Kraken’s crypto trading revenue declined for the second successive quarter, even as the cryptocurrency rebounded massively after bottoming in mid-April.
On Wednesday, Kraken reported $411 million in revenue, a 13% decline from the previous quarter. That’s an even sharper slide than the 7% downturn in the exchange’s first quarter financial report.
Still, the numbers are better than the same period last year, by as much as 18%, Kraken said.
Kraken isn’t alone in the revenue slump. Robinhood’s latest financials also show a decline in crypto revenue for the second quarter in a row.
The first-quarter drawdown had a simple explanation: crypto markets slumped during the period. But prices recovered after mid-April, and the likes of Bitcoin posted even higher price records.
So why aren’t trading shops like Kraken reporting higher revenue numbers?
The answer lies in thinning crypto trading volumes last quarter as institutional investors largely drove the market.
Kraken’s trading volume in the second quarter fell to $186 billion from the $208 billion recorded in the first three months.
With thinning volumes and fierce competition from not only other crypto-native exchanges, but also fintech platforms like Revolut and Robinhood, Kraken is looking to expand its business.
Kraken has partnered with Backed Finance to offer tokenised stocks trading to users. Called xStocks, these assets are tokenised versions of US company stocks, and the market has crossed more than $360 million in onchain transaction volume.
The xStocks trading boom has also catapulted tokenised stocks to become the fastest-growing subsector of crypto’s $25 billion real-world asset niche.
Kraken also plans to go public next year after navigating intense regulatory pressure under the Biden administration, according to sources speaking with Bloomberg.
The exchange is looking to raise $500 million at a $15 billion valuation, according to sources speaking with The Information. Kraken has not confirmed the report.
