Crypto exchange Coinbase Global (COIN) may be able to generate $1.2 billion of additional interest income-driven revenue in 2023 given the increases in short-term interest rates, JPMorgan analyst Ken Worthington told clients in a note earlier this week.

Coinbase’s joint venture with USDC issuer Circle alone could contribute about $700 million of incremental revenue, JPMorgan estimates. The two firms formed a joint venture in 2018 called the CENTRE Consortium, which included a revenue share on interest income from USDC reserves.

Additional ways Coinbase caould earn interest income are from customer fiat and its corporate cash balance, JPMorgan noted, adding up to a potential total of $1.2 billion in added revenue next year.

The bank said that a key risk for Coinbase realizing its interest income is the possibility of a reduced holding of USDC and fiat currency with the exchange.

“We see the potential for institutional investors to hold less USDC given the opportunity cost of holding quasi-cash that doesn’t offer a yield. We also see retail holding less of its fiat at Coinbase since it doesn’t get a yield. As such, we see the potential for USDC balances and fiat balances to decline for Coinbase,” JPMorgan wrote.

JPMorgan kept its neutral stock rating on Coinbase, though it raised its price target to $78 from $64.

Shares of Coinbase were trading at about $74.60 Friday morning, down 2.6%. The stock is down about 70% year to date.

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