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Market Extra: Coinbase gets board OK to add $500 million in crypto to balance sheet, and aims to invest 10% of profit in digital assets

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Coinbase CEO Brian Armstrong on Thursday said that the U.S.’s largest digital-asset exchange received board authorization to add $500 million in crypto to its balance sheet.

In a tweet, Armstrong, co-founder and head of the platform, said Coinbase would also be investing 10% of all profits in crypto.

In a late-Thursday blog from Coinbase, CFO Alesia Haas expanded on Armstrong’s tweets.

“We believe in the cryptoeconomy, a future where economic transactions—buying, selling, spending, earning—will be based on crypto assets,” she wrote.

“This means we will become the first publicly traded company to hold Ethereum, Proof of Stake assets, [decentralized finance] tokens, and many other crypto assets supported for trading on our platform, in addition to bitcoin, on our balance sheet,” Haas wrote.

Coinbase
COIN,
+1.58%
,
as of Dec. 30, held on its balance sheet $48.9 million in a stablecoin, intended to be pegged to the dollar; $130.1 million of bitcoin
BTCUSD,
+0.97%

; $23.8 million of Ethereum’s Ether
ETHUSD,
+1.96%
,
the second-largest crypto by market value; and $34 million of other crypto assets, according to public filings.

Some of the largest publicly traded companies now include digital assets on their balance sheet, a growing trend in 2021, include MicroStrategy
MSTR,
+3.24%
,
which holds bitcoin valued at nearly $5 billion, as well as Tesla Inc.
TSLA,
-2.25%
,
which owns some $2 billion in bitcoin. Galaxy Digital Holdings
GLXY,
+2.08%

BRPHF,
+0.65%

holds nearly $800 million in bitcoin.

Recently, Coinbase said that it had built a $4 billion cash stockpile, as it prepares for closer scrutiny from the likes of the Securities and Exchange Commission’s Gary Gensler and others. The platform could also face new tax-reporting requirements under the roughly $1 trillion infrastructure bill in Congress. 

The exchange platform listed on the Nasdaq
COMP,
+0.11%

in mid-April and is roughly flat based on its $250 reference price established before its first trade and its $342 closing peak on April 16.

Coinbase held a direct listing instead of a standard initial public offering, meaning that the company didn’t raise money through the process of going public and doesn’t have a traditional IPO price against which to measure the stock’s first-day rally.

Earlier this month, Coinbase posted net revenue of $2 billion in the second quarter, up from $178 million a year earlier and $1.6 billion in the first quarter. Coinbase had $1.9 billion in transaction revenue, surpassing consensus expectations for $1.8 billion.

About 50% of the company’s business is still based on bitcoin and Ether trading and those assets have been volatile falling substantially from peaks hit during the spring, though digital assets are attempting a rebound, with the total crypto market hitting $2 billion in value for the first time since May.

Ether prices have been on the rise as the crypto is in the process of a multistep upgrade to the Ethereum network, which includes a shift from a proof-of-work protocol to a proof-of-stake and increased storage capacity and processing power for smart contracts.

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