Coinbase Bet $50 Million on Pro-Crypto Candidates

The 2024 US presidential election has seen a surge of activity in the crypto industry, with various groups and lobbyists supporting the candidate they believe best represents their interests. So far this year, crypto companies have invested collectively. About $119 million Political donations, primarily directed to cryptocurrency-focused super PACs, are due June 30.

This level of spending would make the cryptocurrency industry the largest corporate political donor in 2024, accounting for 48% of all corporate donations. In fact, political donations from crypto companies have grown dramatically. Over 3000% this yearThis made them a dominant force in elections.

According to Public Citizen, no industry has ever been so fully receptive to raising large sums of money directly from corporations and then openly using that political war chest as a threat (or reward) to discipline lawmakers into adopting policies the industry favors.

Taking responsibility is Coinbase Global Inc. (COIN)The largest registered cryptocurrency exchange in the United States, it invested over $50 million in major competition and pro-cryptocurrency political action committees (PACs) during this election cycle. However, the overall decline in the cryptocurrency market took a toll on COIN’s performance, with the exchange seeing a 28% decrease in average daily trading volume compared to the previous quarter. This decrease was partly due to lower user engagement and trading activity on the platform.

COIN’s market share fell from 44.6% in Q1 to 41.2% in Q2, due to increased competition from platforms such as: Robinhood Markets (HOOD)This has led to users migrating elsewhere. The recent downtrend in the cryptocurrency market is largely due to Vice President Kamala Harris’s surge in the polls, which suggests she is likely to win the presidential election.

Critics worry that her policies could be less favorable to the sector than the Biden administration, a concern that Harris said It’s relatively quiet. Unlike her opponent Donald Trump on this issue, Vocal Supporter The cryptocurrency industry.

The cryptocurrency market’s reaction appears to be heavily influenced by these changing political dynamics, especially after President Joe Biden’s decision to step down, which has heightened anxiety among cryptocurrency investors. Many fear that if Trump does not support more lenient cryptocurrency regulation, Harris could implement stricter measures that could hamper market growth. However, this risk is likely overvalued by the market at present.

Despite these concerns, the long-term fundamentals of the cryptocurrency industry appear strong. With the introduction of Bitcoin and Ethereum ETFs, institutional adoption is increasing, and cryptocurrencies are becoming more widely accepted as a legitimate investment option. Let’s take a closer look at the fundamentals of COIN.

The total revenue of COIN is 2nd quarter (Ended June 30, 2024) reached $1.45 billion, up 104.8% year-over-year, while subscription and services revenue increased 17% sequentially to $599 million. The exchange remained profitable in a difficult cryptocurrency market, with net income of $36.15 million, compared to a loss of $97.41 million in the same period last year.

Previously, Coinbase relied heavily on transaction fees, which fell 27% due to lower trading volumes. However, revenue streams have strengthened as the company has focused on expanding subscription-based revenue through products such as blockchain rewards and custody services. The company has also achieved positive adjusted EBITDA for six consecutive quarters despite varying cryptocurrency market conditions.

Coinbase has evolved into an all-weather company with increasingly diversified revenue streams, making it more stable and less dependent on the volatility of the cryptocurrency market. This diversification not only helps to mitigate the impact of market volatility, but also provides resilience when certain parts of the business face difficulties.

conclusion

There have been concerns about what a Harris presidency would mean for cryptocurrencies, but I believe these concerns are overblown. U.S. stocks and cryptocurrencies have been resilient under various administrations, and the global nature of cryptocurrencies makes it unlikely that any one leader will be able to disrupt their progress.

Congress also appears to be moving in a more supportive direction toward cryptocurrencies, with both parties working to establish a favorable legal framework. For example, Senate Majority Leader Chuck Schumer expressed an optimistic attitude On passing cryptocurrency-related legislation by the end of the year. This continued legislative push will provide a more stable environment for the cryptocurrency industry.

Given COIN’s ability to adapt to political changes and the growing confidence among investors in cryptocurrencies, I think it may be a wise choice to own this stock. As the crypto market matures, Coinbase is expected to thrive regardless of who takes the White House, making it a solid long-term investment.