Times are tough for London-based challenger bank Revolut, which on Monday reported that annual losses in 2019 were triple those of 2018. Despite the losses, more people are using it than ever and its nascent crypto business has exploded.
According to its yearly financial report, customers held £93 million worth of cryptocurrencies ($121 million) as of December 31, 2019, about 2.5 times more than at the end of 2018, when the bank held £37 million worth of customers’ cryptocurrencies ($48 million).
And cash (fiat) holdings more than doubled: on New Year’s Eve, the bank held £2.281 billion in cash and cash equivalents; at the end of 2018, £903 million.
At the same time, the bank disclosed that its total loss for the year was £107 million ($140 million), more than three times its reported loss in 2018, £32.9 million ($43 million).
Revolut’s board members are confident that the bank, though running on fumes, will pull through. The board has “a reasonable expectation that the company and the group have adequate resources to continue in operation for the foreseeable future,” they wrote.
As of December 31, 2019, the bank serviced 10 million retail users, almost triple that of 2018’s 3.5 million. And in February 2020, the bank raised $500 million; in June, another $80 million. And in July, it expanded its cryptocurrency offerings to the US.
The board wrote in a letter dated July 2020 that revenue has fallen due to COVID-19—it makes much of its money through currency exchanges, but interest has declined due to the pandemic. However, “some products, such as crypto trading, have been positively impacted by COVID-19 in the short term.”
According to data published by Revolut in May, UK crypto traders bought 58% less crypto per week in the second half of March, around the time when the government forced the country into quarantine and the price of Bitcoin cut in half.
But trading began to increase as the price of Bitcoin recovered from its mid-March crash. In the two weeks following April 20—the start of Bitcoin’s rise—the number of people buying crypto rose by 68% and the average amount of crypto bought increased by 57%.
Revolut currently supports six cryptocurrencies: Bitcoin, Ethereum, Litecoin, XRP, Bitcoin Cash and Stellar. Trading comes with a flat fee of 1.5%. It acts as a broker: these cryptocurrencies are owned by Revolut, which draws on its reserves with crypto custodians or “one of two currency exchanges.”