In a positive turn of events, Coinbase Global reported a profit in the fourth quarter, benefiting from the surge in transaction volumes and increased interest income earned on its stablecoin reserves. The announcement sent the shares of the popular cryptocurrency exchange up by 8% in extended trading.

The recent rebound in crypto prices, fueled by optimism surrounding the U.S. Securities and Exchange Commission's approval of the first spot bitcoin-exchange traded funds (ETFs), played a crucial role in reigniting investor enthusiasm for cryptocurrencies in general.

Coinbase experienced an impressive 64% surge in total transaction revenue, soaring to $529.3 million during the quarter. This growth was attributed to contributions from both consumer and institutional investors, illustrating the widespread interest in cryptocurrencies.

One significant factor behind Coinbase's success was its partnership with Circle, the issuer of the USD Coin (USDC) stablecoin. The exchange benefited from earning interest on its reserves from USDC, which it jointly governs with fintech firm Circle. USDC is a cryptocurrency token designed to maintain a relatively stable price and is backed by U.S. dollar-equivalent assets held in banks and other financial institutions.

Leveraging its alliance with Circle, Coinbase saw its stablecoin revenue surge by nearly 18% to reach $171.6 million, further bolstering its financial performance. Additionally, the interest income generated from loans and funds held in custody on behalf of clients jumped 17% to $42.6 million.

The favorable market conditions created by the U.S. Federal Reserve's decision to maintain its benchmark interest rate at an elevated level after a period of tightening monetary policy also contributed significantly to Coinbase's financial success. This policy allowed companies like Coinbase to generate higher income from their interest-earning assets.

With its impressive growth in transaction volumes, profitability, and increased interest income, Coinbase continues to solidify its position as a leading player in the cryptocurrency market. As the crypto industry gains wider recognition and acceptance, Coinbase is well-positioned to capitalize on the increasing demand for digital currencies.

Disclaimer: The information provided in this article is based on the data mentioned in the original source and should not be considered as financial advice.