stock fell on Thursday in the face of recent gains in
prices, which tend to lead shares of the cryptocurrency broker higher. Investors may be eyeing the prospect of tough new competition in U.S. crypto trading.
the Chicago-based trading firm, plans to launch spot Bitcoin trading amid interest from Wall Street money managers, the Financial Times reported on Thursday, citing anonymous sources. CME declined to comment when reached by Barron’s.
Coinbase is “excited to see yet another of the world’s most regulated players seeking to accelerate institutional adoption of crypto,” said Brett Tejpaul, head of Coinbase Institutional, in a statement. “As we saw with the Bitcoin ETFs, this will benefit the entire ecosystem and we look forward to putting our hat in the ring to support CME with Coinbase’s world-class custody and Prime services.”
The remarkable rally in Bitcoin over the past nine months has done wonders for Coinbase stock—which has almost quadrupled in price over the past year—but it could also be attracting more competition to the crypto brokerage business. CME, which already has a flourishing crypto-derivatives trading business, looks like a serious contender should it enter the spot trading space.
If CME is to muscle in on spot Bitcoin trading, it would be bad news for Coinbase. Sure, much of Coinbase’s core brokerage revenue still comes from retail investors—consumer transaction revenue was $935 million in the first quarter, compared with $85 million from institutions—but institutional money is nothing to shirk.
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The approval of spot Bitcoin exchange-traded funds (ETFs) earlier this year has, at least in part, further encouraged Wall Street stalwarts and financial institutions more broadly to consider crypto. That has shown up in Coinbase’s results, too: while consumer trading volume rose 93% quarter over quarter in the first three months of this year, institutional volumes were up 105%. Revenue growth in Coinbase’s institutional business also outstripped the consumer business.
Coinbase has proved itself to be the closest thing that crypto has to a blue-chip stock, with the company weathering the brutal bear market that rocked digital assets in 2022 and 2023. Management has focused on diversification, and early signs suggest that the new spot Bitcoin ETFs, while competitive on fees, haven’t stolen outsize volumes from Coinbase.
But any competition from CME in the bread-and-butter business of Bitcoin trading should still be duly noted.
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— Joe Light contributed to this story.
Write to Jack Denton at [email protected]
Read More: Coinbase Stock Is Down. A New Crypto-Trading Rival May Be About to Emerge.
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