S&P Global downgrades Coinbase credit rating for weak Q2 earnings and competitive pressures
Coinbase Global has its credit rating downgraded by S&P Global amid regulatory pressures, market performance and weakened competitors.
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Major US cryptocurrency exchange Coinbase had its long-term credit rating downgraded from BB+ to BB by rating agency S&P Global following its latest earnings report this year.
The agency confirmed the downgrade in a note on Thursday, citing Coinbase's weaker performance in Q2 2022 as a driving factor. Heightened competitive risk in the cryptocurrency exchange industry was also highlighted, with Coinbase losing market share to competitors this year.
“The negative outlook reflects uncertainties about the duration of the crypto market downturn and the company's ability to operate effectively by prudently managing operating expenses.”
The downgrade also reflected the potential for "further deterioration in market share" due to the competitive landscape and regulatory risk. The ratings agency noted that total trading volume on Coinbase was down 30% quarter over quarter, while total cash trading volume across all sites was down just 3%. , leading to a decline in market share.
The memo concedes that spot trading has become more concentrated among market makers and high-frequency trading firms, of which Coinbase has a much smaller market share.
The ongoing cryptocurrency bear market also left its mark, with S&P Global highlighting total assets on Coinbase down 63% to $96 billion from the first quarter, due to the decline cryptocurrency values and net outflows from institutional clients.
Related: Coinbase Posts $1.1 Billion Q2 Loss Due to 'Fast and Furious' Crypto Downturn
Binance's decision to remove its Bitcoin trading fees globally also drove the rating...
Coinbase Global has its credit rating downgraded by S&P Global amid regulatory pressures, market performance and weakened competitors.
New
Major US cryptocurrency exchange Coinbase had its long-term credit rating downgraded from BB+ to BB by rating agency S&P Global following its latest earnings report this year.
The agency confirmed the downgrade in a note on Thursday, citing Coinbase's weaker performance in Q2 2022 as a driving factor. Heightened competitive risk in the cryptocurrency exchange industry was also highlighted, with Coinbase losing market share to competitors this year.
“The negative outlook reflects uncertainties about the duration of the crypto market downturn and the company's ability to operate effectively by prudently managing operating expenses.”
The downgrade also reflected the potential for "further deterioration in market share" due to the competitive landscape and regulatory risk. The ratings agency noted that total trading volume on Coinbase was down 30% quarter over quarter, while total cash trading volume across all sites was down just 3%. , leading to a decline in market share.
The memo concedes that spot trading has become more concentrated among market makers and high-frequency trading firms, of which Coinbase has a much smaller market share.
The ongoing cryptocurrency bear market also left its mark, with S&P Global highlighting total assets on Coinbase down 63% to $96 billion from the first quarter, due to the decline cryptocurrency values and net outflows from institutional clients.
Related: Coinbase Posts $1.1 Billion Q2 Loss Due to 'Fast and Furious' Crypto Downturn
Binance's decision to remove its Bitcoin trading fees globally also drove the rating...
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