it's a flesh colored latex sleeve (notice the fashionable leather ?wristband? he's wearing to cover the end of it)...
he palms the quarter before it goes into his mouth, presses it on the end of the nylon string w/adhesive when he rolls up his sleeve....the string is looped through the 'wristband', so when he pulls the string, the quarter is pulled forward
the utility knife dispenses a little stage blood as it cuts....
you can actually see the nylon thread twisting at the top of the cut when the quarter is coming out
or it's magic....I can't decide which.