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These companies hopped on the crypto train -2-

Baird's David Koning notes that Visa saw $3.5 billion in payment volume last fiscal year related to crypto-linked card programs, which let people link their crypto wallets to their Visa credentials for spending purposes. That represented about 0.03% of the company's total volume, he wrote. "Visa also likely has a modest amount of services related to cryptocurrencies," Koning noted.

Visa declined to comment further on its crypto exposure.

Mastercard probably has similar exposure, Baird's Koning added, and crypto likely represents "well less than 1% of total revenue" for both companies.

A Mastercard spokesperson said the company couldn't comment on the estimate as Mastercard doesn't report that figure.

Meanwhile, FIS provides merchant-acquiring services for crypto wallets, but crypto is "very much on the margins" for the company, according to MoffettNathanson's Ellis. Baird's Koning estimates that crypto could account for less than 5% of merchant-segment revenue, and perhaps about 1% of overall revenue.

An FIS spokesperson noted that the company doesn't break out crypto revenue but pointed to past comments from President Stephanie Ferris indicating that FIS served four of the top five crypto exchanges as of the fourth quarter.

Microstrategy

Microstrategy Inc. (MSTR) makes analytics software, but the company has become a cryptocurrency play thanks to its sizable bitcoin holdings. The company held about 129,699 bitcoins as of June 28, 2022. It acquired them for an aggregate purchase price of roughly $3.98 billion and at an average purchase price of about $30,664 each, inclusive of fees. The price of bitcoin is now below $22,000.

PayPal

PayPal Holdings Inc. (PYPL) lets users buy, sell, hold and transfer cryptocurrencies, offering a wider variety of crypto assets than what bitcoin-focused Block allows. But PayPal is also a bigger business, which helps mitigate the impact of cyrpto exposure to its business.

"PayPal's exposure to crypto would be lower than Block's (and Block's is only about 2% of gross profit)," MoffettNathanson analyst Lisa Ellis told MarketWatch, though its exposure is greater than what Visa, Mastercard, and FIS see. "PayPal's yields/take rates on a crypto transaction are similar to Block's, but PayPal is just larger and newer to crypto so it is a smaller part over overall revenues."

PayPal doesn't break out crypto impacts in its financials.

While D.A. Davidson's Chris Brendler was "hopeful that PayPal's crypto launch would be more meaningful to the numbers," he hasn't seen signs of it manifesting in the company's take rate. Because PayPal didn't see big crypto benefits during better times for digital assets, "the good news is, on the way down, it won't be a headwind for PayPal," he added.

Robinhood

Robinhood Markets Inc. (HOOD) generated $54 million in crypto revenue during the first quarter, representing 18% of the company total. The company noted on its latest conference call that it completed the rollout of its crypto wallets during the first quarter, while also adding four new crypto assets to its selection and agreeing to acquire U.K-based crypto platform Ziglu.

Signature Bank

Signature Bank (SBNY) is "the leading depository bank" for the digital-currency ecosystem, according to Raymond James analyst David Long, and its shares have dropped more than 40% this year as the crypto industry has come under pressure.

The company had $29 billion in deposits from the digital-currency ecosystem as of the end of the first quarter, Long wrote, accounting for nearly 27% of overall deposits.

For his part, he sees Signature's recent stock selloff as "overdone," noting that the bank "had more than $26 billion of cash on its balances sheet and capacity to borrow." In other words, "even if every deposit here was withdrawn, which likely means the value of Bitcoin approaches $0, Signature has the liquidity to meet redemptions."

Other financial companies involved with digital assets include investment-management firm Galaxy Digital Holdings Ltd. , and crypto broker Voyager Digital Ltd.

-Emily Bary

 

(END) Dow Jones Newswires

07-09-22 1035ET

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