Running the numbers on Coincheck (again)

Norbert Gehrke
May 9 · 3 min read

First quarter results are in, and this time we have the benefit of comparing any exchange to the gold standard, with US-based Coinbase choosing the path of a direct listing, and registering an eye-popping market capitalization of close to USD 80bn on the first trading day. So you can bet that any crypto exchange operator around the globe is doing the comparison. Alas, as of the close last Friday, Coinbase’s market cap has leveled off some, coming in at around USD 52.5bn.

Regardless, with the numbers available to us, we can determine that Coincheck achieves more than 6% of Coinbase’s first quarter trading volume with a mere 2% of the accounts, and states explicitly that their net income was “close to 10 percent of that” of Coinbase. In Japan, Coincheck claims a 28% market share of verified accounts while competing with 28 other members of the Japan Virtual & Crypto Assets Exchange Association (JVCEA). Is Coincheck punching above its weight or relying upon an unsustainably high commission structure?

Maybe a bit of both. Similar to the way that Coinbase offers a “Pro” version of its platform to experienced traders, with a tiered, more attractive commission structure, Coincheck offers an “Exchange” with limited coin availability, but zero commission/zero spread trading, while the “Marketplace” with 16 coins (the broadest offering in Japan), generates spread income. In other words, less than 15% of Coincheck’s trading value basically generates all revenue. As owner Monex stated in the quarterly report: “Especially, trading value of altcoins increased significantly, which led to a 5.5 times increase in revenue.”

To look at some other numbers of interest, which we cannot compare across players, Coinbase stated that a mere 6.1m out of their 56m registered users were active on a monthly basis. Zero-commission securities trading app Robinhood (those of the GameStop fame) disclosed in a blog post a number of 9.5m active crypto traders on their platform during the first quarter. Elsewhere, Square reported USD 3.51bn in “bitcoin revenue”, which really is the sales value of the bitcoin, and about a 2 percent gross profit, USD 75m. That markup also does not seem sustainable as investors become more sophisticated.

The punch line, of course, is the comparison of market caps. Coincheck’s owner Monex Group comes in at USD 2bn, about 4% of Coinbase’s close on Friday, so with tongue-in-cheek, one might argue that there is a negative valuation attached to the “legacy” businesses of Monex, TradeStation, etc. But we let the markets decide in which way the valuations will converge, if indeed they will. DYOR.

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