Revenue at CoinShares fell in the second quarter from the previous one, weighed down by a decline in institutional investors’ interest in cryptocurrency trading.
Europe’s largest crypto asset manager said combined revenue, gains and other income was reported at £14.2 million, down from Q2 2021’s £19.6 million. Adjusted EBITDA also dropped sharply to £8.2 million from £28.6 million in the three months through June 2021.
In terms of its net income, Coinshares reported a loss of £0.1 million in the quarter ending June 30 from a positive income of £26.6 million the previous years. That was Coinshare’s its first negative quarter since going public in March 2021.
The company attributes the net loss to its TerraUSD (UST) holdings. The London-based firm recorded an “exceptional” loss of £17 million (roughly $21.4 million) from its exposure to Terra’s token when it exited its UST position.
“This financial impact of this episode, despite being relatively small when compared to the losses incurred by other players in our industry, has of course had a material impact on our quarter,” Coinshares CEO Jean-Marie Mognetti said in the report.
In the fourth quarter, CoinShares notched its highest quarterly earnings after surging crypto markets drove significant growth in its assets under management. However, due to lower demand for digital asset investment products, ETP assets under management (AUM) dropped to £3.07 billion from £3.4 billion as of 31 March 2022.
As the market environment has changed in the past three months, with cryptocurrencies under pressure, the institutional-favorite platform has experienced difficulties gaining confidence from investors. Though vowing to focus on “long-term growth,” as indicated in the report, the asset manager’s total comprehensive income for Q1 was £20.2 million, down from £32.1 million a year earlier.
CoinShares widens diversification strategy
Commenting on Q1 2022’s results, Jean-Marie Mognetti, CEO of CoinShares said:
“In light of the market turmoil we have reviewed our risk profile and moved into a more defensive mode. We have commenced taking steps to reduce both our cost base and various exposure across the group and this conservative approach will enable us to preserve our capital, ready to take advantage of opportunities in the digital asset space as they emerge.”
Other business highlights show that CoinShares has taken steps towards its long-term strategy, including progressing plans to uplist to the Nasdaq Stockholm Main Market, hiring a new head of marketing and communications with a dedicated team and integrating consumer platform, Napoleon.
Meanwhile, the group continues diversification of its asset management platform through the launch of 4 additional products within the CoinShares Physical product suite. Europe’s largest digital asset investment firm also bought additional 20% stake in digital bank FlowBank, which is licensed by the Swiss Financial Market Supervisory Authority.
The Jersey, Channel Islands-based firm had initially made an $11.8 million strategic investment in FlowBank back in October 2021. As per the recent shareholding pattern, CoinShares has paid $25 million to up its overall stake to 29.3%. As part of this transaction, the company was also granted voting rights equal to 32.06%.
Through its strategic investment, CoinShares says it allows its clients to leverage the Swiss banking’s heritage. Flowbank clients also can now invest in CoinShares’ crypto ETPs and other tokenised assets directly from their Flowbank account.