Coinbase is conjoined to crypto

NEW YORK, May 11 (Reuters Breakingviews) - Coinbase Global (COIN.O) went for a ride when digital collectibles like Bitcoin soared. The excitement meant more customers, rising trading volumes and rocketing fees. Last year’s revenue was 14 times higher than 2019. First quarter earnings on Tuesday show everything has now switched into reverse, and hard.

Users declined by about a fifth from the previous quarter and revenue fell more than half. The formerly profitable Coinbase racked up a $430 million loss as the company invests in expansion. A new disclosure, that crypto assets held in custody on behalf of customers could be treated as general unsecured creditors in the event of bankruptcy, won’t help. Chief Executive Brian Armstrong’s tweet that “your funds are safe with us” may be true, but it’s not something financial institution bosses ever want to have to say.

Bitcoin has lost a third of its value this year. TerraUSD, which is supposed to be stable, lost more read more over the space of a few days. Coinbase, whose shares fell about 20% on the news and are down about 80% since their debut about a year ago, is crypto’s conjoined twin.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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