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CoinShares is a Buy

CoinShares International Limited (Nasdaq First North Growth Market: CS) (“CoinShares”, the “Group” or the “Company”) today announced preliminary financial results for its first quarter ended 31 March 2021. The full report, which is linked in this press release, can also be found on the CoinShares Investor Relations site.

Commenting on today’s announcement, Jean-Marie Mognetti, Chief Executive Officer of CoinShares stated, “The momentum built throughout 2020 has carried into this year, and in Q1 we delivered the strongest quarterly results in our seven-year history. We reported significant increases in trading revenues, AUM, and management fees, and our bottom-line performance in Q1 exceeded the entirety of 2020. Year to date, we launched a new institutional-grade ETP platform to complement our XBT Provider platform, with four new asset management products, expanding beyond Bitcoin and Ethereum. We also added trade pairs, yield, and staking to our capital markets and trading infrastructure. As market demand is growing, we are expanding our customer and partner base, and continue to evaluate strategic investments which can further strengthen our business.”

Mr. Mognetti continued, “In recent weeks, the cryptocurrency market has reached as high as $2.6 trillion and as low as $1.4 trillion, and while the asset class can be volatile, even the lower of these figures reflects over half a trillion dollars of market growth since the start of the year.1 These are impressive numbers, and it’s important to note that the crypto asset class only comprises 35 basis points of global wealth,2 highlighting the opportunity for growth.  CoinShares is well-positioned to lead, given our technology backbone, suite of products and services, and global leaders we have aligned with. By the end of this year, we intend to introduce a business segment focused on the Consumer Finance market, which will leverage our technology and compliance capabilities to bring innovative solutions directly to a new type of user. At our core, we are a technology company serving the global financial markets and this year, we intend to expand into new segments, which is in line with our vision – making digital assets available to everyone, everywhere. I am proud of the CoinShares team, all of whom are laser focused on delivering for customers and driving shareholder value.”

2021 First Quarter Results

The Company reported total management fees of £17.1 million in the first quarter 2021 compared to £3.2 million reported in the comparable 2020 period, an increase of £13.9 million. The year-on-year improvement was primarily driven by the significant price increases in digital assets for the comparable periods. Total management fees also increased by £10.0 million on a sequential basis when compared to the fourth quarter ended 31 December 2020.

Trading gains generated by CoinShares Capital Markets for the first quarter 2021 were £22.7 million compared to £5.6 million for the period ended 31 March 2020, an increase of £17.1 million. The year-on-year improvement was primarily driven by gains relating to non-directional proprietary trading, fixed income activities, and liquidity provisioning for the Company’s own products and for other products and platforms. Additionally, total trading gains increased by £17.6 million on a sequential basis compared to the fourth quarter ended 31 December 2020. The first quarter 2021 trading gains were in fact in excess of those generated in the entirety of 2020 by £6.4 million or 39%.

Taken together, total management fees and trading gains in the first quarter 2021 were £39.9 million compared to £8.8 million in the first quarter 2020, a year-on-year improvement of £31.1 million, and increased £5.2 million or 15% when compared to the full year ended 31 December 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the first quarter 2021 was £34.1 million compared to £5.8 million in the first quarter 2020, a year-on-year increase of £28.3 million. Adjusted EBITDA includes unrealised gains/(losses) on digital assets held by the Group, which, under FRS102 are recognized in other comprehensive income. When compared to the full year ended 31 December 2020, adjusted EBITDA increased by £11.8 million or 53%.

Total comprehensive income for the first quarter 2021 was £32.1 million compared to £7.4 million reported in the comparable prior year period, a year-on-year improvement of £24.7 million or 334%. On a sequential basis when compared to the fourth quarter ended 31 December 2020, total comprehensive income increased by £27.7 million or 634% and marked an improvement of £13.4 million or 72% when compared to the full year ended 31 December 2020.

Group assets under management (“AUM”) as of 31 March 2021 was £3.4 billion compared to £380 million as of 31 March 2020, representing a year-on-year increase of approximately £3.0 billion or 784%. A significant portion of this increase was experienced in the period post the financial year ended 31 December 2020, with AUM rising 93% (£1.6 billion) in the first quarter 2021.

The Company’s net asset position as of 31 March 2021 was £101.4 million compared to £56.5 million as of 31 December 2020, an improvement of £44.9 million or 79%.

