Despite facing enforcement action from the U.S. Securities and Exchange Commission (SEC), Coinbase, the second-largest cryptocurrency exchange, continues to make progress. Asheesh Birla, a board member of Ripple and an angel investor at PartyDAO, believes that Coinbase might soon venture into offering banking-like services supported by cryptocurrencies.
In a Twitter thread, Birla outlined Coinbase’s mission, vision, and value proposition within the cryptocurrency industry. He concluded that the exchange is well positioned to provide banking services backed by cryptocurrencies as it strives to build a crypto-driven financial system that is accessible, efficient, transparent, and fair to all users.
Birla highlighted Coinbase’s first-quarter 2023 report, which revealed a significant portion of the exchange’s revenue coming from deposits, interest income, custodial fees, and blockchain rewards. These revenue streams were categorized under subscription and services. Notably, USDC deposits generated USD 199 million in interest, accounting for 18% of Coinbase’s total revenue.
Furthermore, the report indicated a shift in Coinbase’s revenue sources from consumer transactions to institutional consumers, resulting in higher profit margins. Institutional trading revenue witnessed a 67% increase compared to the previous quarter (Q4 2022).
Birla emphasized that Coinbase is now benefitting from revenue streams that resemble traditional banking services and are not solely dependent on the volatility of the cryptocurrency market.
While Birla’s observations suggest a potential direction for Coinbase’s future offerings, it remains to be seen how the exchange will navigate regulatory challenges and market demands as it expands its services into the banking sector.