Original Article Title: "Coinbase Landscape Report: Status, Risks, and Valuation of the Leading U.S. Compliant Exchange"

Original Article Author: Alex Xu, Mint Ventures

1. Research Summary

As a global leader in cryptocurrency exchange and services, Coinbase, with its brand trust, widespread user base, product diversification, and early compliance initiatives, is a key target for capturing the long-term development dividends of the crypto industry.

Specifically:

· It has a long history and brand accumulation in compliance operations and security reliability, with numerous institutional partners, facilitating the attraction of more institutional and retail customer bases.

· Diverse revenue streams such as subscriptions and interest have developed well, making the business model more diversified and no longer solely reliant on transaction fees, enhancing its counter-cyclical capabilities compared to the past.

· The balance sheet is healthy, with a low debt ratio and ample cash on hand, providing the company with resilience and offensive capabilities in technological innovation, international expansion, and adverse environments.

· Sovereign nations, led by the United States, tend to have a relaxed and innovation-friendly overall regulatory attitude towards crypto. The long-term industry trend still points to growth, with blockchain and digital assets increasingly integrating into mainstream finance. Coinbase has positioned itself in key industry areas.

However, despite the slowdown in revenue and profit fluctuations with the industry cycle, they are still difficult to avoid large ups and downs (see Section Six: Operations and Financial Performance). This situation has become very evident in the latest two quarters' financial reports.

Furthermore, Coinbase is in a highly competitive race, facing direct competition from Robinhood and Kraken in the U.S. domestic market, while overseas it competes head-to-head with numerous offshore exchanges such as Binance. Decentralized exchanges like Uniswap and on-chain exchange Hyperliquid are also rapidly growing, challenging the market share of traditional CEXs.

It is worth noting that during this current bull market cycle, Coinbase soared more than 11 times from a 22-year historical low, far exceeding BTC's price increase during the same period and outperforming the vast majority of crypto assets.

It can be said that Coinbase faces both competitive challenges and opportunities of the era. This report is Mint Ventures' first coverage of Coinbase, and we will continue to track its progress in the long term.

PS: This article represents the author's phased thinking as of the time of publication, which may change in the future. The views expressed are highly subjective and may contain errors in facts, data, and reasoning logic. All views in this article are not investment advice. Criticism and further discussion from peers and readers are welcome.

2. Company Overview

2.1 Development History and Milestones

Coinbase was founded by Brian Armstrong and Fred Ehrsam in 2012, headquartered in San Francisco. In the early days of the startup, the company focused on Bitcoin brokerage services and in 2014, obtained one of the first BitLicenses issued by the state of New York for Bitcoin trading.

Subsequently, Coinbase continuously expanded its product offerings: in 2015, it launched the exchange platform 'Coinbase Exchange' (later renamed Coinbase Pro) and in 2016, started supporting various cryptocurrencies such as Ethereum. In 2018, it ventured into the blockchain application field through acquisitions like Earn.com, and brought in former LinkedIn executive Emilie Choi to lead M&A expansion. In 2019, it acquired the institutional business of Xapo, solidifying its leading position in custody services. That same year, the company's valuation exceeded $8 billion. On April 14, 2021, Coinbase successfully went public on Nasdaq, becoming the first and only major exchange to be listed in the cryptocurrency industry, with a market value exceeding $85 billion at one point. After going public, the company continued to expand globally and enrich its product line: in 2022, it acquired the futures exchange FairX to enter the cryptocurrency derivatives market and launched an NFT marketplace (although the trading volume later waned). In 2023, it launched the Ethereum Layer2 network Base to strengthen its on-chain ecosystem. That year, while actively addressing regulatory challenges in the United States, it also obtained licenses from multiple regions including Singapore, the European Union (Ireland), and Brazil, and in 2025, completed the acquisition of the top options trading platform Deribit.

After more than a decade of development, Coinbase has evolved from a single Bitcoin brokerage into a comprehensive crypto financial platform covering trading, custody, payments, and more.

2.2 Positioning and Target Customers

Coinbase's mission is to "increase global economic freedom," with a vision to overhaul the century-old financial system and enable anyone to participate in the crypto economy fairly and conveniently. The company is positioned as a secure and trusted one-stop platform for crypto assets, attracting mass users through simple and user-friendly products, while also providing institutional-grade services to meet the needs of professional investors.

The Coinbase customer base can be roughly divided into three categories:

· Retail Users: Individual investors interested in cryptocurrency. In addition to trading mainstream cryptocurrencies, Coinbase also allows users to stake their assets for earnings, use payment features, and more. Its peak Monthly Transacting Users (MTU) reached 11.2 million in Q4 2021, maintaining a quarterly active user level of over 7 million even during the 2022–2023 downturn. In Q1 2025, the monthly active trading users were approximately 9.2 million, slightly dropping to around 9 million in Q2 2025.

