Coinbase is looking to expand and has a $4 billion war chest to hedge against a possible ‘crypto winter’

Coinbase is looking to expand and has a $4 billion war chest to hedge against a possible ‘crypto winter’
  • Coinbase may spend the cash for new products and services, though acquisitions are on the table too.
  • The company reported earnings of $1.61 billion in cash during the second quarter of 2021.
  • Coinbase plans to enter the Japanese market soon.
An extended bear market, dubbed ‘crypto winter’ by the community, has been expected for a while now. And, top crypto exchange Coinbase has amassed a war chest worth $4.36 billion in cash to prepare for that scenario, the company told the Wall Street Journal in an interview.

We want to ensure that we maintain those cash reserves so that we can continue to invest and continue to grow our products and services in the event that we go into a crypto winter

Alesia Haas, chief financial officer (CFO) of Coinbase told WSJ.

The hoarding of liquidity comes amid Coinbase expanding its operations in Japan. The crypto exchange has partnered with the country’s Mitsubishi UFJ Financial Group (MUFG) — a banking institution with more than 40 million customers — to provide Japanese citizens with “a suite of five top assets based on trading volume,” with more tailored solutions launching soon.

What is a ‘crypto winter’?


The term crypto winter was coined during the bear market faced by the industry between 2018 and 2019, driven by regulatory pushback in various markets, including India. The same has been expected this year, after the crypto market underwent an extended bull run between 2020 and mid-2021.

Most market indicators show a slowdown in trading volumes since May, following crackdowns in China and expectations of new regulations in many markets.

As reported yesterday, Bitcoin, Ether and other cryptocurrencies continued to plummet with the top ten cryptos trading in the red.

Coinbase earnings surge

Coinbase’s successful public listing in the US earlier this year is often seen as a shot in the arm for the overall crypto industry. The company has also profited from trading surges seen over the first half of 2021, reporting earnings of $1.61 billion during the second quarter of the year, which is a significant rise from the $32 million it earned a year earlier.

The company’s war chest is expected to cover new product rollouts as well as acquisitions. Investing in new products is a point of focus for crypto exchanges during bear markets and Coinbase is no stranger.

However, Coinbase’s CFO also told WSJ that acquisitions are on the table for the company and it isn’t considering returning money to shareholders through buybacks just yet.

Coinbase is also one of the investors in Indian crypto exchange CoinDCX, which became the first billion dollar crypto startup in the country last week.

For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

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