Crypto exchange Coinbase reported net income of $605 million in the fourth quarter of 2022, according to its latest earnings report released after the bell on Tuesday.
Since its release, COIN shares briefly jumped 3% to $64 before falling back to $62 in after-hours trading.
Coinbase survives the bear
The latest figures from the stock market show a 5% increase from the previous quarter’s figure of $576 million, and slightly above analyst estimates of $588 million.
According to the company deposit, more than half of that revenue ($322 million) came from transactions, while the rest came from subscriptions and services ($283 million). The former increased by 12% compared to the previous quarter, while the latter increased by 38%.
Nonetheless, on an annualized basis, net revenues fell from $7.4 billion in 2021 to $3.1 billion in 2022, reflecting slowing activity across the industry.
“Idiosyncratic events throughout 2022 have exacerbated already weak macroeconomic conditions,” the company wrote. “However, Coinbase and the crypto-economy have proven resilient and long-term fundamentals remain strong.”
Coinbase’s total operating expenses are up 3% since the third quarter – a figure that would have fallen 1% without the exchange’s $50 million NYDFS regulation early January. The department accused Coinbase of failing to perform necessary background checks on its customers, exposing the company to criminal activity, including possible money laundering and alleged child trafficking.
However, the company has taken other steps to reduce spending in the first quarter of 2023, including a 20% cut downsizing and other cost management efforts. By the end of the quarter, he expects a 25% reduction in costs compared to the fourth quarter of 2022 excluding the NYDFS settlement.
The regulations are coming
The report also notes that 2023 is likely to be an “important year for crypto politics in the United States and abroad.” Conversation on the subject gained more attention after FTX’s collapse last year, prompting action from regulators that Coinbase doesn’t like.
“Coinbase is concerned about these actions which appear designed more to be punitive and reactive than to respond to the real interests of consumers and the reality of how crypto works,” the company said.
Coinbase CEO Brian Armstrong has spoken out against the SEC’s recent crackdown on Kraken’s staking service, which he says did not violate securities laws. His company also denied that stablecoins like BUSD constitute securities after the SEC issued a Wells notice to the issuer of the asset, Paxosclaiming as much.
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