Crypto exchanges, Crypto news

Moody’s downgraded Coinbase

Credit rating agency Moody’s expects U.S. cryptocurrency exchange Coinbase to face serious financial problems in the coming months.

Moody’s has downgraded Coinbase’s corporate family rating (CFR). According to the agency, the downgrade is due to the exchange’s markedly diminished revenue over the past few months, as well as the weakened potential for revenue growth – due to the decline in the value of crypto-assets. The rating was also affected by the decreased activity of the crypto exchange’s users. Coinbase’s rating has now been placed under observation with the possibility of further downgrade.

CFRs are long-term ratings that reflect the relative probability of a legal entity defaulting on its debt obligations. A downgrade could cause some Coinbase partnerships to break down or scare away potential customers.

Moody’s said it expects the company’s profitability to decline further under current market conditions. The crypto-exchange published a report in May, reporting a quarterly loss of $430 million and a 19% decrease in the number of active users for the month.

Analysts at the agency said they will assess Coinbase’s ability to reduce its costs while maintaining effective operational controls, as well as changes in cryptocurrency regulation amid its decline. Moody’s also intends to assess “the strength of the franchise and the company’s ability to retain talent.”

Recall, Moody’s believes that the Russian Federation will not circumvent sanctions with cryptocurrencies.

Related Posts

Leave a Reply

Your email address will not be published.