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Cash App brought in $1.96 billion worth of bitcoin revenue during 2021’s final quarter, according to a Thursday earnings report from Block.

From that figure, Cash App saw $46 million in bitcoin gross profit during the period. 

“Bitcoin revenue and gross profit benefited from year-over-year increases in the price of bitcoin and number of bitcoin actives,” the firm explained. “Compared to the third quarter of 2021, bitcoin revenue and gross profit increased on a quarte-rover-quarter basis, driven primarily by increased volatility in the price of bitcoin, which affected trading activity compared to the prior quarter.”

The firm also beat out its overall performance for the year compared to 2021:

“For the full year of 2021, Cash App generated $10.01 billion of bitcoin revenue and $218 million of bitcoin gross profit, up 119% and 124% year over year, respectively. In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin, particularly as we lap strong growth rates on a year-over-year basis in the first quarter of 2021.

Cash App generated $4.57 billion in bitcoin revenue during 2020, as previously reported. 

This report is breaking and will be updated with new information.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchange Coinbase said it earned $2.5 billion in net revenue during Q4 of 2021 in a Thursday earnings release.

Among the other key metrics released: $840 million net income, $1.2 billion in adjusted EBITDA, and 11.4 million monthly transaction users or MTUs. 

“In 2021, millions of new users joined the cryptoeconomy through Coinbase; we generated $7.4 billion in net revenue – including $2.5 billion in the fourth quarter; we became the first publicly traded crypto asset trading platform; and we made substantial progress in building a best-in-class infrastructure to enable easy, safe, and secure on-ramps and access into the global cryptoeconomy,” the firm said in its shareholder letter. 

Of the $547 billion in reported volume, $177 billion came from retail and $371 billion came from institutional traders.

The details represent a jump from the 2021 third-quarte results. As The Block previously reported, Coinbase earned $1.31 billion in the third quarter, and brought in $234 billion in institutional and $93 million in retail trade volumes. 

Assets on platform rose from $255 billion in Q3 to $278 billion in Q4, according to the report. 

The figures come ahead of Coinbase officially launches its non-fungible token (NFT) marketplace, which the firm has teased but doesn’t seem to have an official launch date. Hundreds of thousands of users already signed up for Coinbase’s NFT marketplace, which is set to rival giants like OpenSea — which has been plagued with a lawsuit and scores of user complaints.

This report will continue to be updated. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Western nations have implemented fresh waves of sanctions against Russia as tanks roll across eastern Ukraine. As new sanctions are up for discussion, there is prevailing hesitance to resort to what some have called the nuclear option – a cutoff of Russia from SWIFT. 

The Belgium-based global messaging system for banks, SWIFT is critical infrastructure for any economy hoping to interact with the rest of the world. 

This same argument came up following the Russian annexation of Crimea in 2014. It never went anywhere.

On February 24, Ukrainian minister of foreign affairs Dmytro Kuleba tweeted appeals for the West to cut Russia off from SWIFT in Ukrainian and English on Twitter: 

I will not be diplomatic on this. Everyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT.

— Dmytro Kuleba (@DmytroKuleba) February 24, 2022

The US, EU and UK administer the most significant sanctions programs in the world and will also be the key parties to decide on a SWIFT cutoff. Reports from a call between leaders of the G7 indicated that Boris Johnson, prime minister of the UK, was in favor of the move. Within the EU, the proposal remains questionable. While Germany has already agreed to abort the controversial Nord Stream 2 gas pipeline, policymakers are hesitant to boot Russia from SWIFT. Chancellor Olaf Scholz was reportedly explicit that Germany would not support the move, which, alongside backing from several smaller EU nations seems to doom support from the block.

In the US, president Biden addressed the nation as the Treasury announced new sanctions on a range of Russian banks and business. Most notably, those sanctions froze assets belonging to VTB and barred financial institutions from providing correspondent or pass-through accounts to Sberbank, Russia’s largest bank.

