Coinbase reports Q1 net income at $1.17 billion

Coinbase Global reported strong first-quarter earnings and revenue, thanks in part to a surge in cryptocurrency trading activity triggered by the introduction of the first U.S.-listed exchange-traded funds (ETFs) tracking bitcoin in January.

For the quarter ending March 31, Coinbase reported a net income of $1.2 billion, or $4.84 per share, a major turnaround from a $79 million loss, or $0.34 per share, during the same period last year. This rebound coincides with a bull run in the crypto market following the U.S. Securities and Exchange Commission’s approval of several spot price-based bitcoin ETFs, ending years of negotiation.

The buzz around the new ETFs, especially with Coinbase acting as the custodian for major funds like BlackRock’s iShares Bitcoin Trust (IBIT.O), helped push bitcoin prices to record highs above $72,000 in March. This, in turn, led to a strong boost in Coinbase’s trading volumes, which totaled $312 billion in the first quarter, up from $145 billion a year earlier.

Coinbase CEO Brian Armstrong highlighted the company’s lean cost structure and continuous innovation as key to their financial performance. “Keeping our cost structure low while continuing to innovate is really paying off,” Armstrong said during a call with analysts.

Meanwhile, Coinbase has managed to boost its interest income, earning $66.7 million from interest and finance fees in the first quarter, an increase from $43.3 million the previous year. This income primarily comes from USD Coin (USDC), a stablecoin that Coinbase manages with Circle, backed by dollar and equivalent assets.

Coinbase has been expanding its range of crypto perpetual futures offerings since it received regulatory approval to serve non-U.S. customers in select jurisdictions last year. Despite this progress, the U.S. market has posed greater challenges.

Regulatory hurdles have made it difficult to obtain similar approvals stateside, where American regulators are generally hesitant to approve crypto-based futures that carry higher risks. However, Coinbase did secure a breakthrough last year when it received the nod from the National Futures Association to offer crypto futures trading to a select group of U.S. retail traders via Coinbase Advanced.

The expansion of Coinbase’s perpetual futures offerings comes amidst a surge in derivatives trading volumes, which soared by 86.5% last month to $6.18 trillion.