Author: Eric, Foresight News
Following Coinbase, Galaxy Digital, Circle, Bullish, and Gemini, the US stock market will welcome another company from the Web3 industry.
On September 8, European cryptocurrency asset management company CoinShares will merge with the special purpose acquisition company Vine Hill Capital Investment Corp, which is listed on the Nasdaq in the United States, and the newly established Jersey company Odysseus Holdings Limited. Following the merger, CoinShares will be listed on the Nasdaq in the United States (or another US exchange) and will delist from Nasdaq Stockholm. After several US-based Web3 companies have gone public, the first European native Web3 enterprise will also enter the US capital market.
CoinShares was formerly known as Global Advisors, a commodities investment company established in 1998 by Russell Newton and Danny Masters. Russell Newton worked in crude oil trading for eight years at various companies, including Shell, starting in 1986, before joining JPMorgan as a commodities strategist in July 1994. Another co-founder, Danny Masters, who is also the current chairman of CoinShares, was the global head of energy trading at JPMorgan before co-founding Global Advisors with Russell Newton.
The current CEO of CoinShares, economist JM Mognetti, joined Global Advisors in 2012. Just one year after his arrival, global macro investors began withdrawing substantial amounts from commodities to invest in equities and fixed income. For the three of them, the company was in urgent need of finding new investment directions, and at that time, Bitcoin, priced at only a few hundred dollars, came into their view.
Without any hesitation, Global Advisors fully transitioned to the digital asset space in 2014, later rebranding as CoinShares in 2016, and gradually evolving into a comprehensive cryptocurrency asset management company that integrates asset management, capital markets operations, and proprietary investments.
In 2014, Global Advisors launched the first regulated Bitcoin investment fund in Europe. After the rebranding, CoinShares acquired XBT Provider, which launched the first Bitcoin-based security listed on a regulated exchange; its Bitcoin Tracker One ETP was listed in Sweden in 2015.
In early 2021, CoinShares began launching exchange-traded products (ETPs) with physical assets as the underlying, currently covering not only Bitcoin and Ethereum but also tokens such as LTC, XRP, LINK, and UNI. In March of the same year, CoinShares went public in Sweden, becoming the second listed Web3 company globally after Galaxy Digital (which was already listed on the Toronto Stock Exchange in Canada). According to data provided by CoinShares, as of February 19, 2021, CoinShares had assets under management of USD 4.56 billion, including 70,185 Bitcoin and 655,211 Ethereum, making it the largest cryptocurrency asset management company in Europe and the second largest globally (after Grayscale).
In comparison, as of February 24, 2021, Grayscale had a total AUM of $39.3 billion, Bitwise had just surpassed $1 billion in AUM, and Galaxy Digital had an AUM of $834.7 million as of January 31, 2021.
At the beginning of 2024, following the SEC's approval of several institutions' applications for Bitcoin spot ETFs, CoinShares acquired Valkyrie, one of the issuers of Bitcoin spot ETFs. As of the time of writing, Valkyrie's Bitcoin spot ETF had an AUM exceeding $650 million.
In addition to asset management, investment is also a significant part of CoinShares' business. At the time of its listing in 2021, CoinShares disclosed its investments at the end of 2020 in the Canadian cryptocurrency asset management firm 3IQ Corp and the parent company of the U.S. qualified trust institution Kingdom Trust. In 2021 and 2022, CoinShares invested twice in the Swiss online bank FlowBank, reaching a maximum shareholding of nearly 30%, but FlowBank went bankrupt in 2022 due to insolvency.
Having discussed the development history of CoinShares, let us now turn to its financial status.
Comparing the first and second quarter financial reports published by CoinShares this year, the company reported first-quarter revenues of $39.958 million, a year-on-year decline of approximately 15.88%. The earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to $29.781 million, a year-on-year decrease of about 15.7%, although the profit margin reached 75%, a slight increase compared to the previous year. Taking into account the fluctuations in the value of the company's held crypto assets, taxes, and other factors, CoinShares' comprehensive income for the first quarter of this year was approximately $24.79 million, a year-on-year decline of 42.1%.
In its asset management business, which accounts for the largest share, CoinShares recorded revenues of $29.566 million in the first quarter, representing approximately 74% of total revenue, with a year-on-year growth of about 20.8%. After excluding direct costs and administrative expenses, the profit was approximately $22.714 million, a slight year-on-year increase of about 5%.
In the capital market infrastructure business, CoinShares recorded approximately $11.911 million in the first quarter, a year-on-year decline of about 15.4%. CoinShares' so-called capital market infrastructure business includes providing liquidity income, delta-neutral trading strategy income, digital asset lending, and staking income. After excluding direct costs and administrative expenses, the profit was approximately $9.335 million, a year-on-year decline of about 18.7%.
In its proprietary investment business, CoinShares recorded a loss of approximately $1.519 million in the first quarter, compared to a profit of about $8.942 million in the same period last year, marking a year-on-year decline of approximately 117%.
