Coinbase bounces back with $1.2 billion Q1 profit

Crypto exchange rebounds from last year’s losses, riding wave of bitcoin trading after US ETF approvals.

Coinbase reported a net income of $1.2 billion, or $4.84 per share, for the first quarter ended March 31, a stark reversal from its $79 million loss, or $0.34 per share, a year earlier. The crypto exchange’s fortunes turned following the introduction of the first U.S.-listed bitcoin exchange-traded funds (ETFs) in January.

Coinbase shares slipped 2.5% in after-hours trading on Thursday, despite closing the regular session nearly 9% higher. The after-hours dip was fuelled by concerns that trading volumes will decrease based on Bitcoin’s downward movement.

The crypto market has seen renewed investor interest after the U.S. Securities and Exchange Commission approved the launch of several spot bitcoin ETFs in January, ending a decade-long regulatory tussle.

Coinbase acts as the custodian for some of these ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT.O). This sparked Bitcoin’s rally to a new record high above $72,000 in March, driving up trading volumes at Coinbase to $312 billion for Q1, more than double the $145 billion a year earlier.

Keeping costs low while continuing to innovate is paying off for the company, the CEO stated during an analyst call. While bitcoin has faced headwinds recently due to a shifting interest rate outlook, Coinbase managed to boost its interest income from holding USD Coin (USDC) reserves. USDC is a stablecoin co-governed by Coinbase and Circle. Interest and finance fee income from USDC rose to $66.7 million, up from $43.3 million the prior year.

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