Coinbase (COIN) Inks Deal With U.S. Marshals Service to Provide Custody and Trading of Digital Assets Worth $32.5M

COIN, America's largest registered crypto exchange, provides financial infrastructure and technology for the crypto economy in the United States and internationally.

Coinbase (NASDAQ:COIN) recently entered into an agreement with the U.S. Marshals Service to provide custody and trading services for its digital assets, valued at $32.5 million, as reported by The Street. According to Arkham Intelligence, the U.S. government is the largest holder of crypto at the nation-state level, with holdings exceeding $13.8 billion.

As the largest registered crypto exchange in the United States, Coinbase’s selection by the U.S. Marshals Service, a federal agency responsible for asset forfeiture, including crypto assets, is a logical choice. COIN boasts the capacity to store over 12% of the total crypto market capitalization on its platform.Coinbase Prime, the institutional platform of Coinbase, will securely store the U.S. Marshal Service's crypto assets and handle the selling, trading or exchanging of high-value cryptocurrencies on behalf of the U.S. Marshals Service, as stipulated by the agreement.

Coinbase’s presence in the crypto market and recent performance

In the first quarter of 2024, crypto asset volatility experienced a sharp rise, although it remained below its all-time high levels. On the other hand, crypto market capitalization reached a 52-week high of approximately $2.8 trillion during the said period, largely due to the launch of the bitcoin ETFs. Earlier this year, the Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds.The crypto market has seen a recent downturn, with a 5.5% decline in market capitalization during the last trading session. Bitcoin, the largest cryptocurrency, fell by 5%, while Ethereum, the second-largest cryptocurrency, declined by about 6%. An interest rate cut by the Fed is likely to increase volatility, which could benefit the crypto market.Coinbase stands to benefit from higher crypto asset volatility and rising crypto asset prices. It expects subscription and services revenues to be in the range of $525 million to $600 million, assuming stable crypto asset prices. It is also expanding its market share in the U.S. spot and derivatives markets, increasing its product portfolio and penetrating the international market. Additionally, growth in stablecoins is expected to drive the top line of this company. With a higher trading volume, COIN anticipates an increase in technology and development and general and administrative expenses, which are expected to rise sequentially from $660 million to $710 million in the second quarter of 2024.Both Coinbase Financial Markets and Coinbase International Exchange are showing promising growth in their early stages. Its institutional business is set to benefit from bitcoin ETFs.

Coinbase's price performance and outlook

Shares of Coinbase have gained 28.3% year to date, outperforming the industry’s increase of 2.6%, the Finance sector’s rise of 6.1% and the Zacks S&P 500 composite’s increase of 16.1% in the said time frame. Its outperformance is backed by product expansion, operational expertise and a solid crypto market.

COIN Outperforms Industry, Sector & S&P YTD

Shares of Robinhood Markets (NASDAQ:HOOD) and Interactive Brokers Group, Inc. (NYSE:IBKR), two other crypto-oriented stocks, have rallied 79.9% and 51.4%, respectively, year to date.

Northbound estimate revision for Coinbase

The Zacks Consensus Estimate for COIN’s 2024 and 2025 earnings has moved 2.6% and 43.6% north, respectively, in the past 60 days.

Return on Invested Capital

Return on invested capital in the trailing 12 months was 14.5%, better than the industry average of 5.9%, which reflected the insurer’s efficiency in utilizing funds to generate income.

Premium Valuation

COIN is expensive currently. It is trading at a P/E multiple of 53.2, higher than the industry average of 24.7. However, given the growth prospect, rising estimates and better return on invested capital, a premium valuation is justified.Coinbase's growth plan and recent initiatives

為了加速成長，Coinbase 正加深在國際市場的紮根。它現已被加拿大證券管理局註冊為受限制交易商，因此是在加拿大註冊的最大且第一個國際加密貨幣交易所。加強銀行聯繫、鎖定新許可證以及擴大客製化產品範圍以滿足獨特的客戶偏好幫助 COIN 攀上新的高度。該公司預計會增加加密貨幣的採用，因為它相信「發展加密經濟意味著促進安全和高效的市場」。因此，它透過投資基礎設施和 Base 等基礎平台來優先考慮加密實用性，該平台旨在透過提高網路的速度和可承受性來優化以太坊的基礎設施。值得注意的是，Base 顯著降低了交易費用並提高了交易速度。公司預計第二-

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