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Coinbase's quarterly results falling short of expectations, as the company feels the effects of volatile swings in the price of cryptocurrencies. But with Bitcoin back above $100,000, could next quarter see a boost? Joining us now, Devin Ryan, Citizens Director of Financial Technology Technology research. Devin, great to have you. So, Bitcoin back above that $100,000 level, to what extent do you continue to see the price of Bitcoin impacting crypto stocks like Coinbase?

Hey, good morning. Thanks for having me on. So, uh, it absolutely matters because it affects sentiment on, um, on the group. And so, uh, the first quarter was, you know, obviously, a little bit of a risk off as the quarter progressed, and you saw crypto prices coming down a bit. Um, what you've seen just over the past little bit over a week here at the beginning of May, crypto market caps up over 10%, and you're seeing pretty strong re-engagement in trading. So a little bit of a light, uh, lighter trading quarter in the first quarter for Coinbase. Uh, second quarter has started also relatively slow April, with the tariffs kind of risk off month, and then, uh, the tone here, just even in recent days, has been quite a bit better. So we're looking for kind of a better second half of the quarter relative to the first half. And then, you know, the bigger picture here is, you know, Coinbase is focusing on what it can control and and really building out a much more diversified business model that we think can last through kind of crypto volatility over any short period of time.

What do you think is the largest growth engine for their business right now, Devin?

Well, you know, today, it's still trading, but what I would say, and this kind of gets lost, I think, in some of the noise is that, uh, the subscription services part of the business, which is, you know, nearly $3 billion run rate right now, uh, is again, it's about a third of revenues, it didn't even exist five years ago. So you now have a $3 billion business, and that part of the business is going to grow rapidly. That's where, you know, they are, uh, helping Circle, their partner, expand stable coin utilization. We expect stable coins are going to grow by more than 10x by 2030. So kind of an explosion, uh, there and a big opportunity, um, you know, staking, and then crypto kind of as a service where Coinbase is really is, is more people come into this ecosystem, which, you know, is happening now, but it's really going to happen on the other side of stable coin legislation and market structure legislation. Um, Coinbase is going to be in the middle of all of that. You know, whether it's tokenization or helping firms get into the industry. And so, uh, that's going to be a big future opportunity for Coinbase. It's not, you know, it's growing, but, um, you know, it's not moving the needle as much as it will in the future.

Yeah, and you mentioned in your note that management is still hopeful on legislative progress going forward. But of course, as you know, there was a bit of a scuttle to that this week when Democrats did not move forward legislation that is GOP led that would be favorable to cryptocurrencies in particular. Are you concerned about that legislation leading to a broader headwind for cryptocurrencies, or do you think this is just a bump in the road?

Yeah, so great question. We're obviously watching closely, but our sense is right now this is more negotiation and the path is still forward. So there there's just been such bipartisan, I think, support over the past, uh, you know, really six months as people realize this is a critical issue for the American public. It was a key kind of winning point for for the past election that we just had here, and not just in the, at the presidential level, but, you know, across Congress. And so we think that we're still moving in a positive direction. We're watching it closely, but I think that kind of the vote yesterday was just more negotiation tactics relative to, uh, you know, some some big halt in progress.

And so what would investors, what would holders of crypto truly like to see in not just the establishment of the strategic Bitcoin reserve, but actual either purchasing or adding to the the pile that already exists of excessive 200,000 Bitcoin, which I believe we're still the largest country or nation holder of Bitcoin right now?

Yeah, so I think there's two things. There's obviously Bitcoin, and Bitcoin kind of this digital gold asset that, um, has been growing kind of through the ups and downs of the market over the past decade plus. And, uh, you know, I think that is something that people feel very strongly about continuing. And then you have kind of added fuel to the fire, whether it's the strategic reserve or, uh, you know, the ETFs, which we think are still in the early days and will have much more demand over the next couple of years. And then now you have all these corporate treasuries stepping in as well. And so that, in our opinion, will support much higher prices over time. And so I think people are are looking at that tactically, either from a trading perspective or just they they own Bitcoin and they're going to hold it for a long time as digital gold. The flip side is you look at all these other tens of thousands of, um, digital assets, you know, they're serving very different purposes, some of which we think have a very bright long-term future as a blockchain that will be utilized, and some are much more speculative. And I think what we all want to get to is a place where we see the utility, um, of the blockchains, and that's going to drive value over the long term.