· Institutional Clients: Since 2017, Coinbase has been focusing on the institutional market, providing services such as Coinbase Prime brokerage and Coinbase Custody custody to clients including hedge funds, asset management companies, corporate treasuries, and more. By the end of 2021, its institutional client count had exceeded 9,000, including 10% of the top global hedge funds. Institutional clients contributed the majority of the platform's trading volume (with institutional trading volume accounting for approximately 81% in 2024), bringing in stable custody fees and transaction revenue despite lower fee rates.

· Developers and Ecosystem Partners: Coinbase also considers developers and blockchain projects as ecosystem clients, supporting blockchain network development through infrastructure like "Coinbase Cloud" (node services, API interfaces) and collaborating with new projects through investments, listings, and more. Additionally, the stablecoin USDC was jointly launched by Coinbase and Circle, where Coinbase is both an issuing partner and a major distribution platform, significantly sharing the spread income and channel fees from Circle.

Overall, Coinbase has a dual advantage of being user-friendly for the masses and trustworthy for institutions, bridging the retail and institutional markets and playing a role as the "bridge between fiat and the crypto world" in the crypto ecosystem.

2.3 Equity and Voting Structure

The company employs an AB dual-class equity structure. Class A common stock is listed on Nasdaq with one vote per share, while Class B common stock is held by founders and executives with 20 votes per share. Founder and CEO Brian Armstrong, through holding around 23.48 million shares of Class B stock, controls over 64% of the voting rights, making Coinbase a highly controlled company. Some early investors (such as Andreessen Horowitz) also hold some Class B shares. In mid-2025, Armstrong slightly converted and sold some Class B shares but still retains approximately 469.6 million votes equivalent to Class A stock voting rights. Since Class B shares can be converted to Class A shares at a 20:1 ratio at any time, the total share capital of the company may vary slightly with conversions. This dual-class equity structure ensures the founding team's control over the company's strategic direction but also means that common shareholders have limited influence on corporate governance. In general, Coinbase's equity structure is highly concentrated, giving the founder significant decision-making power, which ensures the consistency of the company's long-term vision and strategic direction.

3. Industry Analysis

3.1 Market Definition and Segmentation

The market where Coinbase operates is the broad cryptocurrency exchange and related financial services market. The core areas include:

· Spot Trading Market: which involves the buying and selling of cryptocurrencies through order matching, and is also Coinbase's primary business category. Depending on the trading pairs, it can be divided into fiat-to-crypto (fiat on-ramp) trading and crypto-to-crypto trading. Based on the customer type, it can further be segmented into retail trading and institutional trading.

· Derivatives Trading Market: which includes trading of cryptocurrency futures, options, and other leveraged derivative products. This market has seen rapid growth in recent years, with cryptocurrency derivatives trading volume accounting for approximately 75% of the total trading volume in the first half of 2025 (source: Kaiko). Coinbase entered the derivatives space relatively late and currently operates through regulated futures exchanges and overseas platforms.

· Custody and Wallet Services: which provide secure storage solutions for institutions and individuals holding a large amount of cryptocurrency. The custody market is closely related to trading, as customers often require compliant custody services for large transactions on exchanges.

· Blockchain Infrastructure and Others: which include services such as stablecoin issuance and circulation, blockchain operation (Base), payment settlement, staking, and other "blockchain financial" services. This segment expands the revenue sources beyond the exchange, such as Coinbase earning interest and fees through USDC stablecoin and node staking.

3.2 Historical Scale and Growth (Past Five Years)

The overall cryptocurrency market experiences significant fluctuations in line with market cycles. Measured by trading volume, the global cryptocurrency trading volume surged from around $22.9 trillion in 2017 to $131.4 trillion in 2021, with a high annual growth rate. Subsequently, in 2022, due to a bearish market, the trading volume dropped to $82 trillion (a -37% change from the previous year), and further decreased slightly to $75.6 trillion in 2023. In 2024, driven by a new market frenzy, the total annual trading volume reached a new high of around $150 trillion, nearly doubling compared to 2023.

The industry scale is highly correlated with cryptocurrency prices and volatility: for example, during the bull market of 2021, various token prices surged, speculative trading was active, and the year-over-year trading volume growth was nearly +196%; whereas in 2022, during a bear market with depressed prices, the trading volume plummeted by almost 40%. In terms of user base, the global cryptocurrency holder count also fluctuates with market conditions but shows an overall upward trend. According to Crypto.com research estimates, the global cryptocurrency user count increased from around 50 million in 2018 to over 300 million in 2021, declined in 2022, rebounded to around 400 million by the end of 2023.

