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For the full year, Block’s bitcoin revenue declined 29% from 2021 due to the fall in the price of bitcoin, the company said.

Coinbase reported first-quarter revenue up 22% as cost-cutting measures paid dividends. Shares popped 7% in after-hours trading.

Interest income rose 32% to $240 million, above estimates of $205 million, of which $199 million was derived from USDC. In the fourth quarter, interest income totaled $146 million, of which $182 million was USDC.

The cryptocurrency exchange said revenue for the first quarter was $736 million, coming in above the $658 million estimate of analysts surveyed by FactSet. EBITDA was positive $284 million, better than the negative $36 million estimated. 

Subscription and services helped drive this growth, said the firm’s vice president of investor relations, Anil Gupta, in an interview with The Block following the release. Subscription and services revenue, which included staking and interest income, was $362 million, above estimates of $316 million. 

The declining circulating supply of USDC may have a more outsized impact on Coinbase’s revenue as the year progresses, Mizuho’s Ryan Coyne told The Block ahead of time. Gupta confirmed the exchange expects interest income derived from USDC is expected to fall in the second quarter due to this.

Staking accounted for $73.7 million, above the $71 million estimated by FactSet. It did, however, lead to an increase in transaction expenses as rewards are paid out to users, the firm noted. Staking was under the microscope during the first quarter. Kraken reached a $30 million settlement with the Securities and Exchange Commission. Shares in Coinbase tumbled as the SEC came down on staking as staking revenues came under threat.  

Coinbase ‘fully prepared’ to fight the SEC

Coinbase also provided shareholders with an update on its looming legal battle with the Securities and Exchange Commission, a key U.S. regulator. The SEC gave Coinbase official notice that it was the subject of an investigation last month with a Wells Notice, a document that can precede an enforcement action.

The company responded to the notice last week, warning that an enforcement action against Coinbase would not be in the country’s interest. Separately, Coinbase is suing the SEC to answer its request for a digital asset-specific rule.

“Despite our ongoing engagement with the SEC, they have not shared their specific concerns with Coinbase or provided any clarity or workable path forward for the industry. While we hope to avoid litigation, we are fully prepared to defend ourselves and advocate for the entire crypto industry if necessary,” Coinbase wrote in its shareholder letter.

Coinbase said its “preferred path would be for Congress to take action to provide clear rules of the road for the industry.” The exchange hinted that “real action” could be taken on “substantive, bipartisan legislation” during the second quarter of 2023, which ends in June.

“We are also digging in on our direct advocacy efforts in Washington, D.C. We need crypto-specific rules and regulation, not more enforcement, to help this innovative technology flourish and for America to maintain its leadership position,” the letter said.

© 2023 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.

Block, formerly known as Square, reported surging sales of bitcoin on its Cash App platform in the first quarter of the year. 

In an earnings release on Thursday, the company said it sold $2.2 billion worth of bitcoin in the quarter, a 25% year-over-year increase. That’s also an increase from $1.8 billion sold in the fourth quarter of last year.

Gross profits from bitcoin sales were $50 million, according to the Q1 shareholder letter. 

“The year-over-year increase in bitcoin revenue and gross profit was driven by an increase in the quantity of bitcoin sold to customers, partially offset by a decrease in the market price of bitcoin compared to the prior-year period,” Block said.

Block profits rise

Block reported an overall gross profit of $1.7 billion, a 32% year-over-year increase, with total revenue of just under $5 billion in the period. 

“Transaction-based revenue was $1.4 billion in the first quarter of 2023, up 15% year over year, and transaction-based gross profit was $602 million, up 16% year over year,” Block said.

Cash App profits were $931 million and Square profits weighed in at $770 million, representing year-over-year increases of 49% and 16%, respectively. 

This report will be updated with additional information from Block’s 5 p.m. ET earnings call. 

© 2023 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.

Bankrupt lender Voyager Digital could start distributing cash and crypto to creditors “within the next few weeks,” according to the Official Committee of Unsecured Creditors in the troubled crypto lender’s bankruptcy case.

The firm is finalizing the liquidation procedures after crypto exchange Binance.US pulled out of a $1.3 billion deal to buy its assets.

“Voyager is also finalizing everything internally that is necessary to make distributions to creditors,” the creditors committee said on Twitter. “We are hopeful that initial distributions will begin within the next few weeks.

The court-approved restructuring plan had included a “toggle” that allowed Voyager to liquidate if Binance.US decided to exit the deal. The crypto exchange said it backed away from the plan due to the “hostile and uncertain regulatory climate in the United States.” 

The failed deal between Voyager and Binance.US was met with government scrutiny. The U.S. Securities and Exchange Commission indicated in a court hearing that staff believe Binance.US is operating an unregistered securities exchange in the country, although the commission hasn’t taken an official position.

