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Staking Revenues Under Threat As Coinbase Shares Tumble 22%

U.S. regulators set their sights on crypto-staking services this week, and Coinbase shares tumbled 22%.

Shares in the exchange began to trade lower following comments from CEO Brian Armstrong, who said Wednesday that it would be a "terrible path" for U.S. regulators to restrict crypto staking. Coinbase shares traded lower throughout Thursday, extending losses into Friday's session. 

Coinbase noted in financial statements that staking revenue makes up a large portion of what it calls "blockchain rewards." As the company considers itself the principal in transactions with blockchain networks, it presents blockchain rewards earned on a gross basis.

Those blockchain rewards were $63 million in the third quarter of 2022, about 11% of total net revenue. Analysts covering the firm believe it could be a significant revenue line in the future.  

"While staking is still a small portion of COIN's overall revenue today, it is an important piece to diversify revenue away from trading and is seen as a potentially high-growth vertical," John Todaro of Needham Co. wrote. 

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