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Crypto Trading Volume on Coinbase Down 29% in Q3

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The declining prices in the cryptocurrency market in Q3 2021 have led to a substantial decline in Coinbase’s revenue.

The largest US-based crypto exchange has seen a sizeable decline of 29% from $462 billion in Q2 to Q3’s $327 billion in trading volume. In its latest report, the company emphasized the volatility in the market as an important factor influencing the transaction revenue. The figures have been quite underwhelming, but according to the platform, it was still a win.

Coinbase Takes a Hit

Coinbase’s revenue had hit record figures from April to June this year after its debut as a publicly-traded company. But it could not escape the ramifications of the market-wide bearish movements in the following three-month period.

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The exchange registered net revenue of $1.2 billion, of which $1.1 billion constituted transaction revenue. Furthermore, $1 billion originated from retail transaction revenue in Q3, meaning a decline of 44% compared to the Q2 results.

Similar to the retail counterpart, Coinbase’s institutional transaction revenue was also down by almost 34% from  Q2 and stood at $67.7 million.

Subscription and Services Comes to the Rescue

While everything else noted a significant reduction, it was the subscription and services revenue that managed to hold Coinbase’s income from dwindling even more.

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All in all, the revenue from these sources contributed a total of $145 million in Q3 and was up by a whopping 41% compared to Q2. Apart from the “Earn” campaign, which slashed 10% revenue figures and totaled $15.2 million, Blockchain rewards and Custodial fee revenue boosted the figures in the quarter.

  • Staking and Ethereum 2.0 drove Blockchain rewards revenue to $81.5 million.
  • Owing to lower Bitcoin and crypto prices, as well as maximum net inflows using its custody solution, Coinbase managed to rake in total custodial fee revenue of more than $31 million.

No evidence of users migration from Coinbase Consumer to Pro

Coinbase also recorded a slump in terms of weighted average retail transaction fee rates in the third quarter. The decline can be attributed to relatively higher trading volumes on its professional trading platform – Coinbase Pro, according to the exchange.

Coinbase Pro offers, what is called, a “tiered” fee structure wherein users who trade higher dollar amounts pay lower fees, on average.  The reports suggested that there were no modifications to its retail fee structure in the said quarter, and hence, it did not witness any evidence of user migration of the general Consumer platform to the Pro.

However, weighted average institutional fee rates remained unfazed in Q3 as compared to the quarter before. Market makers were the biggest contributors to the institutional trading volume.

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Coinbase will establish presence in Israel through purchase of Unbound Security

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Cryptocurrency exchange Coinbase will acquire cryptographic security company Unbound Security in a move that will also have the U.S. company launch a research facility in Israel.

In a Tuesday blog post, Coinbase said it would be purchasing Unbound to gain access to its cryptographic security experts as well as establish a presence in Israel. The exchange cited Unbound’s work in multi-party computation to provide users with the “virtually impenetrable nature of cold, offline storage, with the frictionless convenience of hot, online wallets.”

“We’ve long recognized Israel as a hot bed of strong technology and cryptography talent, and are excited to continue to grow our team with some of the best and brightest minds in these fields,” said Coinbase. “The Unbound Security team will form the nucleus of this new research facility, which we plan to grow over time.”

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The Unbound acquisition is the latest of many for the major crypto exchange following its public listing on Nasdaq in April, giving the firm a roughly $100 billion valuation. Last week, the team at crypto wallet provider BRD announced it would be joining Coinbase in an effort to “help accelerate Web 3.0 adoption” as well as provide “deep expertise in self-custody.”

Coinbase did not immediately disclose the terms of the Unbound acquisition. The exchange has already purchased firms including Agara, an artificial intelligence-enabled support platform with operations in India, data aggregator Zabo, and data analytics platform Skew, with each agreement likely in the millions if not more.

As cryptocurrency prices continue to be volatile, Coinbase announced in August that it had stockpiled a war chest worth roughly $4 billion in cash to prepare for a potentially harsh crypto winter, spurred by decreased crypto retail trading volumes and higher operating costs from regulatory hurdles. The company reported revenue of $1.2 billion in the third quarter of 2021, with profits totaling $406 million.

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Coinbase Acquires Mobile Wallet Company BRD

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Key Takeaways

  • Coinbase has acquired the mobile wallet company BRD Wallet.
  • The team behind the wallet will join Coinbase Wallet to work on self-custody and Web3 integration.
  • Coinbase has acquired several other companies in recent months including Agara, Bison Trails, and Skew.

Leading crypto exchange Coinbase has acquired the crypto wallet company BRD, according to statements from both firms.

BRD Team Will Join Coinbase Wallet

BRD announced today that its team will join Coinbase, where it will contribute to the company’s Coinbase Wallet. The app was originally launched in 2014 under the name “breadwallet” and achieved a userbase of 10 million.

BRD suggested that its own wallet will continue to operate normally for the time being and that users will be given the option to migrate to Coinbase Wallet in 2022.

The team behind BRD will join the team behind Coinbase Wallet. Coinbase noted that BRD “brings deep expertise in self-custody for crypto wallets” and that the acquisition is part of its goal of “doubling down on [its] investment in self-custody and Web3.”

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It is unclear how the BRD team will change Coinbase’s wallet. Though BRD offers self-custody of crypto funds, Coinbase Wallet already supports this feature, unlike many other exchange wallets.

Coinbase Is On an Acquisitions Spree

BRD is the latest Coinbase buyout in a series of 18 acquisitions since 2018. Earlier this month, Coinbase acquired Indian AI customer support company Agara for over $40 million.

In recent months, Coinbase has also acquired the wallet interoperability company Zabo, the blockchain infrastructure firm Bison Trails, and the crypto data analytics company Skew.

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Coinbase also controversially acquired Neutrino in 2019, a company that has been involved in government surveillance efforts for countries such as Ethiopia, Saudi Arabia, and Sudan.

In other news, footwear company Adidas also announced today that it has partnered with Coinbase but has revealed few details about its plans.

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Adidas Teasing Partnership with Coinbase

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German sports apparel behemoth Adidas has announced a partnership with Coinbase, America’s leading cryptocurrency exchange, on Twitter. 

The crypto platform replied with the handshake emoji, seemingly confirming the deal. 

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In another tweet, Coinbase welcomed Adidas “to the party.”  

While there are no details about the high-profile tie-up as of now, cryptocurrency enthusiasts were quick to speculate about it.  

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On Nov. 22, Adidas tweeted about developing “adiVerse,” a play on the term “metaverse,” together with The Sandbox, a blockchain-powered gaming platform. The tweet has bolstered the rally of the native SAND token that went ballistic after Facebook changed its name to Meta in late October.  

Earlier this month, Nike filed to trademark various digital items in the U.S. In 2019, the company received a patent for “Cryptokicks,” a platform for selling non-fungible tokens that represent tokenized versions of physical shoes.  

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