Retail trading held steady, but institutional revenue took a hit. JPMorgan flagged the drop in revenue from institutional volume of 30% quarter-over-quarter and a decline in institutional fees from 4.1 to 3.1 basis points, driven by incentives, rebates and a heavier presence of high-frequency traders.
Still, the $2.9 billion acquisition of Deribit, the leading global crypto derivatives exchange, stood out as a bold bet on the future of derivatives.
The deal, expected to close by year-end, drew praise from Bernstein (with an outperform rating), which called the valuation fair given Deribit’s $1.2 trillion annual volume and $30 billion in open interest. Canaccord Genuity (buy rating) said the acquisition gives Coinbase strength internationally and primes it for eventual U.S. regulatory clearance of crypto options.
While trading revenue slumps, the exchange is leaning on other growth levers. Subscription and services revenue grew 9% to $698 million, boosted by stablecoin adoption. USDC balances on Coinbase surged nearly 50% to $12.3 billion and balances held off-platform jumped 39% to $42 billion. Average balances per user have tripled since June 2023, Canaccord noted.
The company's strategy also includes expanding its “Coinbase as a service” model — white-label infrastructure for institutions looking to enter the crypto market. Analysts at Canaccord say this could become a key pillar of revenue, offering a hedge against volatile trading cycles.
“We have heard plenty of anecdotal data points at this point from TradFi and crypto-native infrastructure players that a buy [versus] build strategy is the most likely scenario if this industry evolves rapidly,” Canaccord analysts said. “Revenue from such types of infrastructure as a service would help smooth trading variability in quarterly numbers while further cementing the company's cornerstone positioning in the market.”
Oppenheimer (outperform) and Barclays emphasized macroeconomic risks, including tariff-related uncertainty and weak sentiment that dragged volumes down in April and so far in May. Hopes for regulatory clarity suffered a setback when the GENIUS Act — a stablecoin-focused Senate bill — was blocked earlier this week. Despite that, JPMorgan said management remained optimistic that progress on legislation could resume before the August recess.
Coinbase still views itself as central to the evolving crypto ecosystem. While the immediate outlook is clouded by low volumes and squeezed fees, many analysts say the exchange’s broadening product suite, dominant U.S. market position and early-mover advantage in derivatives and infrastructure set it up well for the long term.
As Canaccord put it, Coinbase remains the “gold standard” for both institutional and retail entry into digital assets — even if it has to navigate more choppy waters in the short run.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.