Voyager bankruptcy asset recovery

Voyager must first file the liquidation procedures in the U.S. Bankruptcy Court for the Southern District of New York, and parties will then have 10 days to object to the plan. The company said it had more than 100,000 creditors when it filed for bankruptcy protection last summer.

“If no objections are filed, Voyager intends to go ‘effective’ with the plan at that time,” the committee said.” If an objection is filed, the Court will hold a hearing to consider the objection before the plan can go effective.”

Of the 6% of creditors who voted on the proposed Voyager restructuring plan, 97% voted in favor. Customers would have seen a 73% recovery of assets under the Binance.US proposal, although that percentage could have dropped to 48% if claims from bankrupt crypto exchange FTX and its sibling Alameda Research are eventually successful.

© 2023 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 exchange reported first quarter results after the close on Thursday.

With wannabe Jedis rattling their lightsabers around the world in honor of Thursday’s Star Wars Day celebrations, Cryptoys has announced it will be selling — in partnership with Disney — digital toys fashioned after three of the movie franchises’ most iconic characters.

Cryptotoys, backed by Andreessen Horowitz, Mattel and Dapper Labs, said it will release “15 limited-edition Luke Skywalker, Princess Leia and Darth Vader collectible digital toys.”

Although The Walt Disney Company is one of the most successful marketers and sellers of merchandise based on famous intellectual property, the Hollywood studio and theme park operator has yet to make a big foray into crypto.

Last year, the media conglomerate advertised a job opening for a transaction lawyer to explore emerging technology opportunities, according to a posting on LinkedIn.

Powered by Dapper Labs’ Flow blockchain, consumers can buy Cryptoys Star Wars NFTs for $39.99. Purchases will be possible with Apple  Pay and Google Pay, “worldwide,” according to the company.

© 2023 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 jury is out on whether the benefits outweigh the risks of central bank digital currencies, but stymying research and passing premature legislation comes with its own harms.

Ethereum’s Shanghai upgrade spurred deposit inflows to liquid staking protocols, including to the largest player Lido.

Activist investors are suing the leader of SpartacusDAO. He hasn’t shown up in court after ignoring multiple attempts to serve him.

Florida Governor Ron DeSantis said the Sunshine state would soon move against any kind of a central bank digital currency, with lawmakers advancing with legislation that could be on his desk within “the next couple of weeks.”

“Florida rejects the idea of a central bank digital currency,” DeSantis said at a press conference on May 2. “You could just get fined, and they’ll just take it right out of your digital currency, without any due process or anything like that. And so it gives the government a huge amount of power over your economic self sufficiency and independence.”

The Republican is an avid critic of centrally controlled digital currencies, but he’s expressed support in the past for decentralized cryptocurrencies because the government has no control over them.

DeSantis, who’s widely considered as a possible presidential candidate in next year’s election, has previously accused President Joe Biden of eyeing the technology for “surveillance and control.” He first announced the legislation that would outlaw centralized digital currencies in the state in March. 

His Tuesday comments came amid widespread discussion of what’s been perceived by some to be a broad crackdown on the crypto sector by the U.S. Securities and Exchange Commission. Coinbase, a U.S.-listed crypto exchange, is suing the regulator and calling for clear rules.  

Crypto crackdown

“They want to get rid of crypto,” DeSantis said. “They don’t like crypto because they can’t control crypto, so they want to put everything in a central bank digital currency.”

“My view is is like, if you want to invest in crypto, it’s up to you,” DeSantis continued. “You can do it. I mean, like, you can make those decisions.”

DeSantis’ press office didn’t immediately respond to an emailed response for additional details about who he thought was leading the campaign against crypto. He said on Tuesday that an agenda was being imposed by an “elite” with access to “to a lot of financial might, a lot of business resources, corporate resources.”

DeSantis said the pending legislation in Florida would provide preemptive protection from a U.S. central bank digital currency, even though one doesn’t yet exist.  

DeSantis warns against ‘financial surveillance state’

“I don’t think Congress would authorize it,” DeSantis said. “But if the Fed or the Treasury tries to do it unilaterally, in Florida, we’ll have a prohibition against that. And I think that that’s ensuring your financial independence and making sure that we don’t have a financial surveillance state, where they know every transaction that you’re making.”

DeSantis first raised his opposition to centralized digital currencies last year, but he has previously taken a friendlier approach toward decentralized tokens and has said he was working on ways for Floridians to pay taxes with crypto.

The Biden administration has developed policy objectives for a possible CBDC system in the U.S., with the Federal Reserve and Treasury Department both conducting research in the area.

© 2023 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.