Coinbase's own business has followed the industry's ups and downs: In terms of trading volume, its platform's trading volume rose from $320 billion in 2019 to $16.7 trillion in 2021, then dropped to $8.3 trillion in 2022, further decreasing to $4.68 trillion in 2023. In terms of active users, Coinbase's monthly transacting users grew from less than 1 million in 2019 to an annual average of 9 million in 2021, and then fell back to a quarterly average of 7-9 million in 2022-2023.

In summary, over the past five years, the industry's scale has experienced significant fluctuations but has shown a medium- to long-term growth trend.

3.3 Competitive Landscape & Coinbase Market Share (Past Five Years)

The cryptocurrency trading industry has seen numerous competitors, and the landscape has evolved with the market.

Globally, Binance has rapidly risen to become the largest exchange by trading volume since 2018. Its global spot market share once exceeded 50% at the peak of the bull market; it still holds about 38% of the market share at the beginning of 2025, ranking first. Other major players include OKX, Coinbase, Kraken, Bitfinex, and regional leaders (such as Upbit in South Korea). In recent years, some newcomers (such as Bybit and Bitget) have also gained significant market share. Coinbase's market share in the global market fluctuates around 5-10%: for example, in the first half of 2025 based on spot trading volume, Coinbase accounts for approximately 7% of the total volume of the top ten exchanges globally, on par with OKX, Bybit, and others. In comparison, Binance's share is several times higher. It should be noted that, due to Coinbase's focus on the U.S. compliant market and its avoidance of a large amount of altcoin speculative trading, its global ranking is often surpassed by platforms that list more aggressively and engage in high-volume trading. However, in the fiat-compliant market, especially the U.S. market, Coinbase has a clear advantage. Since 2019, Coinbase has consistently ranked first in U.S. trading volume and further increased its market share in U.S. spot and derivatives markets in 2024. With competitor FTX's collapse in 2022, Coinbase's position in the U.S. market has become more solid.

Competitive Landscape Dynamics

There have been several significant changes in the past five years:

· The market share of trading platforms has shifted from concentration to dispersion. After FTX's collapse in 2022, Binance's market share briefly increased from 48.7% (Q1) to 66.7% (Q4). Subsequently, the market share began to differentiate, and the market shares of Bybit, OKX, Bitget, and others started to rise, making the competition more intense.

· Increased compliance pressure has led to regional differentiation—fewer competitors in the US domestic market (only a few remaining, such as Coinbase and Kraken), while Asian platforms are rising (such as Upbit in South Korea, Gate in Southeast Asia);

3.4 Future 5–7 Year Industry Size and Growth Rate Forecast

Looking ahead to the next 5-7 years, the cryptocurrency trading industry is expected to continue to grow, but the growth rate will depend on multiple factors and scenario assumptions. Industry research reports (from Skyquest/ResearchAndMarkets/Fidelity/Grand View Research) generally predict that the cryptocurrency market will maintain a double-digit annual compound growth rate. Under the base scenario (assuming macroeconomic stability and no significant deterioration in the regulatory environment), the total market value of the global cryptocurrency market is expected to rise from the current level of about $3 trillion to the $10 trillion range by 2030, with the corresponding transaction volume also set to increase significantly. However, as the market matures gradually, volatility may decrease simultaneously, with the transaction volume growth rate slightly lower than the market value growth rate, expected to grow by an average of about 15% annually.

The key drivers of growth in the cryptocurrency industry include:

· Asset price trends: If leading assets like Bitcoin continue to hit new highs, it will drive the overall market upwards. Price increases and increased volatility will stimulate trading activity, thereby increasing trading volume.

· Derivative penetration: The derivative market share has reached about 75% and is expected to continue to expand in the future. For example, institutional investors prefer hedging tools such as futures, and retail investors may gradually accept leveraged trading, which will increase the overall transaction volume. We assume that by 2030, the derivative share will increase to 85%, leading to an additional increase in total trading volume by approximately 1.2 times.

· Institutional entry: If more traditional financial institutions (asset managers, banks, etc.) enter the cryptocurrency market, it may bring in trillions of dollars in new funds. For example, the approval of more ETF varieties and access for institutions (many institutions still do not allow direct exposure to cryptocurrency assets, including ETF shares) and sovereign fund allocations will significantly deepen the market. This will drive simultaneous growth in trading volume and custody demand. Fidelity and others predict that institutional funds in the coming years are expected to increase the total cryptocurrency market value by billions of dollars annually.

