What’s Happening?
Despite the financial report showing that cryptocurrency company Coinbase has a net profit of up to $1.4 billion, this profit largely comes from investment earnings related to companies such as Circle, rather than from its core business. The revenue from “trading fees,” which accurately reflects daily operating conditions, performed poorly and fell short of expectations, raising concerns on Wall Street and causing its after-hours stock price to plummet.
Revenue associated with the stablecoin USDC, on the other hand, grew against the trend, increasing by 12% quarter-over-quarter, indicating that the company has made initial progress in reducing its reliance on single-transaction income and driving business diversification.
In the face of current challenges, Coinbase announced an ambitious plan to become the “Everything Exchange,” aiming to offer a wider range of trading services in the future, including tokenized real-world assets and prediction markets, demonstrating its strong intent to break the traditional cryptocurrency exchange framework.
Coinbase’s Latest Report Card
As a bellwether of the cryptocurrency industry and the only cryptocurrency company included in the S&P 500 index, Coinbase’s quarterly financial reports draw significant attention from global investors. Following the market frenzy in the first quarter, the cryptocurrency market in Q2 2025 appeared relatively calm, with trading activity cooling off.
Although benefiting from investment income that resulted in a bright net profit, the weakness in its core business still dragged down Coinbase’s latest financial report. Coinbase recently released its Q2 2025 financial results, with total revenue falling short of Wall Street expectations, leading to a sharp decline in its stock price during after-hours trading.
According to the financial report, Coinbase’s total revenue for Q2 was $1.5 billion, below the general analyst expectation of $1.56 billion to $1.59 billion, and also a 26% decline compared to the previous quarter.
Our Q2 2025 financial results are now live.
— Coinbase ️ (@coinbase) July 31, 2025
As one of Coinbase’s primary and core sources of income, the significant decline in trading fee revenue in Q2 was the main reason for the disappointing results. Trading income for Q2 was $764 million, falling short of the expected $787 million, reflecting a general cooling in cryptocurrency spot trading volume. Among them, retail trading volume increased by 16% year-over-year to $43 billion, but still fell below the analyst estimate of $48.05 billion.
However, there were still notable highlights in the financial report. Coinbase’s net profit this quarter reached $1.4 billion (or $5.14 per share), far exceeding the $36.13 million from the same period last year. This astonishing profit growth primarily stemmed from investment earnings in non-core businesses, including approximately $1.5 billion in unrealized gains from its investment in Circle, a stablecoin issuer that recently went public, as well as a $362 million appreciation in its held crypto assets.
Excluding these one-time investment gains, the adjusted net profit was only $33 million, and the Non-GAAP earnings per share was a mere $0.12, far below some analysts’ expectations of $1.49. This also explains why, despite the high reported net profit, the market reaction remained negative.
Non-GAAP is a set of “customized” financial measurement standards defined by the company’s management. It is based on official accounting standards but excludes or includes certain items that management believes do not reflect the company’s “core, ongoing operating performance.”
Stablecoin Business Shines, Subscription Services Show Resilience
As trading operations faced headwinds, Coinbase’s subscription and services business demonstrated strong resilience. This sector generated $656 million in revenue, down only slightly by 6% from the previous quarter, but up 9% compared to the same period last year.
Among them, the stablecoin-related business became the primary driver. Benefiting from its partnership with Circle and the surge in market interest in the USDC stablecoin, Coinbase’s stablecoin-related revenue reached $332 million, a 12% increase from the previous quarter and a significant 38% jump year-over-year. Coinbase has a lucrative revenue-sharing agreement with Circle, providing it with stable cash flow.
Coinbase expects its subscription and service revenue for Q3 to be between $665 million and $745 million, indicating the company’s continued optimism about this business segment.
After the financial report was released, Coinbase’s (COIN) stock price fell more than 8% in after-hours trading, bringing the price to around $353. Nevertheless, since the beginning of 2025, its stock price has accumulated an increase of over 45%, outperforming the S&P 500 index into which the stock was included in May.
Regulatory Dawn and Ambitious Layout for “Everything Exchange”
Despite the slowdown in market activity in Q2, Coinbase pointed out that the policy developments in the U.S. in July were “a milestone victory.” This includes President Trump’s signing of the GENIUS Act, which establishes a federal regulatory framework for stablecoins, and the House passing the CLARITY Act to clarify the structure of the cryptocurrency market.
Coinbase also announced a major plan to become the “Everything Exchange.” This platform will first launch in the U.S. and gradually expand to the global market. Its service scope will go beyond traditional cryptocurrencies to include tokenization of real-world assets (RWA), prediction markets, derivatives trading, and early token sales.
Coinbase is becoming the everything exchange.
All assets will inevitably move onchain, so we want to have everything you want to trade in one place.
Incoming: DEX integration (access millions of assets) + expansion of our derivatives offerings.
Next: tokenized equities + more.
— Brian Armstrong (@brian_armstrong) July 31, 2025
Moreover, the company has made progress on its product roadmap, with the public testing waitlist for its Base App attracting over 700,000 users. In May of this year, Coinbase completed the acquisition of the options trading platform Deribit for nearly $3 billion, setting a record for the largest acquisition in the history of the cryptocurrency industry, actively expanding its business landscape.
References: cointelegraph, cnbc, decrypt