Cryptocurrency exchange Coinbase (COIN) reported second-quarter earnings after the close Tuesday that beat expectations. Coinbase stock slipped after hours.
The company reports results as investors weigh the prospect of new cryptocurrency regulations and industry crackdowns against signs of more mainstream support. The just-passed Senate infrastructure deal includes new IRS reporting requirements regarding cryptocurrency transactions.
Estimates: Wall Street expected Coinbase earnings to come in at $2.32 per share on revenue of $1.821 billion.
Results: Revenue came in at $2.03 billion. The company earned $6.42 per share.
Coinbase stock rose 0.4% after hours in the stock market today. Shares have largely fallen since their debut in April, when the price of Bitcoin was near record highs. COIN stock surged 22% over the prior three sessions, rebounding from its 50-day line.
Coinbase, like other Bitcoin stocks, tends to rise and fall with the underlying cryptocurrency.
The price of Bitcoin slipped 1.9% vs. 24 hours earlier to $45,050. Bitcoin topped $46,400 on Monday, the highest since mid-May. That comes after the Bitcoin price tumbled below $30,000 in late July.
The Grayscale Bitcoin Trust (GBTC) was down 2% during the regular session.
Coinbase’s fortunes are largely tied to the public’s interest in cryptocurrencies, drawing revenue from transaction fees earned from cryptocurrency trades on its platform. The exchange had 68 million verified users on its platform as of the end of the second quarter.
The company, which competes with other exchanges, in June said it would allow some trading of the meme-based cryptocurrency Dogecoin. Coinbase’s first-quarter results, reported in May, came up shy of estimates.
In a list of questions from shareholders for the company ahead of its results, the most shared question was about whether Coinbase has “any plans to add NFTs?” or non-fungible tokens. Those tokens use crypto technology to render things like art as verifiable pieces of property that can be sold as digital goods.
Another widely-shared question sought more information on how Coinbase’s Prime service, geared toward more sophisticated and institutional investors, was different from other service providers.
Bitcoin stocks also face broader challenges. Cryptocurrency industry groups expressed dismay at the Senate’s decision not to rework an item in the $1 trillion bipartisan infrastructure bill that was intended to strengthen transaction-data reporting requirements and tax enforcement on the industry. The tighter rules would raise an estimated $28 billion over the next decade to fund the bill.
The Senate passed the bill on Tuesday. The bill — and crypto lobbyists’ attention — now go to the House.
At issue has been how the bill defines the cryptocurrency-transaction “brokers” that would be subject to the reporting requirements. The crypto industry worried that definition was too broad, and would end up applying to people like miners and others that don’t directly handle crypto transactions and are unable to collect user information.
“As written, the infrastructure bill contains harmful IRS reporting requirements that many in the crypto ecosystem lack the capabilities to comply with,” Kristin Smith, executive director of the Blockchain Association, an industry advocacy group, said in a statement Monday. “As a result, many crypto players will be forced to move overseas, leaving future jobs and economic growth on the table.”
Elsewhere, the price of Bitcoin and Bitcoin stocks have been under pressure amid a crackdown in China on cryptocurrency-related activity.
Follow Bill Peters on Twitter at @IBD_BPeters.
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