Creating a buzz across financial markets globally as well as in fintech, Coinbase stirred the sentiments of investors and commoners alike by declaring that its balancesheet will be decked by the term “Crypto” as the company tends to invest in it, to get hold of $500 million, while putting aside 10% of its quarterly profits in its portfolio that centre around crypto.
Coinbase is first such public company to consider such initiative about specific crypto assets, finance chief Alyssa Haas notifies in her blog, ”Ethereum, Proof of Stake assets, DeFi tokens and many other crypto assets are supported for trading on our platform”.
CEO Brian Armstrong took to twitter to notify the world about his plans, expressing hopes for the ever expansive market. Besides, company also hopes to variegate its crypto range of services and operations where trading remains at the centre.
As was expected, there was a splash in Bitcoin prices following such news, crossing above $47000 on Friday, as on August 20th, while it remained below $45000 mark for two days earlier.
This is worth mentioning that there are some companies whose holdings are ingrained with bitcoins, such as Tesla and Microstrategy while the aim has been to garner resilience towards inflation and also as a reaction to US dollar devaluation. Consequently, Citi considered reviewing Microstrategy’s ratings as it invests in Bitcoin.
Last week, Palantir disclosed its quarterly results highlighting its mammoth investment in gold worth $50 million with the intention to hedge against black swan events. Besides, Palantir opened its exclusive bitcoin counter facilitating customers to pay in bitcoin but none has turned so far.
Analysts raised a toast and rejoiced on seeing quarterly earnings that Coinbase reported last week, while they oppose stock’s association to bitcoin’s price and volatility but are still hopeful about its roadmap to lead strategic innovation for a long-term across the whole financial framework.
Haas declared that the investment will be made by crypto balances that the company holds, “over a multi-year window using a dollar cost averaging strategy”. She also said that Coinbase plans a long-term investment and “will only divest under select circumstances, such as an asset delisting from our platform”.
Reacting to the news, Oppenheimer’s Owen Lau played down the new investment policy to weaken the correlation between Coinbase and bitcoin “materially in the future”. But he maintained his support to Coinbase to “further facilitate and influence both retail and institutional adoption” by merging cryptocurrencies into its own operational stream for purpose such as making payment to vendors and for paying salaries to employees.
Similar report featured in Wall Street Journal too this past week, where it was claimed that Coinbase has accumulated $4 billion in cash to brave regulatory headwinds. Albeit, Mr. Lau is content about more money in hand with company even after such a deal.
His words, ”Share repurchases and dividends appear to be off the table at least near term, but we believe management will use excess capital to reinvest in the business and make acquisitions, especially in international presence and subscription-based business”.
Interestingly enough, Elon Musk too, in recent past, has tried to tide over the bitcoin in his own unique ways. Follow this story here.
While in India, our own crypto-currency is set to sail in coming weeks with the nod from RBI (Reserve Bank Of India), let’s keep our fingers crossed for it.