US-based crypto exchange Coinbase reassured investors of its commitment to operating within the country during its Q1 earnings call. CEO Brian Armstrong emphasized that the company is dedicated to the U.S. market for the long term, despite regulatory uncertainties.
Armstrong expressed his optimism about the U.S. government’s ability to establish clear rules and regulations for cryptocurrency firms. He highlighted the strong bipartisan support in Congress and believed that new legislation would provide a much-needed rule book for the industry.
He also mentioned that Coinbase was founded in the United States due to the prevalence of the rule of law, which he deems crucial. However, Armstrong also voiced concerns about the Securities Exchange Commission’s (SEC) unpredictable enforcement actions.
The exchange received a Wells notice from the SEC in late March, but the specific concerns of the regulator have not been clearly communicated to the company. Armstrong acknowledged the difficulty of predicting the timeline for potential SEC litigation.
Coinbase’s Positive Financial Results In Q1
Despite these concerns, Coinbase reported positive financial results for Q1. The company focused on reducing costs, improving operational excellence, managing risks, and driving product innovation.
As a result, net revenue increased by 22% compared to the previous quarter, while total operating expenses declined by 24%. Although Coinbase experienced a net loss of $79 million, it achieved a positive Adjusted EBITDA of $284 million.
Coinbase’s Q1 report highlighted the revenue growth of subscriptions and services, which rose by 28% compared to the previous quarter, reaching $362 million.
The growth would have been approximately 24% when adjusting for crypto price fluctuations. The average crypto market cap increase contributed to better-than-expected revenue, particularly in blockchain rewards and custodial fees.
Looking ahead, Coinbase cautioned investors about extrapolating current results, noting the potential for rapid market evolution. The company expects its outlook to be influenced by subscription and services revenue and expenses, which it deems the most predictable elements of its business.
Coinbase continues to advocate for clear regulatory frameworks for the crypto industry in the US, highlighting the importance of staying at the forefront of this transformative technology and its potential to preserve jobs and update the financial system.
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