Analysts say regulation will “stifle” innovation, and Coinbase’s earnings exceed expectations


Coinbase Global (NASDAQ stock code: coin) Rebounded in the morning trading session on August 11, after it exceeded Wall Street’s sales and revenue forecasts for the second quarter.

At the opening in New York, the cost of buying a COIN stock soared by 4.7% to $282.34. Later, the coin’s bid rose to $294, and then fell back to the current price of $279.72.

Coinbase stock daily chart. Source: TradingView

Coinbase’s strong second quarter earnings

Coinbase Global Reported earnings are better than expected In the second quarter of 2021, net income was US$2.3 billion. This is an increase of 27% from the previous quarter and a year-on-year increase of 1,042%.

At the same time, Coinbase’s net income during the same period rose from US$32 million to US$1.6 billion, surpassing the income of older and more traditional exchange operators, including the CME Group of Chicago, the group In the third quarter, revenue was US$510 million, revenue was US$1.2 billion, and the Intercontinental Exchange. Exchange, which reported revenue of $1.3 billion.

Positive Coinbase results show up as various entities Continue to accumulate bitcoin The company reported that its monthly transaction indicators climbed from $6.1 million in the first quarter to $8.1 million in the second quarter. At the same time, its transaction volume increased from US$335 billion in the same period to US$462 billion.

In an excerpt from the earnings conference call, I heard Coinbase CEO Brian Armstrong (Brian Armstrong) Discuss the plan Expand Coinbase business in the future.

Armstrong said:

“We are also focusing on international expansion, another form of decentralization, just listing more and more assets. We want to be the Amazon of assets, listing all legal crypto assets.”

In a letter to shareholders, Coinbase shared its plan to explore decentralized finance (DeFi) and added that mainstream customers and institutions will soon use this technology to eliminate traditional intermediaries from financial services, such as lending .

Analysts still express caution

On the other hand, Coinbase warned Decreased volatility In the cryptocurrency market, this may affect its earnings in the coming year.

The company said its monthly trading users (MTU)-retail traders who trade on exchanges at least once a month-soared 44% to 8.8 million at the end of the second quarter. Nevertheless, the decline in net MTU in July and August prompted Coinbase to reduce its annual user estimate from 9 million to 8 million.

The decline in trading volume is another indicator of the analysts concerned. The weakening of the figure in July was mainly due to the price of Bitcoin falling below $30,000.

According to Wedbush Securities analyst Moshe Katri, COIN’s main concerns are “mainly related to the regulatory environment”.

Katerry was probably referring to the U.S. Senate Approved an infrastructure bill of approximately $1 trillion, Part of which requires digital asset brokers to report capital gains to the IRS. The bill aims to raise $28 billion in ten years by taxing the cryptocurrency sector, but it fails to define what it considers to be a “broker.”

Anne Fauvre, chief operating officer of data security company Oasis Labs, said the bill is too vague and fears that it might eventually cover entities that are neither brokers nor hold any personal information about customers.

Fauvre told Cointelegraph, “Regulation should be seen as a way to build a fence around the industry” and “As we know, this bill will stifle innovation in the United States for the next 20 years.”

In addition to these regulatory issues, Coinbase Chief Financial Officer Alesia Haas Tell CNBC US regulators and legislators need to know that every cryptocurrency is not a security. Armstrong said that Coinbase is investing in an encryption advocacy organization called the “Encryption Innovation Council” to ensure “reasonable regulation” in the United States.

COIN’s technical outlook is positive

Katerry Iteration Coinbase stock has a “buy” rating, and it is recommended to rise to $300 in the next 12 months, which is an upside estimate of 3.03%.

Analysts have a consensus on the rating of Coinbase stock. Source: TipRanks

according to TipRanks, The average consensus of analysts on COIN is also “buy”, with a target price of US$369.25 per share next year.