Owen Lau, an Oppenheimer analyst, told Reuters, adding that the guidance was supported by improved revenue trend and expense control.
The quarter's net revenue was $605 million, up from $2.49 billion in the previous year.

In comparison to a profit of $840 million a year earlier, Coinbase reported a net loss of $557 million for the three months ending December 31.

Coinbase CFO Alesia let CNBC know that markets have bounced back in the ongoing quarter contrasted with Q4 2022, and that "economic situations have truly developed, even in a solitary month." Haas mentioned that in January, Coinbase made $120 million from transaction fees and that retail has returned to the market.

Haas stated on a call with CNBC, "We're seeing what we've always seen in crypto." Trading activity is driven by market conditions and overall volatility, and these idiosyncratic events have altered the longer-term dynamic we've seen.

Coinbase's business could also be affected by SEC actions that could treat crypto services and certain kinds of tokens as securities. CEO Brian Armstrong and C.L.O. Paul Grewal have suggested in tweets that the business would fight any such action in court.

As part of a settlement with the SEC over allegations that the platform sold securities that were not registered, crypto exchange Kraken, for instance, recently discontinued its staking services.

Customers can stake their tokens on a variety of centralized exchanges, including Kraken and Gemini, to earn interest on digital assets that would otherwise be idle on the platform. Investors typically store their crypto assets in a blockchain validator during crypto staking, which verifies the authenticity of blockchain transactions. As a reward for storing those assets, investors may receive additional cryptocurrencies in the form of tokens.

Haas, on the other hand, insisted that Coinbase's staking product was "not a security" during a call with CNBC. Haas added that staking was an "important part of the ecosystem" that the platform plans to grow, but that it was less than 3% of net revenue at this time, making it not a significant source of net revenue.

Beginning at 5:30 p.m. ET, executives will hold a conference call to discuss the results.