In the 7 years since cryptocurrency exchange Coinbase launched, the company has achieved an uncommon feat: generating more profits from its operations than the money it has raised in its many fundraising rounds.
Indeed, according to new remarks made by Coinbase chief executive officer Brian Armstrong at Vanity Fair’s New Establishment Summit this week, the San Francisco-based crypto exchange has earned roughly $2 billion USD in revenues from transaction fees since the summer of 2012, when its doors first opened to American traders.
That impressive sum stands in contrast to the $547 million the cryptoeconomy powerhouse has raised from investors across 9 separate fundraising rounds in the same span — a disparity of approximately 265 percent.
As the company nears its first decade in existence, word of Coinbase’s impressive revenues aren’t necessarily surprising. The exchange and its various arms like Coinbase Pro and Coinbase Custody have become an epicenter for cryptocurrency activity in America and more recently beyond as the firm has expanded in many directions, both geographically and services-wise.
For example, the firm has considerably widened the amount of cryptocurrencies it offers (having added projects like XRP and Chainlink’s LINK token in just the past few months alone) and opened up new apps, like Coinbase Earn and Coinbase Wallet.
The company has also grown its operational footprint, having opened up new offices in Japan and Ireland to better reach and serve international traders. Notably, Coinbase has used its profits to make acquisitions and investments around the space, most recently having invested in Mexican crypto exchange giant Bitso.
Coinbase has also gone where some competitors have yet to tread, namely in launching its USDC Rewards program which allows users to earn interest for holding USD Coin on its platform. Moreover, the exchange has shown a willingness to emulate things that have worked for its peers: last month, the firm’s director of institutional sales, Kayvon Pirestani, said the exchange was considering launching an initial exchange offering (IEO) division.
Taken altogether, Coinbase has proven adept at cultivating its juggernaut status in the ecosystem, and it has the receipts to prove it.
Not Like Other Unicorn Companies
This week, China-based research and investment firm Hurun released its first “Hurun Global Unicorn List” and in it noted that as of this year 11 blockchain industry companies had achieved “unicorn” status — i.e. when a private company achieves a $1 billion valuation before going public.
Of those 11 firms, Coinbase’s $8 billion valuation was only behind Chinese miner manufacturing titan Bitmain’s $12 billion valuation, indicating the U.S. exchange is the second largest company in the cryptoeconomy at present.
At the New Establishment Summit, CEO Brian Armstrong acknowledged the company’s unicorn status but argued that Coinbase was in the ecosystem for the long-term rather than just for one large IPO haul, saying:
“Most of these profits were plowing back into the business to create new products. I sort of think of us as the anti-unicorn unicorn … I want Coinbase to be a company of repeatable innovation … I just like to build products with technology.”
Armstrong Also Said He’s Open-Minded on Libra
Facebook’s proposed Libra cryptocurrency has become extremely controversial both within and without the cryptoverse. Ethereum researcher Vlad Zamfir recently said he was going to personally disassociate with anyone who supports the project, for example, and that’s not even getting into the scathing comments made by global regulators lately.
Coinbase CEO Brian Armstrong is decidedly on the other side of the fence, saying during the aforementioned summit that U.S. authorities should embrace crypto innovation — including Libra — going forward:
“There are a lot of people who are unbanked in the world, who are underbanked … My hope is the U.S. embraces this kind of innovation, even if it comes from a company like Facebook that they’re not necessarily very happy with.”