Biden emphasized the global unity the administration had assembled in its latest sanctions program, which will sanction four additional Russian banks. When questioned on SWIFT, Biden said “the sanctions we’ve imposed on all their banks will have equal consequence and maybe more consequence than SWIFT.” He further suggested that the EU had been the deciding factor in avoiding a SWIFT cutoff up to the present. 

At the same time, Russian markets are in free fall, reporting their worst day on record. The ruble has slipped, and is trading at around 87 to the dollar. The Moscow Stock Exchange announced on the morning of February 24 that it would be pausing all trading, including stocks and foreign currencies. 

Consequently, the time seems ripe for capital flight. However, crypto is not proving to be that venue. Bitcoin is down alongside a broad move towards safe assets. And as of February 24, blockchain forensics firm Chainalysis has seen no abnormal volumes on crypto exchanges based in Russia or Ukraine, the firm tells The Block. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchange Coinbase will report fourth-quarter earnings Thursday, revealing to Wall Street exactly how the firm navigated the recent drawdown in bitcoin’s price and whether the current macro uncertainty will put pressure on its share price. 

The ongoing rout in cryptocurrencies has sent public companies offering services in the space into a tailspin, with Coinbase trading down more than 30% year-to-date. It’s not the only victim of the current market backdrop, which has been underpinned by concerns about mounting inflation and, in recent days, the escalating military conflict in Ukraine. 

A wide range of stocks exposed to crypto fell sharply over the course of the fourth quarter, including MicroStrategy, Square (now Block), and Silvergate. Block is also reporting earnings on Thursday.

Still, trading volumes – Coinbase’s bread butter money maker — likely fell sharply from the previous quarter. In total, daily exchange volumes fell from around $45 billion in mid-November to $25 billion towards the end of the quarter, according to data from The Block Research.

Price will likely be a focus as well. In fact, Owen Lau, an analyst at Oppenheimer, said that the price of bitcoin is the “number one” concern for the stock.  “Fundamentally speaking, I don’t think they should be trading hand-in-hand, but in reality they are.”

In fact, Coinbase performed worse than bitcoin as both slid over the last three months.

Still, despite the headwinds facing Coinbase, Wall Street remains optimistic about its stock. The average price target across Wall Street analysts covering the stock stood at $358 on February 22 — far higher than its share price of $209. At the same time, buy recommendations far outnumber hold and sell recommendations. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Cryptocurrency payment gateways provide a trusted and easy integrable service for businesses seeking to accept cryptocurrencies as payment.
• Price volatility risk is lowered by automated conversion to fiat at the point of sale.
• Major companies such as American Red Cross, Microsoft, Newegg, Shopify, Twitch, and Wikimedia all accept cryptocurrency as payment.

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Sam Cassatt, former chief strategy officer at ConsenSys, had been working under the radar since 2020 for his web3 infrastructure startup Aligned. The company has now emerged from stealth with $34 million in seed funding.

Several investors backed the funding, including GSR, Altium Capital, Cavalry Fund and Ninja4. There was no lead investor. Angel investors, including ConsenSys alum and Darma Capital founder Andrew Keys, Gryphon Digital Mining executive Chris Ensey, entrepreneur Steve Wiggins, and former ConsenSys and PayPal employee Ron Patiro, also joined the funding.

This was an equity funding round and will help Aligned expand its web3 infrastructure, Cassatt told The Block. While Aligned currently offers computing hardware for mining cryptocurrencies such as ether (ETH) and other activities, it eventually hopes to become the Amazon Web Services for web3. The startup’s hardware and infrastructure allow it to build services that look similar to a cloud services business from the outside, but designed specifically for the needs of web3 projects, according to Cassatt.

“We build custom hardware out of many components; some of those are chips that are already made. There are many applications of this hardware, and mining various cryptocurrencies is one of them, including ETH and others,” said Cassatt.

