Given the rise in short-term interest rates, cryptocurrency exchange Coinbase Global may produce $1.2 billion more in interest income-driven revenue in 2023, according to a note sent to clients earlier this week by JPMorgan analyst Ken Worthington. JPMorgan predicts that the joint venture between Coinbase and USDC issuer Circle will generate an additional $700 million in income. In 2018, the two companies established the Centre Consortium, a cooperative venture with a revenue split on the interest income from USDC reserves. Coinbase May Earn $1.2B Next Year According to JPMorgan, Coinbase could generate interest revenue from user fiat and its corporate cash balance, equaling $1.2 billion in additional revenue for Coinbase in 2023. According to the bank, the prospect of a decreased holding of USDC and fiat money with the exchange is a significant risk for Coinbase’s ability to realize its interest income. “We see the potential for institutional investors to hold less USDC given the opportunity cost of holding quasi-cash that doesn’t offer a yield. We also see retail holding less of its fiat at Coinbase since it doesn’t get a yield. As such, we see the potential for USDC and fiat balances to decline for Coinbase,” JPMorgan wrote. Broadridge Financial Enlisted to Improve Liquidity According to a news release, Coinbase is collaborating with fintech company Broadridge Financial Solutions to enhance buy-side liquidity for traders. T...
