Coinbase is navigating a shifting landscape as it transitions from a traditional cryptocurrency exchange to a multifaceted financial services platform. Amid intensifying competition, the company has begun expanding its offerings to include custody services, derivatives, and stablecoins, positioning itself to better serve a diverse client base.
Despite achieving robust revenue streams from Exchange-Traded Fund (ETF) custody, Coinbase remains acutely sensitive to fluctuations in Bitcoin prices. This volatility impacts its primary revenue source—trading fees—which continue to dominate its income but are subject to the unpredictable nature of the crypto market.
Recently, reports from the Financial Times highlighted the dual pressures Coinbase is experiencing from both established financial institutions and newer crypto-based competitors. The exchange faced a setback in its marketing efforts when a television advertisement aimed at the UK market was rejected for not adhering to broadcast standards, primarily due to the absence of risk warnings. This campaign was a part of Coinbase’s broader strategy to expand into areas such as asset management and payment services.
Since its inception in 2012, Coinbase has significantly evolved, recently entering the S&P 500 and achieving a market capitalization of approximately $83 billion. Shares have seen a notable increase, having surged 70% since Donald Trump’s election, largely buoyed by a favorable regulatory environment for cryptocurrencies during his administration. However, disappointing second-quarter earnings resulted in a 15% stock decline, reflecting investor hesitance regarding its financial health.
The heightened competition is also causing compressions in fees and impacting profit margins, particularly from Asian exchanges. Despite being the custodian for eight of the top eleven US Bitcoin ETFs and generating $43 million in the last quarter of 2024 from those services, the potential for new legislation could bring traditional custodians like State Street and BNY Mellon into direct competition, posing a threat to Coinbase’s market position.
In response to these challenges, Coinbase is exploring strategies like tokenized stock trading and small business banking services. The firm is making significant inroads into the stablecoin market, finding success with its USDC stablecoin partnership with Circle, which is now one of its leading revenue sources. Additionally, staking has emerged as a profitable avenue due to its high margins.
In a move to enhance its market presence, Coinbase recently acquired the crypto derivatives platform Deribit for $2.9 billion, underscoring its ambitions within derivatives trading. The exchange is also collaborating with major banks like JPMorgan and PNC to intertwine traditional finance and digital assets.
Coinbase’s expansion and industry influence have not gone unnoticed, as TIME named it one of the 100 Most Influential Companies of 2025, commending its role in shaping digital asset policies and markets in the US. The publication noted that Coinbase is poised to become a central hub for crypto trading nationwide.
Looking beyond the US, Coinbase is making strides in Europe by obtaining a license under the EU’s Markets in Crypto-Assets (MiCA) regulatory framework through Luxembourg’s financial regulator. In line with its growth strategy, Coinbase has also been increasing its corporate Bitcoin holdings, purchasing an additional 2,509 BTC for about $222 million in Q2, raising its total to 11,776 BTC and solidifying its status among the top public holders of Bitcoin, just ahead of Tesla in terms of coin count.
