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Is Revolut sitting on a £1bn crypto pile?

Revolut has held crypto on its balance sheet for a number of years and owing to the recent spike in prices this has likely ballooned to a huge amount of 'digital gold'.

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Photo by Thought Catalog from Pexels

Digital banking challenger Revolut has 13 million customers globally, with many of those attracted to its services being enthusiastic crypto investors. 

Revolut doesn’t disclose up to date numbers for its crypto exposure but its group accounts, as well as accurate information on the recent price fluctuations in the likes of Bitcoin, paint a picture of an enormous and growing crypto pile at the firm, which is currently gearing up for a UK banking license, that has increased many times over in the past three or so years since it first began to offer crypto.

Its balance sheet showed £156m of crypto assets at the end of 2019 but, according to AltFi research, that may have now swelled to well over £1bn worth of Bitcoin and other crypto-assets today.

First off, crypto assets are tricky for firms such as Revolut to account for and disclose on their balance sheets. Guidance on how to account for them is at best patchy but the below explains Revolut's approach of disclosing under the term 'intangible assets'.

Source: Companies House

Revolut first reported crypto assets as ‘intangible assets’ in its group accounts filed at Companies House back in October 2019, for the year ending 31 2018. Rather confusingly (stay with me), it also restated how much crypto it held in 2017 in the same accounts.

As the image below shows, in 2017 Revolut said it had c.£14.4m worth of crypto, rising to £37m in 2018.

 Source: Companies House

By the end of 2019, according to its latest accounts, on Companies House, this figure had swelled to £93m while it also purchased another £63m in the same calendar year. As the accounts (below) show, Revolut saw an increase from £37m in 2018 (of £56m) to £93m by the end of 2019. Its increase of £22m from c.£14.m in 2018 is also shown backing up the trend. 

This would suggest that Revolut started 2020 with c.£156m of crypto. Obviously, there is no break down of the balance of different crypto holdings but with a rising tide for most crypto assets, the magnitude of appreciation is similar and the direction of travel clear.

Revolut currently offers Bitcoin, Ether, Litecoin, XRP, Bitcoin Cash and Stellar lumens but AltFi understands that the vast majority of its holdings are perhaps unsurprisingly in Bitcoin.

Bitcoin and other crypto-assets have soared since this period. At the end of 2019 the price of Bitcoin was c.$7,100, according to CoinDesk, but today it has risen to $56,700 at the time of publishing this article. This represents a more than 800 per cent gain.

This would put Revolut's total crypto holding at c.£1.25bn, all other things remaining equal. Of course, if it also purchased additional assets the figure could be much higher.

Revolut first began offering crypto just over three years ago at the end of 2017 to its (at the time) 1 million users.

In a statement a the time, Revolut’s founder and CEO Nik Storonsky said of cryptocurrency exposure that it was “the number one requested feature” from customers.

“Despite being one of the hottest trends in the world right now, getting exposure to cryptocurrency has notoriously been time-consuming and expensive,” he said. “We’re going to open up cryptocurrency exposure to everyone, faster than any other platform on the market,” Storonsky said.

We'll have to wait until much later in the year to see the last year's group accounts for Revolut, and who knows where Bitcoin might be by then price-wise. But it is becoming abundantly clear that crypto is becoming big business for the banking challenger. How it adapts to becoming a bank while also holding vast pots of crypto assets is another question.

Revolut declined to comment on this story.

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