Despite regulatory uncertainty, Coinbase’s CEO stated that the company is “100% committed” to the U.S. market over the long term, adding that he founded Coinbase in the U.S. because of its strong rule of law. He expressed optimism that the U.S. will eventually get cryptocurrency regulation right.
Strong Financial Performance in Q1
Coinbase’s Q1 earnings report highlighted the company’s efforts to reduce costs, double down on operational excellence and risk management, and drive product innovation and regulatory clarity.
As a result, net revenue grew 22% Q/Q, and total operating expenses declined 24% Q/Q, resulting in a net loss of $79 million but a return to positive Adjusted EBITDA of $284 million. The company’s teams have become smaller but more nimble, resulting in progress on building trusted products and infrastructure to help crypto realize its potential through new use cases and enhanced technologies.
Coinbase remains focused on delivering the most trusted crypto products and services to bring crypto to one billion people, encouraged by progress in international markets.
The company has made international expansion progress with the initial launch of its international exchange and is making good progress in new markets like Canada, Brazil, and Singapore. Coinbase predicts that the crypto market cap and crypto asset volatility will diverge in Q2 compared to Q1, with the average crypto market cap in April being $1.3 trillion, up 17% compared to the Q1 average of $1.1 trillion.
However, crypto asset volatility in April was 25% lower than the Q1 average.
U.S. Market Leadership
In its letter to shareholders, Coinbase emphasized the importance of the U.S. market and working to assure America’s leadership in the updating of the global financial system. The company believes that America is in a position to lead in crypto and help update the global financial system.
Coinbase urges for crypto-specific rules to be put in place, rather than regulation by enforcement, to help this innovative technology flourish and for America to maintain its leadership position. The company predicts that an estimated one million web3 developer jobs will be created over the next several years, highlighting the growing importance of crypto.
Coinbase cautioned investors about extrapolating its Q1 results and noted how quickly the market can evolve. Despite strong Q1 performance and a commitment to the U.S. market, regulatory uncertainty and market volatility remain challenges for the company and the broader cryptocurrency industry.