· Regulatory clarity: Clear regulatory frameworks will reduce market participant concerns and attract more participants. In an optimistic scenario, all major economies establish sound regulations (such as widespread licensing in developed country economies, ETF legalization and expansion, etc.), leading to an increase in user base and activity; in a pessimistic scenario, if regulations tighten (such as restricting bank support, strict capital requirements), market growth may be limited or even stagnant. From the current situation, with the formal passage of the US Stablecoin Act and the passage of the Clarity Act at the House level, the demonstration effect can gradually radiate to developed economies globally, and the expected clarification of overall cryptocurrency policies in the future is worth looking forward to.

Scenario Split: We can build three scenarios to predict the industry's scale from 2025 to 2030:

· Baseline Scenario: Assuming a stable macroeconomic environment, major countries adopt friendly regulations but remain somewhat cautious, and cryptocurrency is gradually accepted by more investors. The cryptocurrency market's annual growth rate is around 15%, with a transaction volume growth rate of about 12%. By 2030, the global annual transaction volume could reach around $300 trillion, and industry revenue scale (transaction fees) grows with the transaction volume. Leading compliant platforms like Coinbase maintain and may slightly increase their market share. In this scenario, the industry shows healthy growth without experiencing a massive bubble.

· Optimistic Scenario: Assuming a significant boom similar to the 'FinTech of the Internet' era: major economies (especially the U.S.) clearly define industry regulations, large institutions and corporations heavily participate, and cryptocurrency technology sees widespread adoption (e.g., DeFi experiences a significant leap in scale and adoption). Asset prices surge (such as Bitcoin possibly reaching the million-dollar level by 2030, as projected by ARK Invest), with a global market capitalization annual growth rate of over 20% and a transaction volume growth rate of up to 25%. Following this projection, the total transaction volume in 2030 could reach as high as $600-800 trillion. Compliance giants like Coinbase reap huge profits during this explosive growth, significantly raising the industry's ceiling.

· Pessimistic Scenario: Assuming an unfavorable macro environment or severe regulatory constraints: for example, major countries impose stringent restrictions, and cryptocurrency experiences a prolonged period of stagnation and volatility. The industry's scale may remain stagnant or grow only slightly, or even see years of decline. In the worst-case scenario, the transaction volume growth rate could drop to single digits or even stagnate and decline, with the total transaction volume by 2030 possibly hovering around $100-150 trillion. Compliance exchanges like Coinbase might increase their market share (as gray platforms are suppressed and exit under strict regulations or lose market share), but their absolute business scale growth would be limited.

Overall, the author leans towards a slightly optimistic outlook based on the baseline: in the next 5-7 years, the cryptocurrency trading industry is expected to continue its growth amid cyclical fluctuations, with the overall scale increasing year by year. Cryptocurrency users and industry conglomerates have become an undeniable force in the eyes of various political powers worldwide, and they were a significant factor in the Republican Party's victory over the Democratic Party in the 2024 U.S. presidential election. Since that event, the Democratic Party's stance on cryptocurrency legislation requiring bipartisan cooperation has also notably softened, and in bills like the Genius Act (passed in both houses) and the Clarity Act (House of Representatives), many Democratic lawmakers have also cast affirmative votes.

4. Business and Product Line

Coinbase's current business is diversified, with its main sources of revenue divided into two major segments: Trading and Subscription & Services, under which there are multiple product lines.

Below is an overview of each major business segment, including its model, key metrics, revenue contribution, profitability, and future plans:

· Trading Brokerage Business (Retail Trading): This was Coinbase's original and core business, providing cryptocurrency buying and selling services to individual users. In terms of its model, Coinbase acts as a broker and matching platform, allowing users to buy and sell cryptocurrencies with one click through the app or website. Coinbase charges a high fee for retail trading (previously 0.5% of the transaction amount plus a fixed fee, changed to a spread and tiered fee structure after 2022, see PS below). Therefore, retail customers have contributed the majority of the company's historical trading revenue. For example, in 2021, retail trading volume accounted for approximately 32% of the total volume but contributed to around 95% of the revenue (dropping to 54% in 2024). Key metrics include Monthly Transacting Users (MTUs), average transaction volume per user, and the fee rate level. During the bull market in 2021, MTUs peaked at 11.2 million; in 2022-2023, MTUs dropped to around 7 million due to the market downturn. The profitability of the retail trading business is strong, with trading fee revenue driving the company's net profit margin to a high level during a bull market (46% net margin in 2021, 42.7% over the past year). However, during a bear market, when trading volume shrinks, this business's revenue plummets (2022 retail trading revenue down by ~66% year-on-year), dragging down overall profitability. PS: In retail customer trading, the "spread" fee is charged in several transaction categories such as "one-click buy/sell, Simple, Convert, and Card Spend," where the fee is embedded in the asset price—buying is slightly above market price and selling is slightly below market price, and the difference is the "spread." The fee structure for Advanced Trading (limit orders/market orders) uses a tiered fee rate, where the larger the trading volume in the past 30 days, the lower the maker and taker fees.

