Status: 11.08.2021 2:47 p.m.
The crypto exchange Coinbase has increased its profits by a fantastic 4900 percent. The company, which Elon Musk counts as one of its customers, is expanding rapidly – and is also targeting Germany.
In retrospect, Coinbase’s IPO looks like a bad omen for the crypto market. Shortly before the largest US crypto trading platform went directly to the Nasdaq technology exchange in April 2021, Bitcoin – the world’s most important and oldest cyber currency – hit a record high at more than $ 63,000.
Profit explodes to $ 1.6 billion
The Coinbase IPO was considered a milestone for the emerging market for cryptocurrencies, which still has to fight for its place in the established financial world. But shortly afterwards, the crypto boom came to an abrupt end. Bitcoin recently hovered around the $ 45,000 mark.
The company itself, which also counts Elon Musk as well as its companies SpaceX and Tesla among its customers, was not affected much by the fall in Bitcoin, Ethereum & Co. This is shown by a look at the quarterly figures published on Tuesday evening after the US market closed. Accordingly, profits exploded in the second quarter by literally 4900 percent to 1.6 billion dollars.
Benefit from the crypto hype
The business model of the company, founded in 2012 in San Francisco by Brian Armstrong and Fred Ehrsam, is as simple as it is profitable: Coinbase generates the vast majority of its revenues with fees that customers have to pay for buying and selling cryptocurrencies.
In this respect, it is similar to traditional stock exchange operators such as Deutsche Börse: The Frankfurt company also benefits from market turbulence when investors trade more. The direction does not matter.
Approved by German authorities
In order to continue to grow, Coinbase now has to open up new markets. Germany could play a key role in this. Because the Federal Financial Supervisory Authority (BaFin) granted Coinbase the first crypto trading and custody license in Germany in June.
Coinbase Germany is the first company to offer trading and custody of cryptocurrencies under the supervision of BaFin. For customers, this means a plus in terms of security.
In the course of the BaFin permit, Coinbase also expanded its product range for German customers. Anyone who has a minimum balance in a certain crypto currency can now validate transactions and earn so-called staking bonuses in this way.
BaFin as a door opener?
“Germany is an extremely important market for Coinbase,” emphasizes Sascha Rangoonwala, Country Manager Germany at Coinbase. Marcus Hughes, Managing Director for Coinbase in Europe, adds: “The licenses in Germany are an important milestone for Coinbase.” They look forward to working with regulators from around the world.
For Coinbase, BaFin approval means a clear advantage over the competition in any case. For example, the controversial global crypto exchange Binance has been in the crossfire of the authorities for months.
Regulators in Hong Kong, the UK, Germany, Japan and Italy cracked down on Binance over investor protection concerns. It was only at the end of June that the company was banned from regulated trading by the British financial regulator FCA.
Deutsche Telekom as a customer
But BaFin approval offers additional security not only for German private customers, but also for German companies. Shortly after the BaFin license was granted, Deutsche Telekom selected Coinbase as the custodian for its Celo tokens.
The former German state-owned company was the first telecommunications company in the world to invest in Celo’s public blockchain network in April. Celo offers financial services for everyone via smartphone. The BaFin license has already paid off for Coinbase – and could possibly give the company an advantage over the competition in the future.
Competition on the rise
Experts see the greatest danger for the company in the steadily growing number of rivals: Discounter providers who charge far lower fees are flooding the market.
The stock exchange does not currently trust Coinbase to have much growth potential either. Coinbase stocks barely react to the fable numbers. They are currently trading around 20 percent below their closing price on the first day of trading on the Nasdaq ($ 328). This means that the crypto exchange still has a significantly higher market capitalization than many “traditional” exchange operators such as Deutsche Börse.