The largest fiat-to-cryptocurrency exchange in the world, Coinbase is set to rake in more than $1.3 billion in revenue for the year by the end of the last quarter.
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Other exchanges record high revenues
The most popular crypto exchange for digital asset traders, Binance recorded a whopping $200 million in profit in January. This number is close to what the Deutsche Bank of Germany earned.
Bithumb and Upbit, both situated in South Korea have recorded a monthly profit of $100 million this year. The sum was gotten mainly from withdrawal fees and transaction fees.
Earlier in the year, Jung Yoon-ho, a Yoojiin investment researcher told the media that
In January, Yoojjin Investment researcher Jung Yoon-ho told local publications that $2.5 billion in user funds are actively traded daily on the Bithumb. The average transaction fee is about 1 percent, and this means that Bithumb generates $2.5 million in daily revenue and has done so since earlier in the year.
Due to the harsh bear market as well as the reduction of trust towards cryptocurrency exchanges by the investors in South Korea, this number dropped. It came after two consecutive security breaches of the exchange and experts predict that the revenue of major cryptos in the country dropped to $60 to $70 million from $100 million in the past ten months.
How are exchanges making ends meet?
According to reports from Bloomberg, some documents disclosed the projected yearly revenue of Coinbase to be approximately $1.3 billion.
Julie Verhage from Bloomberg reported,
“The company’s $1.3 billion in sales for 2018 comes from the commissions on trades on its platform, as well as from gains and losses in its own crypto holdings. Because the firm looks at several internal measures of revenue, the exact figures can vary,”
The large revenue brought in by the crypto exchanges are gotten from fees on different buy or sell orders. Withdrawal requests also generate profits.
Binance has disclosed that it will donate listing fees to fund transparent initiatives led by organizations like the UN using cryptocurrency.
The CEO of Binance, Changpeng Zhao said,
“If you look at the first few UN Sustainable Development Goals, such as poverty, hunger, health and even education, these are easily addressed or improved by charity initiatives. Yet, what we’re trying to do is a level deeper. I believe that by improving transparency in the charity sector, we will be able to address all 17 goals as a whole, at a more fundamental layer.”
The crypto market volume
For the past eleven months, the crypto exchange market’s volume reduced by half despite hovering around $20 billion. Bitcoin, the most dominant digital currency in the market dropped dramatically to $3.5 billion to $8 billion.
However, the $10 billion regular trading volume of the cryptocurrency exchange market, is sufficiently significant for firms to generate large revenues.
More institutions are interested in cryptos because of the high revenue figures. In South Korea, conglomerates like Shinhan Bank, Kakao, Nexon and other who dominate local industries, run all the major crypto exchanges.