Coinbase Let's You Trade Crypto… And Engages in It as Well

Coinbase is known for storing cryptocurrency and allowing its many customers to trade digital assets. However, what we didn’t know was that the company also did its own investing in crypto as well.

We’re Learning a Lot About Coinbase

As it turns out, the company has become of the first major cryptocurrency exchanges to file for a public listing. In doing so, a lot of information has come out about the firm that many traders were unaware of prior, a big one being that Coinbase ultimately does its own trading.

Over the past year, with bitcoin’s meteoric rise and the world’s number one digital asset shooting into the $40,000 range by the end of 2021, the company saw its crypto assets shoot up to a whopping $316.1 million. This is an increase of roughly $33 million within 12 months.

Bitcoin grew by as much as 300 percent, while many competing altcoins – such as Ethereum – surged even more and incurred growth of 500 percent or more. In addition, both assets have continued their surges well into the new year, and things are set to continue throughout 2021 though at press time, the setting has taken a bit of a stumble with assets like bitcoin now in the $46,000 range – down from last week’s $56,000.

Brett Teipaul – Coinbase’s head of institutional coverage – explained in a recent blog entry:

Since our founding in 2012, Coinbase has held bitcoin and other crypto assets on our balance sheet, and we plan to maintain an investment in crypto assets as we believe strongly in the long-term potential of the crypto economy. Investing in crypto assets required us to develop new investment, accounting and tax policies, as well as ensure we established a control environment for purposes of receiving unqualified audit opinions on our financial statements.

Things have really turned themselves around for the digital trading platform. Coinbase saw a net profit of roughly $322 million throughout 2020. This is a huge change from the figures it saw in 2019, which brought a $30 million loss to the company. Overall, business for Coinbase grew by over $1 billion. By the time it appears on the Nasdaq, Coinbase is slated to have revenue considerably higher than its operating expenses and the company is valued at more than $100 billion.

Could Things Take a Nasty Turn?

The sudden drop in bitcoin’s price, however, could bear a few problems for the exchange, and the company explained in a recent statement:

A decline in price may require us to take an impairment charge on our crypto assets and a decline in the value of the crypto assets we hold in higher concentrations may have a larger impact on our operating results in any given period.

Still, the company appears to be in solid shape. Coinbase has also engaged in a private market sale prior to its official Nasdaq listing.

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