Coinbase revenue jumps as ‘everything exchange’ plans proceed

The Coinbase (NASDAQ: COIN) digital asset exchange saw its revenue soar during Q3 while ramping up M&A spending like sailors on shore leave.

Figures released Thursday show Coinbase generated net revenue of just under $1.8 billion in the three months ending September 30, a 55% year-on-year improvement and 25% better than Q2’s $1.42 billion. From this bounty, the company booked net income of $433 million, a significant retreat from Q2’s $1.43 billion, but significantly better than Q3–24’s $75 million.

The sequential profit decline reflects the outsized gains that Coinbase derived from June’s initial public offering (IPO) of USDC stablecoin-issuer Circle (NASDAQ: CRCL). Coinbase and Circle were once partners on USDC, but Coinbase traded its equity for 8.4 million Circle shares, which mooned in the aftermath of Circle’s IPO.

Q2’s transaction volume was bleak but Q3 showed a rebound in both in consumer and institutional activity. Consumer revenue rose 30% sequentially to $843.5 million as transaction volume rose 37% to $59 billion. Coinbase credited “unique token listings and rising prices in long tail assets” during the quarter for the surge.

These token price surges were downright dramatic, with some hitting all-time highs. BTC, for example, began Q3 at around $107,000 but spent most of the next three months just under and briefly above $120,000. (It briefly slipped back below $107,000 on Thursday, making a mockery of the whole ‘Uptober’ thing.)

ETH started Q3 at $2,400 before spending most of August and September above $4,000. A roughly similar trajectory was enjoyed by the XRP token. These price surges also helped cut Coinbase’s transaction expenses as a share of revenue by three points to 14%.

Q3’s institutional revenue more than doubled to $135 million despite volume rising only 22% to $236 billion. The company singled out its Derebit derivatives platform, which Coinbase acquired this spring for $2.9 billion, for adding $52 million to the institutional revenue tally. Derebit uptake has proven so successful that Coinbase says it’s “begun to scale back rebates and incentives.”

As for what everyone was trading, BTC claimed a 24% share of both transaction volume (-6 points from Q2) and revenue (-10 points). ETH’s share of volume was 22% (+7) while revenue came in at 17% (+5). XRP’s share of volume and revenue nudged up one point each to 9% and 14%, respectively. The Solana network token’s revenue share was 7% (unchanged), but SOL somehow failed to make the volume chart.

‘Other crypto assets’ saw volume rise one point to 42% while revenue gained four points to 38%. USDC’s archrival USDT, issued by Tether, saw its trading volume fall by one-half to 3%, down from 15% in the same quarter a year ago.

Coinbase dramatically widened the number of assets in this ‘other’ category thanks to its Ethereum layer-2 network Base, which has become a memecoin paradise (featuring over five million tokens). The Coinbase app integrated Base’s decentralized exchange (DEX) during Q3, allowing customers to trade “more than 40,000” additional tokens.

The ’other transaction revenue’ category improved by more than one-quarter to $67.7 million, “primarily driven by an increase in instant transfer activity, which is typically correlated with the growth in Trading Volume.”

Revenue from Base grew due to an increased number of transactions and ETH’s record-high price, although Coinbase continues to subsidize transaction fees to boost user growth.

Coinbase’s monthly transaction users (MTUs) hit 9.3 million in Q4, up from 8.7 million in Q2, but not yet back to Q1’s 9.7 million total. It bears mentioning that MTU is a broadly defined category that includes users who earn passive income via rewards and even customers “sending and receiving crypto assets between wallets and off-platform accounts on a non-expedited basis.”

USDC still paying the bills

Coinbase’s Subscription & Services revenue couldn’t rely on token prices for growth, but still grew by 14% to $746.7 million. The largest share of this segment was stablecoin revenue, which rose 6.7% to $354.7 million.

Coinbase makes major bank off USDC, regardless of whether it’s held/used on or off the exchange. Average USDC balances held in Coinbase products rose 9% to an all-time high of $15 billion during Q3, while off-platform balances rose 12% to $53 billion. USDC’s market cap grew by $12 billion during the quarter, and “Coinbase customers accounted for the largest portion of that balance growth.”

Blockchain rewards (aka staking) revenue gained nearly 28% to $184.6 million, thanks to the aforementioned rises in the value of ETH and SOL. Interest and finance fee income rose 9% to $64.8 million as average loan balances (more on this later) rose 25% to a record $1.2 billion.