Aligned is also building crypto staking infrastructure that will launch for clients “in the very near future,” said Cassatt. Besides mining and staking infrastructure, Aligned also provides liquidity to DeFi protocols. To date, it claims to have deployed 15,000 ETH (around $37 million) across the DeFi sector by working with projects like NeptuneDAO.

There are currently over 30 people working for Aligned, and Cassatt plans to increase headcount to around 100 over the next few months.

To that end, Aligned will raise more funds in the near future. “Building data centers and manufacturing hardware are capital-intensive businesses, so additional capital will be needed to fully realize our model,” said Cassatt.

Cassatt has also run the Aligned Capital venture fund since November 2019, but has so far only invested in one startup, an Ethereum Layer 2 network called Nahmii, according to data from Dealroom.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Cryptocurrencies were trading in the red Thursday morning as investors across the market rushed for safety after Russia staged a military attack on Ukraine. 

According to data from CoinGecko, bitcoin was trading down 7.9% over the last 24 hours, while ether was trading down more than 10% over the same period. Long-tail assets saw an even steeper sell-off, with Avalanche, Shiba Inu and Cardano falling by double-digit percentage points. 

“Big risk off move across the board,” noted Chris Hermida of Manna Trading. 

The price action in the crypto market again illustrates the degree to which liquid tokens have tracked global stocks — similar to the way it has amid the US Federal Reserve’s plan to hike interest rates. The news out of Ukraine is expected to add further pressure to a global economy gripped by mounting inflation and supply chain headaches. The Dow Jones Industrial Average was trading down more than 2.23% at the time of writing. 

Indeed, this is the latest example of bitcoin failing to live up to its promise as a hedge against various forms of uncertainty. It’s 30-day correlation to gold—which has long been viewed as a safe haven asset in times of distressed markets— slipped from 0.28 on February 16 to 0.17 on February 22, while bitcoin’s correlation to the S&P 500 has ticked up.

“The correlation between crypto and stock markets has been pretty solid over the last few months on both inflation news and geopolitical issues,” noted Nigel Green, chief executive officer of deVere Group.

Joshua Lim of Genesis Trading said that investor wariness of the crypto market is behind that increase in correlation between bitcoin and US equities, with bitcoin moving “on a 2ish beta to the SPX.”

Still, gold — which has been enjoying a rally amid the intensifying tensions between Russia and Ukraine — pulled back Thursday morning. JPMorgan noted to clients that there is a risk that Russia could sell some of its gold reserves to fund its military operation. 

In the short term, traders are keeping an eye on Ethereum, given the large number of on-chain liquidations that would be triggered at the $2,100-$2,200 level. 

As explained by my colleague Osato Avan-Nomayo, “an automatic liquidation of $500 million in ether (ETH) could occur on-chain if its price falls below $2,100, causing a Maker vault holder’s position to become under-collateralized and putting further downward pressure on the second-biggest cryptocurrency.”

In general, market participants anticipate geo-political uncertainty and news out of the Fed  to continue to weigh on the market.

“On the crypto front, surprised to see Bitcoin continue to maintain the $35K mark without dipping under $30K,” said Aya Kantorovich of crypto financial services firm FalconX in a message to The Block.

Kantorovich added: “All eyes on the Fed for whether March rate hikes will continue to stay in the books while we’re waiting for the 12:30 pm ET Biden address on Ukraine today.”

While macro events have pushed bitcoin to lows above $34,000, one executive pointed to a saving grace that could support the market from a severe drawdown: institutional capital sitting on the sidelines. 

“Macro tourist money is the fastest to exit, as they free up capital in the most liquid instruments to meet margin calls,” said GSR co-founder Rich Rosenblum. “But, there are a lot of underinvested institutional pockets of capital looking to invest in crypto, waiting on the sidelines for a dip. So long as the situation doesn’t deteriorate, we should see bounces.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

An automatic liquidation of $500 million in ether (ETH) could occur on-chain if its price falls below $2,100, causing a Maker vault holder’s position to become under-collateralized and putting further downward pressure on the second-biggest cryptocurrency.

