Cryptocurrency Trading Revenue Could Double Despite Market Slump, Analysts Say

Francisco Memoria
  • Cryptocurrency exchanges could see their revenue hit $4 billion this year, thanks to crypto trading fees.
  • Coinbase reportedly enjoyed nearly half of last year's $1.8 billion fee revenue pool.

Revenue generated from cryptocurrency trading fees is expected to double this year, despite the cryptocurrency market’s bearish trend, according to analysts from New York-based global asset management firm Sanford C. Bernstein.

In a report titled “Crypto Trading – the Next Big Thing is Here?”, first spotted by Bloomberg, a team of analysts led by Christian Bolu revealed the firm believes fees collected from cryptocurrency traders is still a major source of revenue.

Last year, buying and selling cryptocurrencies earned crypto exchanges $1.8 billion, the report notes, a figure that could double to as much as $4 billion this year, a notable development taking into account the market’s performance so far.

According to CryptoCompare data, most cryptocurrencies dropped from their all-time highs in mid-December to, in some cases, yearly lows. While BTC dropped from nearly $20,000 to about $6,500, Ethereum dropped from $1,300 to $300 at press time.

In their paper, the analysts wrote:

As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms.

The analysts’ estimates are based on transaction fees from available data. Per Bloomberg, only the global cash equities market surpassed cryptocurrency trading. Wall Street giants like Goldman Sachs and BlackRock have already started dipping their toes in the crypto ecosystem, but regulatory uncertainty and volatility seemingly stop them from diving.

The traditional financial sector has been proceeding cautiously when it comes to cryptocurrencies, partly because of the lack of products aimed at institutional investors. Recently the US Securities and Exchange Commission (SEC) rejected a bitcoin ETF application filed by the Winklevoss twins, and postponed its decision on the VanEck-SolidX ETF application.

According to Bernstein’s analysts, San Francisco-based cryptocurrency exchange Coinbase, whose userbase is now of over 13 million, may end up in an “unassailable competitive position” if Wall Street firms keep staying away from crypto.

Per their estimates, Coinbase has enjoyed 50 percent of the transaction revenue pool, a figure consistent with reports that revealed Coinbase exceeded revenue expectations last year, reaching a record $1 billion. As CryptoGlobe covered, Coinbase has revealed it was adding 50,000 users a day last year, although available data shows its popularity dwindled this year.

Notably Coinbase has been facing competition from various popular financial apps, including Square’s Cash app and Robinhood Crypto, which let users buy and sell cryptocurrencies. These don’t share a part of the fee revenue pool as they don’t charge users. Square, which recently moved its trading service to OTC desks, netted $400,000 off of $37 million in revenue from BTC transactions.

GateHub Data Breach Compromised Crypto Wallet Passwords for 1.4 Million Users

Michael LaVere
  • More than 1.4 million users were affected by the data breach of crypto wallet service GateHub.
  • User email addresses, passwords and two-factor authenticators were posted to the dark web. 

A massive data breach has led to more than 2.2 million users having their password data and personal information posted online, including information from the crypto wallet service GateHub. 

According to a report by Ars Technica published Nov. 19, security researcher Troy Hunt confirmed that more than 2.2 million users had their data posted online in a massive breach of privacy.

Hunt, who is the researcher behind the “Have I Been Pwned” breach notification service, says that 1.4 million accounts from GateHub’s cryptocurrency wallet service were impacted, in addition to 800,000 accounts on the RuneScape bot provider Epic Bot.

The stolen information includes user email addresses, passwords, and two-factor authentication. While the original poster of the 3.72GB GateHub database claimed it included wallet hashes, GateHub officials later disputed the point following an investigation. 

GateHub previously notified users of a hack occurring in July, which resulted in the theft of 23 million XRP. However, the company claimed the data compromise had been limited to around 18,000 user accounts, far from the 1.4 million that have recently been posted to the dark web. 

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