‘Other subscription and services’ revenue gained 19.4% to $142.7 million. This category now contains custodial fee revenue—including from assets held by Wall Street-issued exchange-traded funds (ETFs)—and assets under custody grew to a record $300 billion by the end of Q3.

The one item on Coinbase’s Q3 report that wasn’t growing was operating expenses, which dropped nearly 9% to just under $1.4 billion. ‘Other operating expenses’ dropped by 80% due to Q2 featuring a $308 million charge related to this spring’s customer data breach by Coinbase’s India-based support staff. The breach may be in the rearview mirror now, but the incident still accounted for $48 million of the $61.3 million this category reported in Q3.

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Q4 forecast

As far as the current quarter is concerned, Coinbase says its October transaction revenue will be ~$385 million, which isn’t bad considering the shellacking that major token values have taken this month. Subscription & Services revenue is estimated to come in somewhere between $710-$790 million.

As for red ink, Technology & Development and General & Administrative expenses will be around $925-$975 million, with Sales & Marketing costs of $215-$315 million. The always thorny issue of stock-based compensation will cost the company ~$234 million in Q4, but hey, it’s the holidays.

Coinbase shares, which fell nearly 6% to $328.51 on Thursday as the value of major tokens tanked, nudged up 4% in after-hours trading.

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The call

Haas noted that “those who are building apps on Base, often, will then incorporate USDC. They will often need to be able to buy other crypto. They may need custody solutions. And so we do monetize the other products and services by the growth of the overall ecosystem and the growth of onchain developers.”

But the in-development Base app will also allow “monetizing through advertising,” and so Haas sees “opportunities to have revenue profiles that look similar, honestly, to the Coinbase main app in terms of transaction fees, maybe some subscription fees, maybe advertising fees, some various different ways that we can monetize in that app.”

Asked about efforts to improve the exchange’s notoriously unsatisfactory customer service, president/COO Emilie Choi said the company was now “very invested in automation. Currently, 65% of our customer support interactions are fully automated. We’re trying to push that number up rapidly.”

Asked about Coinbase’s recent deal with U.S. banking giant Citi (NASDAQ: C) to develop digital asset payment capabilities for institutional clients, Armstrong hyped the Coinbase Developer Platform, aka crypto-as-a-service. Armstrong said it “allows us to have different revenue streams and participate in the value creation as more and more companies come in to integrate with crypto. That’s going to be all banks, all fintechs, all payment service providers, but it’s also going to be nonfinancial services-related companies.”

Haas added that Coinbase’s vertical integration—Base, USDC, payment APIs, etc.—means the company “continue[s] to win mandates from large financial players, fintechs … but we’re also seeing small- and medium-sized businesses really come to our platform as we enable them to more efficiently manage their capital and their liquidity through instant settlement via stablecoins.” The company claims to have onboarded “over 1,000 businesses … and we have a growing wait list.”

One analyst noted that historically, it takes cost savings of 3-5% to incentivize consumers or merchants to switch payment methods, then asked what Coinbase was doing to incentivize adoption of its payments platform.

Armstrong argued that it wasn’t just Coinbase that these entrenched payment systems were up against. “These are decentralized, open networks, with thousands of companies participating all over the world. So it’s a little bit like the Internet going up against some kind of proprietary system, not just one company.”

Crypto also “opens up microtransactions or new international markets where credit card penetration is low. So we’ll see it first take off in areas where people’s unmet need is the highest. And then eventually, it will eat into more and more of it just because it’s faster and cheaper and more global.”

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If it’s for sale, Coinbase will buy it

Earlier this month, Coinbase announced that it had paid $375 million to acquire Echo, the crypto crowdfunding platform. Coinbase said the deal, made in a mix of cash and stock, was due to its desire to “create more accessible, efficient, and transparent capital markets.”

Since its beta launch in April 2024, Echo has helped projects raise over $200 million via private sales and through Sonar, the platform’s self-hosted public token sale option. Coinbase said its integration of Echo will “start with crypto token sales via Sonar. We plan to expand support to tokenized securities and real-world assets over time.”

The acquisition came alongside Coinbase paying $25 million to acquire an NFT issued by Jordan ‘Cobie’ Fish, who founded Echo. Cobie tweeted that Echo “will remain a standalone platform under its current brand for now” but the longer-term plan is to “introduce new ways for founders to access investors, and for investors to access opportunities into coinbase itself.”

