Coinbase to add $500 million in crypto including Ether, DeFi tokens on balance sheet
- Coinbase has gotten the green light to invest $500 million in leading cryptocurrencies to its balance sheet.
- The firm aims to be the first publicly-traded company to hold Ether, DeFi tokens and various digital assets.
- The crypto exchange will reinvest 10% of its net income into the new asset class.
Coinbase has received approval from its board to make a purchase of over $500 million worth of cryptocurrencies on its balance sheet. The firm would also reinvest future profits in the new asset class.
Coinbase continues to bet big on crypto
As part of the company’s filing for its direct listing on the Nasdaq, the firm revealed that it was holding roughly $365 million in cryptocurrencies. Although Coinbase is a crypto-native company, it holds fewer digital assets compared to MicroStrategy and Tesla, two companies that the exchange has helped with making Bitcoin purchases.
In terms of revenue, Coinbase beat analyst estimates in Q2, generating $2.23 billion compared to the forecast of $1.78 billion. The firm’s net profit resulted in $1.6 billion, a 4,900% increase compared to the same period last year.
The crypto exchange has benefitted from high trading volumes over the last quarter through its transaction fees, with the explosive rally and a crash that followed.
Coinbase has announced a change in its investment policy, with a commitment to invest $500 million of its cash and cash equivalents in cryptocurrencies. The firm will also allocate 10% of its quarterly net income into various digital assets.
The major crypto exchange also noted that Coinbase would become the first publicly-traded firm to hold assets like Ethereum, Proof of Stake cryptocurrencies, DeFi tokens and other digital assets that are supported on its platform in addition to Bitcoin.
To avoid any conflict of interest with its customers, the trades required for cryptocurrency investment at the firm would be conducted through its over-the-counter desk or at a third party.
Coinbase further added that it might increase its allocation over time. The firm expects that more companies in the future will hold cryptocurrencies on their balance sheet as the industry matures.
The crypto exchange continues to grow as it recently entered the Japanese market, expanding its business in the country in partnership with Mitsubishi UFJ.
Author
Sarah Tran
Independent Analyst
Sarah has closely followed the growth of blockchain technology and its adoption since 2016.