2021 First Quarter and 2021 Second Quarter YTD Milestones

  • January 2021: With more than $202 million in XBT certificates changing hands3 on the market’s first day of trading in 2021, CoinShares had the highest volume traded in any European listed crypto ETP. CoinShares Physical Bitcoin, the first product released on the Group’s new institutional-grade ETP platform, was launched to provide investors with passive exposure to Bitcoin. This product, traded on the regulated SIX Swiss Exchange under the ticker symbol BITC, initially launched with approximately $200 million in AUM.4
  • February 2021: CoinShares aligned with the Massachusetts Institute of Technology (MIT) Media Lab, making a four-year, $0.5 million donation to the Digital Currency Initiative to help support open-source software development and advance the security of the Bitcoin protocol.5 CoinShares Physical Ethereum, the second product released on the new ETP platform, was launched with $75 million in AUM, and is traded on the SIX Swiss Exchange under the ticker symbol ETHE.6
  • March 2021: CoinShares successfully completed its public listing on the Nasdaq First North Growth Market. The Company raised 151.1 million Swedish krona, which equates to approximately $17.8 million, prior to listing related costs, and received retail subscriptions of more than 20x the retail offering and overall subscriptions of more than 4x the total offering, bringing in over 2,000 new shareholders and highlighting market demand. 7 As of 11 March 2021, the Company’s shares began trading under the ticker symbol CS.8
  • April 2021: CoinShares extended its alliance with the DeFi Alliance and launched a new chapter in Europe as a founding partner.9 This alliance brings together other leading European crypto companies with a vision of supporting European DeFi startups with capital and liquidity and collaboration with partners to build a robust DeFi ecosystem in Europe. Additionally, CoinShares Physical Litecoin10 and CoinShares Physical XRP11 commenced trading on the SIX Swiss Exchange under the ticker symbols LITE and XRPL, respectively, providing eligible institutional and individual investors throughout Europe access to an expanded range of digital asset products.  The 3iQ CoinShares Bitcoin12 and Ethereum13 ETFs also launched on the Toronto Stock Exchange (TSX), following a strategic investment made into 3iQ in December 2020.

CoinShares joined the Crypto Climate Accord (the “Accord”)14, an initiative designed to make the cryptocurrency industry run entirely on renewable energy by 2025. Led by Energy Web and the Alliance for Innovative Regulation (AIR), and inspired by the Paris Climate Agreement, the Accord is aiming to decarbonize the entire cryptocurrency industry, while developing an open-source accounting standard for measuring emissions for players in the industry to adopt.

CoinShares also surpassed $5 billion in AUM on its two ETP platforms, XBT Provider and CoinShares Physical (together, “CoinShares ETPs”).15

CoinShares reached a new milestone in AUM on Saturday, 8 May 2021, when the Group temporarily crossed $6 billion of AUM across its two ETP platforms. As of market close on Wednesday, 19 May 2021, the Group’s AUM stood at approximately $3.95 billion. Digital assets can be volatile, as seen over the last two weeks, and the Group’s AUM balances are always visible in real-time via Armanino’s real-time Trust Explorer.16 CoinShares is the world’s first and only digital asset manager to provide real-time attestation of its AUM and the assets backing it.17

On Wednesday, 19 May 2021, more than $490 million in CoinShares ETPs changed hands amidst significant market volatility.18 This marked the highest volume traded of any European crypto ETP provider and a new milestone for CoinShares.

The full Q1 2021 Earnings Report can be found here.

The Company will hold a webcast on Monday, 24 May 2021 at 3:00 pm BST (10:00 am ET) to discuss the results for the first quarter ending 31 March 2021. The live webcast of the earnings conference call can be accessed on the investor relations section of the CoinShares website at http://coinshares.com/investor-relations. A replay of the webcast will be available online approximately 2 hours following the live call for a period of 30 days.

About the CoinShares Group

CoinShares is Europe’s largest digital asset investment firm, managing billions of assets on behalf of its client base.  The Group is focused on expanding investor access to the digital asset ecosystem by pioneering new financial products and services that seek to provide trust and transparency when accessing this new asset class.

For more information on CoinShares, please visit: https://coinshares.com

Company | + 44 (0)1534 513 100 | [email protected]

Investor Relations – Jay Morakis | + 1 646 859 5951

Certified Advisor – Mangold Fondkommission AB | + 46 (0)8 503 015 50 | [email protected]

This information is information that CoinShares International Limited is obliged to make public pursuant to the EU Market Abuse Regulation 596 / 2014.  The information in this press release has been published through the agency of the contact persons set out above, at 8:00 am BST on Monday, 24 May 2021.   

S. Jack Heffernan Ph.Dhttps://www.knightsbridgelaw.com
S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.

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