Coinbase’s Echo acquisition came just days after it confirmed that it had made an investment of unspecified size in CoinDCX, an exchange focused on India and Middle Eastern markets with over 20.4 million users. As of July 2025, CoinDCX’s annualized group revenue is ~$141 million, its transaction volume is ~$165 billion, and its assets under management are $1.2 billion.

CoinDCX CEO/co-founder Sumit Gupta tweeted that the investment valued his exchange “at $2.45B post-money,” but similarly declined to offer specifics on the size of Coinbase’s stake. Coinbase Ventures first invested in CoinDCX in 2020 and boosted its stake in a 2022 funding round that put a $2.15 billion valuation on CoinDCX.

Coinbase said its increased stake “underscores the potential we see” in CoinDCX’s key markets. In March, Coinbase announced plans to return to the Indian market after an ignominious exit in 2022 that followed Coinbase’s claim that customers could legally fund their accounts with India’s Unified Payment Interface (UPI). Indian authorities fiercely rejected this claim, and Coinbase withdrew from India not long afterward.

In July, CoinDCX denied reports that it was being acquired on the cheap by Coinbase just days after CoinDCX suffered an embarrassing exploit that resulted in the loss of $44.2 million.

Coinbase Ventures has been a busy beaver this autumn, having participated in a seed round for Brazilian stablecoin-focused fintech Crown, a Series D funding round for the Kalshi prediction market, a Series A round for stablecoin payments firm Coinflow, an extended Series A round for agentic payment infrastructure firm Kite, a pre-seed round for AI sports betting startup Billy Bets, a strategic funding round for white-label stablecoin-issuing platform Bastion, and a funding round for machine agency firm OpenMind. And that’s just a selection of its wallet-abusing activity.

On Thursday’s call, Coinbase’s Choi said the company looked to “some of the best tech companies of all time and how they were able to use M&A to massively accelerate adoption and so we’re very excited about some of the opportunities on the horizon.”

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BTC loans proving controversial

On September 30, Coinbase revealed that the total amount of USDC it has lent out via the Bitcoin-backed loans it began offering in January had topped $1 billion. The company added that it would “soon” increase its individual loan limits from $1 million to $5 million, but has yet to set a start date for that upper limit.

The loans are issued via Morpho, the decentralized finance (DeFi) lending protocol built on the Base network. Coinbase Ventures has a stake in Morpho, which customers access via Coinbase’s mobile app. Coinbase customers can deposit BTC into Morpho, which can be used to borrow USDC, or they can earn a yield of up to 10.8% by letting Morpho lend their BTC to other customers.

In August, Coinbase announced that it was launching “a second Stablecoin Bootstrap Fund” to boost USDC liquidity in DeFi capital markets, starting with Morpho and two rival platforms on Solana (Kamino and Jupiter).

On October 28, Decrypt reported that Coinbase was “offering customers competitive rates by connecting them with lightly vetted pools of capital, which don’t require people to provide personal information before funds are disbursed to Americans.”

Since DeFi protocols don’t impose the same level of ‘know your customer’ (KYC) requirements as traditional lenders, Decrypt claims the “lower bar” for money laundering and terrorist financing defenses “raises compliance concerns.”

Coinbase’s chief legal officer, Paul Grewal, tweeted an angry response to the article, calling it “PR” for an unspecified “anti-crypto lobbying group [feeding] talking points to reporters while hiding on background.” Grewal added that “DeFi lets users access financial tools without permission, and that’s what threatens the old guard.”

Grewal’s tweets brought a response from Amanda Fischer, policy director of Better Markets, an “independent, nonpartisan, nonprofit organization” that advocates for “layers of protection between hardworking Americans on Main Street and Wall Street’s riskiest activities.”

Better Markets works with traditional financial institutions, but Fischer said she suspects “a crypto lending competitor that actually does KYC tipped this.” She later tweeted that she was “laughing at the idea that there exist groups created for the express purpose of lobbying against crypto who would need to go on background to criticize crypto.”

Fischer also asked Grewal, “where in the law does it say KYC for lending is optional if it’s on a blockchain?” Fischer added that Coinbase “funded the Tornado Cash lawsuit to make mixing easier.” Grewal has yet to respond to Fischer’s queries.

Coinbase helped fund a suit by Tornado Cash users that concluded in U.S. federal courts, striking down sanctions imposed on the protocol’s smart contracts in 2022. In August, Tornado Cash co-founder Roman Storm was found guilty of conspiracy to operate an unlicensed money transmitting business.

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