Coinbase's BlackRock Deal Probably Doesn't Matter
For the most part, Coinbase (NASDAQ: COIN) generates revenue from charging its retail users transaction fees for buying and selling cryptocurrencies. The company offers some subscriptions and services, but transaction fees from retail investors accounted for around 83% of total revenue in the first quarter.
Another source of revenue is fees generated from institutional customers. Coinbase Prime is the company's solution aimed at institutions, offering advanced features and functionality. Transaction fees levied on institutions accounted for just 4% of total revenue in the first quarter, with a bit more coming from custodial fees. The percentage is only that high because retail trading activity has plunged this year as cryptocurrency prices crashed.
Shares of Coinbase surged on Thursday after the company announced a partnership with asset management giant BlackRock (NYSE: BLK). Institutional clients of BlackRock's Aladdin platform will have direct access to cryptocurrencies, beginning with Bitcoin, via a connection with Coinbase Prime. Coinbase Prime already has over 13,000 institutional clients, and this deal will likely increase that number.
Source Fool.com