As Russia’s invasion of Ukraine roils crypto markets, a pseudonymous Maker vault holder called “7-Siblings” could see $500 million in ETH seized and sold if the price drops another 14% from its current level, according to data from Block Analitica. The market drama comes less than a month after the same investor narrowly escaped a $600 million liquidation.

Going by Block Analitica’s data, 7-Siblings has multiple debt positions on Maker vaults totalling about $500 million. All these positions have liquidation prices in the region of $2,100. If ETH falls below this level before 7-Siblings can re-collateralize, then they will lose their collateral as the system liquidates the funds.

To understand the issue at stake, here’s a brief background of how Maker vaults work. Maker’s dai (DAI) stablecoin is backed by crypto like ETH. When an investor deposits ETH to a Maker vault, they get DAI in return.

Because cryptos can suffer volatile price swings, the Maker protocol requires that all debt positions be over-collateralized. This means that deposits required to mint $1 worth of DAI might require up to $1.70 worth of the deposited crypto. This ratio is called the collateralization ratio.

Maker’s protocol requires this over-collateralization as suitable mitigation for price swings. It enables the DAI to maintain its stablecoin status even if crypto prices dip suddenly.

With ETH down about 10% over the last 24 hours to $2,435, 7-Siblings’ position is in danger of being liquidated. If that happens, the selling pressure could potentially trigger even more liquidations across other trading positions.

The last time things were in this position, 7-Siblings was able to remedy the situation, although they still lost about $60 million.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Crypto Council for Innovation, a trade association launched early in 2021 to lobby for the crypto industry, is welcoming crypto exchange operator Gemini into its roster. 

Sheila Warren, formerly of the World Economic Forum, joined the CCI as CEO at the beginning of the month. The CCI’s announcement credits Warren with bringing Gemini into the fold. 

“As a CCI member, we will continue to partner closely with policymakers and regulators around the world to help build a bridge to the future of cryptocurrency,” said Gemini’s head of policy Ji Kim in a statement.

Block (then known as Square), Coinbase and Fidelity Digital Assets initially launched the CCI, following which Paradigm, Andreessen Horowitz and Ribbit Capital joined its membership. Based on the profile of the firms involved in its launch, it was the subject of a flurry of press reports.

However, the CCI’s actual activities in 2021 were limited by the absence of full-time staff. Likely its most memorable moment so far was in June 2021, when it hosted “The ₿ Word,” a panel discussion including Jack Dorsey, CEO of Block. That was around the time that Gus Coldebella, who had been leading CCI, left his main role as General Counsel at Paradigm. 

Despite the CCI’s limited activity, members have maintained independent lobbying programs. Most notably, Coinbase is setting the pace for crypto exchange lobbying, though Gemini also got involved near the end of 2021. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

China announced powers to jail those found guilty of raising funds via token sales as it expands its crackdown on crypto.

China’s highest court amended its interpretation of the country’s Criminal Law to make raising money from the public through “virtual currency” illegal, according to a statement today. The amendment comes into force from March 1.

While China has banned crypto-based fundraising since 2017, this new amendment means Chinese courts can now officially issue sentences to criminals. Jail terms will vary from below three years to over ten years, depending on the amount raised.

If the amount of crypto fundraising fraud is more than 100,000 yuan ($16,000), it will be deemed a “large amount.” If that amount is more than 500,000 yuan, it will be identified as “enormous”, as stipulated in Article 192 of the Criminal Law.

China has been taking aggressive steps to root out crypto from the nation. Last September, China’s central bank banned all cryptocurrency transactions, declaring them illegal. Crypto-related business activities were also declared illegal, including trading and mining.

China’s crypto crackdown has benefited the US, allowing it to leapfrog China as the largest market for bitcoin mining. The US now accounts for more than 35% of the Bitcoin hash rate or computing power, according to the Cambridge Bitcoin Electricity Consumption Index.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.