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By Jaiveer Shekhawat and Niket Nishant
(Reuters) -Crypto exchange Coinbase beat estimates for fourth-quarter profit on Thursday, driven by higher trading volumes in bitcoin and other digital tokens following the U.S. election.
Unprecedented interest in crypto, fueled by Donald Trump's victory in the November presidential election, pushed bitcoin beyond $100,000 in the quarter as investors anticipated more crypto friendly policies under the new administration.
Trump has promised to make the U.S. the "crypto capital of the planet". Paul Atkins, his pick to lead the Securities and Exchange Commission, is known for his pro-crypto views - a sharp contrast to former Chair Gary Gensler, who likened the industry to the "Wild West".
"We're really entering a golden age for crypto here. The opportunity in front of us is unprecedented to update the financial system and increase economic freedom around the world, the regulatory overhang is lifting," CEO Brian Armstrong said on a post-earnings call.
Coinbase earned $4.68 per share for the three months ended December 31, while analysts were expecting a profit of $1.81 per share, according to data compiled by LSEG.
The profit included $476 million in pre-tax gains on its crypto asset investment portfolio.
Its transaction revenue rose 172% to $1.6 billion. Revenue from the subscription and services unit, which houses businesses outside of trading, rose 15% to $641 million.
Total revenue rose to $2.3 billion from $953.8 million a year earlier.
"Compared to Robinhood, whose earnings we saw yesterday, Coinbase has a much greater number of tokens available to trade and already has a number of value-added services like staking and stablecoin access," Ava Labs President John Wu said.
Its offering will only get richer as we see more regulatory clarity around crypto in the U.S., but to defend its market share it must continue to diversify away from retail and make inroads into the institutional trading community, he added.
Competition in the crypto trading market is intensifying, with rival Robinhood cementing itself as a popular option for traders looking to bet on digital currencies.
Though it lists fewer tokens than Coinbase, the company has been steadily gaining market share and is poised to gain ground further under a crypto-friendly Securities and Exchange Commission, according to a note from Bernstein last month.
On Wednesday, Robinhood reported a 700% jump in fourth-quarter transaction-based revenue from crypto trading.
(Reporting by Jaiveer Singh Shekhawat and Niket Nishant in Bengaluru; Editing by Anil D'Silva)
