The Swiss online bank Swissquate bulletin shows that, due to a marked slowdown in encryption transactions during the first half of the year, the company reduced its annual revenue and profit expectations. The significant fall in income from encryption operations was the main reason for this adjustment.
In the first half of the year, there was a clear fall in encryption revenues.
The company disclosed a decline of 66.2 per cent in net encrypted income in the first half of the year to CHF 146.6 million. The number of encrypted transactions declined by 63.5 per cent over the same period to SwF 25.80 billion.
In its performance material, Swissquate indicated that the prices of most encrypted assets had weakened in the first half of the year, resulting in a lower performance of the related business than assumed at the beginning of the year. As a result, the company is expected to reduce its net annual earnings by approximately SwF 30 million, the latest target being SwF 730 million.
Loss of stock recorded in warehouse
In addition to the decline in transaction income, Swissquate also recorded losses on its encrypted inventory used to support the SQX exchange in marketing and trading. According to the company, this portion was recorded as a loss of CHF 5.3 million.
It is mentioned that in the six months of June 30th, bitcoin fell by 33%, the Taifeng by 47% and the CoinDesk 20 Index by 40%. Swissquate indicates that the updated year-round guidance already reflects a weaker than expected encrypted market environment.
Pressure on other business growth components
Despite encryption pressures, the growth of the rest of the Swissquate plate has resulted in a more or less flat overall harvest and limited the decline in profits. The total assets of corporate clients increased by nearly 20 per cent over the same period to SwF 9.63 billion.
This means that the current pressure on Swissquate is focused mainly on the income associated with encrypted transactions rather than on the loss of funds from clients as a whole. For the outside world, this performance also reflects the low volatility of the encrypted market and the fall in prices, and is continuing to compress the proceeds of retail and platform-oriented transactions.
Additional information:Swissquate, based in Grand, Switzerland, is an online banking and financial technology company that provides local services for stock, foreign exchange and encrypted asset transactions.