{"id":52041,"date":"2023-08-23T13:14:38","date_gmt":"2023-08-23T17:14:38","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/heres-why-coinbases-new-circle-arrangement-could-be-a-financial-positive\/"},"modified":"2023-08-23T13:14:41","modified_gmt":"2023-08-23T17:14:41","slug":"heres-why-coinbases-new-circle-arrangement-could-be-a-financial-positive","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52041","title":{"rendered":"Here\u2019s why Coinbase\u2019s new Circle arrangement could be a financial positive"},"content":{"rendered":"
\n

Coinbase Global Inc.\u2019s new arrangement with Circle could deliver financial benefits, analysts say. <\/p>\n

The cryptocurrency exchange announced Monday that it would invest in Circle, the the issuer of the USDC stablecoin, while winding down the jointly managed Centre Consortium that used to oversee the stablecoin. Additionally, the parties will start equally sharing in interest income generated from the distribution and usage of USDC, while continuing to share revenue based on the amount of USDC
\n USDCUSD,
\n +0.01%<\/bg-quote>
\n held on each of their platforms. <\/p>\n

\n

The new agreement could drive low-single-digit upside to Coinbase\u2019s
\n COIN,
\n +3.30%<\/bg-quote>
\n interest revenue and provide a high-single-digit boost to earnings before interest, taxes, depreciation and amortization, according to Barclays analysts.<\/p>\n

Interest income \u201cis nearly pure profit,\u201d the analysts said, though they kept an underweight rating on the stock. <\/p>\n

Bitcoin\u2019s tumble<\/strong>: Here\u2019s what may have sparked selloff \u2014 and why it may spell trouble for other assets<\/p>\n

While Coinbase noted in a Monday tweet that the company doesn\u2019t expect the update to impact its prior outlook, the Barclays team highlighted that Coinbase was looking for at least $300 million in subscription and services revenue in the third quarter, so there could be room for upside. <\/p>\n

Oppenheimer analyst Owen Lau added that the new arrangement could better incentivize the two entities to grow the USDC ecosystem together. <\/p>\n

\u201cWe believe the new revenue-share agreement increases the predictability of Coinbase\u2019s interest income going forward,\u201d Lau said in his note to clients. \u201cIt also removes the downside risk of Coinbase and Circle focusing too much on their revenue sharing [percentage], and adds upside opportunities for both companies working together to grow the ecosystem. By taking an equity stake, the alignment will grow stronger.\u201d<\/p>\n

He rates the stock at perform. <\/p>\n

Mizuho\u2019s Dan Dolev was more pessimistic on the arrangement, saying that it skewed negative. <\/p>\n

\u201cMost importantly, the Circle equity stake deepens COIN\u2019s exposure to a dwindling asset class (USDC market cap is 50% below peak), casting doubt about the standalone business model of stablecoins,\u201d he wrote, while maintaining his underperform stance. <\/p>\n

Coinbase shares closed down 0.5% in Tuesday\u2019s session.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Coinbase Global Inc.\u2019s new arrangement with Circle could deliver financial benefits, analysts say. The cryptocurrency exchange announced Monday that it would invest in Circle, the the issuer of the USDC stablecoin, while winding down the jointly managed Centre Consortium that used to oversee the stablecoin. Additionally, the parties will start equally sharing in interest income […]<\/p>\n","protected":false},"author":1,"featured_media":52042,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-52041","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nHere\u2019s why Coinbase\u2019s new Circle arrangement could be a financial positive | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Coinbase Global Inc.\u2019s new arrangement with Circle could deliver financial benefits, analysts say. 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