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> The real profit center of the company is Coinbase Custody Citation needed. The fees are significantly lower than the brokerage (custody fees go down with lar
by beaner 6y ago
> The real profit center of the company is Coinbase Custody
Citation needed. The fees are significantly lower than the brokerage (custody fees go down with larger amounts), which has been the bread & butter that's funded the development of all their other operations. Custody fees are probably not insignificant in absolute terms, but I'm highly doubtful they're greater than brokerage fees.
- conanbatt 6y agoA single customer could have 5 billion dollars of bitcoin. Xapo, a competing company in that space, holds 15% of all bitcoins in circulation!
- beaner 6y agoCoinbase actually owns Xapo's custody business, they bought it in August 2019 [0]. An amount like $5b would likely pay less than 10 bips (0.1%) per year in custody fees, or $5m/year. Coinbase Pro's volume has recently been doing up to a few million dollars in revenue per day - and that's not even counting the higher brokerage fees that apply on top of some of that volume. Custody is certainly an important part of the business. But I think brokerage currently accounts for a much larger % of revenue. Custody will become bigger as the price of crypto grows. [0] https://www.coindesk.com/crypto-exchange-coinbase-acquires-xapos-institutional-custody-business https://www.coindesk.com/crypto-exchange-coinbase-acquires-x...
- conanbatt 6y agoGood back of the envelope math. 0.1% of 15% of circulation is around 60 million. Big but not as big as trading. I'm sure there's some vertical integration considerations here: the people that hold this amount of assets also trade, and probably trade at OTC with very special requirements that make them valuable.