In the first quarter, due to the overall decline in cryptocurrency prices, all business segments experienced a downturn, except for the asset management business, which saw growth that was less affected by price fluctuations. A detailed examination of the financial report reveals that in the capital market infrastructure segment, liquidity provision, lending, and staking revenues were significantly impacted by the price drop and low trading activity; however, delta-neutral strategy trading offset some of the losses, while the investment business was primarily dragged down by the overall market price decline. Overall, CoinShares did not observe a decline in its core business and is actively adjusting its investment strategies.
In the second quarter, while cryptocurrency prices increased overall, CoinShares' business did not experience significant growth.
In the second quarter, CoinShares recorded revenue of $41.519 million, a quarter-on-quarter increase of approximately 3.8% and a year-on-year surge of 258.3%. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at $26.299 million, reflecting an 11.7% decrease quarter-on-quarter and a year-on-year decline of about 22.7%, with the profit margin also decreasing to 63%. CoinShares' comprehensive income for the second quarter was approximately $25.578 million, a slight quarter-on-quarter increase of around 3.2% and a year-on-year increase of 1.1%.
For the entire first half of the year, the data appears distorted due to the inclusion of losses from the bankruptcy of FlowBank in 2024 and income from the sale of FTX claims, which has led to abnormal year-on-year revenue growth. Excluding these figures, CoinShares' performance in the first half of this year did not change significantly compared to the same period last year.
In asset management, CoinShares' revenue in the second quarter slightly exceeded $30 million, with a quarter-on-quarter increase of 1.6% and a year-on-year growth of 6.1%. Operating profit was $21.748 million, reflecting a quarter-on-quarter decline of approximately 4.3% and a year-on-year decline of about 10.3%. In the first half of the year, CoinShares' total revenue from asset management was approximately $59.613 million, a year-on-year increase of 12.4%, while operating profit was $44.462 million, representing a year-on-year decrease of 3.5%.
CoinShares reported a net outflow of $126 million in funds for products launched under XBT in the second quarter, coupled with the company allocating more expenses and costs to the asset management division, which has resulted in increasing asset management revenue but continuously declining profits.
In the capital market infrastructure segment, CoinShares recorded revenue of approximately $11.346 million in the second quarter, a quarter-on-quarter decrease of 2% and a year-on-year decrease of 22.3%. Excluding the additional income from the sale of FTX claims, both profit and profit margin have declined.
In its proprietary investment business, CoinShares reported a profit of nearly USD 125,000 in the second quarter. Although this represents a certain increase compared to a loss of approximately USD 1.519 million in the first quarter, the investment losses and profits exhibit some randomness over time, making them less indicative. Notably, CoinShares has remained in a state of loss in its investments throughout 2024 and in 2025 to date; however, it achieved nearly USD 3.7 million in profit from investments in 2023.
Although CoinShares stated in its roadshow materials that its total assets under management have surpassed USD 8 billion, making it the fourth largest cryptocurrency asset management firm globally, following Blackrock, Grayscale, and Fidelity, and the largest in the EMEA (Europe, Middle East, and Africa) region, accounting for approximately 34% of the market share, the overall data suggests that CoinShares' growth has been relatively slow. Apart from a steady and slight increase in asset management business, its other operations have shown significant fluctuations. CoinShares' acquisition of Valkyrie and its listing in the United States are essentially aimed at expanding its business in the U.S., but its home base appears to lack any unique competitive advantage.
According to ISS Market Intelligence data, as of the end of May this year, the assets under management of American fund companies in Europe have grown from USD 2.2 trillion a decade ago to USD 4.9 trillion. Should American asset management giants intend to expand their cryptocurrency asset management business into Europe, CoinShares will have to contend with formidable competitors.
Assuming the SEC approves more cryptocurrency ETFs in the future, CoinShares' current advantages may be gradually eroded. Based on the closing price of European stocks yesterday, CoinShares has a market capitalization of approximately SEK 8.228 billion, equivalent to about USD 877 million, with a price-to-earnings ratio of approximately 7.97, but its valuation upon 'backdoor listing' reached USD 1.2 billion, indicating a premium rate of nearly 37%.
In comparison to the world's largest asset management company, Blackrock, which achieved an asset management scale of USD 12.5 trillion by the end of the second quarter of this year, CoinShares significantly surpasses Blackrock in the ratio of asset management scale to market capitalization, yet its price-to-earnings ratio is nearly 27 times lower than that of Blackrock. This creates a somewhat contradictory valuation situation for CoinShares. Although cryptocurrency asset management is likely to remain highly sought after for a considerable period, the extent to which CoinShares' market capitalization can experience significant growth will, from a rational perspective, depend on whether its asset management business can achieve growth beyond expectations, establish a competitive moat in non-U.S. regions, and capture a share of the market in the United States.
