Coinbase Earnings Reviewed With Elections, Regulation In Focus; Russia And Iran Working On CBDC

Coinbase – earnings review

Earnings for cryptocurrency platform Coinbase outpaced Wall Street’s expectations for the first quarter of 2024 as the company reported earnings of $4.40 per share last Thursday, more than tripling analysts projections, with total revenue of $1.64 billion which more than doubled the revenue from the same period a year ago.

Nevertheless, Wall Street analysis was a mixed bag. Cannacord said “the quarter underscored the company’s ability to gain market share in hot and cool crypto market environments” while Goldman Sachs said “the risk-reward for Coinbase stock will largely be a reflection of volatility in crypto prices going forward, without a long-term plan in the broader crypto market according to Investor Business Daily. Read more.

Coinbase currently has a market cap of $54 billion. 

more tips:

Coinbase – elections, dual banking

On the conference call with analysts, Coinbase CEO Brian Armstrong noted how growing revenue, crypto utility and regulatory clarity were his company’s three big priorities. Fairshake Super PAC, “which already had a great impact in the market primaries in California, Texas, and Alabama” also was mentioned by Armstrong.

Expect more of the same on election contributions leading up to November appeared to be the message.

Citi analyst Peter Christiansen asked the Coinbase team about stablecoin legislation during the earnings call. Christiansen claimed “press reports are indicating potentially that Lummis-Gillibrand [Payment Stablecoin Act – S.4155] could hit the floor at some point next week. And part of that Bill, as you likely probably know is the dual banking system debate and whether or not states can issue their own stablecoins independently of the government — the federal government. I’m just curious how you see state-issued stablecoins kind of playing in the market. Is that potentially an opportunity for Coinbase? I’m just curious for your thoughts around that dynamic.”

Coinbase chief legal officer Paul Grewal fielded Christiansen’s question on the call saying, “I think the point that you’re raising around the role of state governments and in particular, state-chartered institutions in supporting the crypto ecosystem and in particular, stablecoins is an important one. Whether that ultimately comes to pass in any final legislation, that’s enacted remains to be seen. But we do think it’s very important that states continue to have an important role in supporting stablecoins and supporting crypto more generally. We do think the dual system serves consumer and investor interest reasonably well. And we’re hopeful and confident that in any legislation that’s finally passed, that will continue to be recognized.”

what you should know: Citi’s Christiansen may have confused the Senate bill with the House stablecoin bill. There have been no inklings of S.4155 hitting the Democratic-controlled Senate floor let alone the House bill reaching the House Floor this coming week.

stablecoin bill future

The House Financial Services “Clarity for Payment Stablecoins” bill [H.R.4766] has an uncertain future according to a myriad of on- and off-the-record Capital Hill voices captured in a Politico article by Eleanor Mueller and Jasper Goodman on Friday. Dual banking negotiations appear to be still far apart in spite of previous “green shoots.”

Even Sen. Thom Tillis (R, NC) throws in his opinion on having the stablecoin bill attached to the FAA Reauthorization saying the must-pass effort is/was “half-baked.” -perhaps, this last remark was a pun by Tillis in reference to Democrats attempt to add Cannabis banking to the must-pass, too. Read more (subscription).

more tips:

    • SEC’s Gensler turns tide against crypto in courts – Politico

what you should know: One thing that everyone seems to agree on is that the HFS stablecoin bill is the main stablecoin legislation in play in Congress currently.

next must-pass option

Punchbowl News’ The Vault newsletter takes a look at what the options are for future must-pass legislation. The FAA Reauthorization is still pending this week, but Congress is skeptical about any bill being successfully attached (like stablecoins). The next must-pass which may be an opportunity for a bill to be included is the year-end National Defense Authorization Act (NDAA).

Punchbowl says that the many months until the NDAA deadline may be of benefit to the stablecoin bill which needs time for negotiation: “House Financial Services Committee Chair Patrick McHenry (R, NC) and top Democrat Maxine Waters (D, CA) haven’t been able to land a deal to regulate stablecoins. But once they do, they’ll likely need to negotiate with Senate Banking Committee Chair Sherrod Brown (D, OH).” Read more.

what you should know: If Senator Brown feels threatened in his Senate race taking place this November with Bernie Moreno (R), he may be more inclined to come to the “stablecoin table” and try to grab a few pro-crypto votes.

House floor vote – SAB 121

House Joint Resolution 109 [H.J.R.109] which looks to rescind the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121) appears eligible for consideration on the floor of the House.  The resolution was placed on the Union Calendar last week and is listed on Majority Leader Steve Scalise’s schedule this week.

A House floor vote would be interesting to see for the resolution which seeks to undo SAB 121 restrictions placed on the regulated financial system when it comes to crypto custody.

Unanimously supported by Republicans on the House Financial Services Committee including its sponsor, Rep. Mike Flood (R, NE) in a late February markup, the resolution was also supported by a splinter group of three Democrats: Reps. Wiley Nickel (NC), Ritchie Torres (D, NY) and Josh Gottheimer (NJ).

How many Dems support this resolution beyond the 3 on HFS?

what you should know: Are we about to get a House floor vote on something digital assets-related?

blockchain for smartphones

Vodafone looks to integrate crypto wallets with SIM cards – Cointelegraph

Iran, Russia work on CBDC

According to Ledger Insights on Friday, “Russian newspaper Izvestia spoke to Iran’s trade attaché at the embassy in Russia, Rahimi Mohsen. He says the two countries are working together to address settlements using central bank digital currency (CBDC) and Russian digital financial assets (DFAs), the legal framework for tokenized assets.”

The seeds of this latest news started in 2023 and Ledger Insights gives a  concise overview on how the new CBDC efforts intersect with China and the Chinese renminbi which “has become the dominant currency for Russian cross-border payments.” Read more.

what you should know: With clear national security implications, it will be curious to see if this news changes the narrative around CBDCs from the pro- or anti-CBDC coalitions.

Russian money laundering

In another tale of crypto, illicit finance and Russia, a Russian national named Alexander Vinnik has plead guilty to money laundering charges related to cryptocurrency exchange BTC-e from 2011 to 2017 -even the “ancient” Mt. Gox hack is implicated in the case.

CoinDesk reports, “BTC-e did not register as a money services business in the U.S., did not operate any know-your-customer or anti-money laundering rules and did not collect any customer data, the DOJ said Friday. Vinnik did use shell companies to process fiat conversions for BTC-e.” Read more.

more tips:

Rep. Cuellar indictment

Rep. Henry Cuellar (D, TX) is a co-sponsor of FIT 21 (digital asset market structure bill). Perhaps Rep. Ritchie Torres (D, NY) May 1 co-sponsorship of FIT 21 may be to take Cuellar place due to his recent indictment. – blockchain tipsheet on X

Rep. Henry Cuellar accused of taking bribes from Azerbaijan, Mexican bank – The Washington Post


Opinion: “The Dollar Won, but Might the U.S. Lose Control of the Dollar?” – CoinDesk

Opinion: “Cryptofinance: Stablecoins encroach on shadow banking system” – Financial Times

still more tips

Coinbase faces copycat class action suit asserting tokens are securities in echo of pending case – The Block

Crypto Startups Turbocharge Valuations as Investment Picks Up – Bloomberg

From 25 years in prison to just four months: Inside the final verdict on a crypto billionaire CEO archrival – CNBC

New York Woman Gets 18 Years for Funding Terrorism With Cryptocurrency – The New York Times