Future Plans: Coinbase is enriching its retail products to increase user stickiness, such as launching the Coinbase One membership service (providing zero-fee limits and other value-added benefits), continually listing new tokens (adding 48 new tradable assets in 2024, including popular memecoins to attract traffic), and improving user experience (such as a simpler interface, educational content). The company is also exploring social trading, automated investing, and other features. As the market heats up, retail trading will continue to be the cornerstone of revenue, with its growth depending on crypto market popularity and Coinbase's market share expansion.

Institutional Trading and Brokerage Business: This segment includes trading services for high-net-worth and institutional clients, such as Coinbase Prime and Coinbase Pro (now integrated into a unified platform). In terms of structure, these institutional platforms offer deep liquidity, lower fees, and API access to attract large traders and market makers. Institutional trading volume accounts for as much as 80-90% (e.g., in 2024, institutional trading volume reached $941 billion, representing 81% of the total volume), but fees are only a fraction of a percent, resulting in relatively modest direct revenue contribution (in 2024, institutional trading revenue accounted for approximately 10% of the total trading revenue). However, the indirect benefits of institutional business are significant: institutions often hold a large amount of assets in Coinbase custody and participate in staking, contributing to custody fees, interest income, and more. Additionally, having active institutional clients helps with platform liquidity and pricing advantages, benefiting the trading experience of retail customers.

Key metrics of focus include institutional client count and assets under custody (AUC). Coinbase's AUC reached as high as $278 billion in Q4 2021, then dropped with the market to $803 billion by the end of 2022, rebounded to around $145 billion by the end of 2023. Heading into 2025, institutional custody business maintains strong momentum: in Q1 2025, Coinbase's average custody assets reached $212 billion, increasing by $250 billion from the previous quarter, hitting a new high in Q2 2025 at $245.7 billion. While institutional trading itself may not directly contribute high profits, it can generate additional income through custody/financing services.

Future Plans: Coinbase is actively expanding into derivatives to meet institutional comprehensive needs, launching perpetual futures products overseas in 2023 and obtaining a futures commission merchant registration through its subsidiary Broker in the US to offer Bitcoin and Ethereum futures to US institutions. Additionally, Coinbase established the Coinbase Asset Management division (derived from the acquisition and restructuring of One River Asset Management in 2023), planning to issue crypto investment products such as ETFs, basket indexes, and more to increase institutional participation. To strengthen its crypto derivatives portfolio, Coinbase announced at the end of 2024 the acquisition of the world's leading crypto options exchange Deribit. The transaction was valued at approximately $2.9 billion, including $700 million in cash and 11 million shares of Coinbase Class A common stock. This acquisition is one of the largest in the crypto industry, aiming to rapidly elevate Coinbase's position and business scale in the global crypto derivatives market. As a leading options platform in the industry, Deribit saw trading volume reach $1.2 trillion in 2024, a 95% year-over-year increase. Through the integration of Deribit, Coinbase instantly gained a dominant share of the Bitcoin and Ethereum options markets (Deribit's Bitcoin options market share exceeded 87%). This acquisition further expands and complements Coinbase's derivatives product line (encompassing options, futures, and perpetual contracts), solidifying its position as the preferred platform for institutional entry into the crypto space.

Custody and Wallet Services: Coinbase Custody is a leading industry-compliant custody service, mainly targeting institutional investors to provide cold storage custody. The custody business model mainly relies on custody fees (typically an annual fee of a few basis points of the custody assets) and withdrawal fees. As of 2024, Coinbase Custody's held assets accounted for 12.2% of the global crypto total market value. Especially after large-scale products like Grayscale chose Coinbase as their custodian, its reputation endorsement further increased. While the custody business revenue is included in the financial report under the "Subscription and Services" category and is not significant in scale ($142 million, accounting for 2.2% of that year's total revenue of $6.564 billion), its strategic significance is profound: Custody ensures the security of high-net-worth client assets, supporting their large-scale transactions on the exchange. In addition, Coinbase's wallet service (Coinbase Wallet), as a self-custody wallet application, although does not directly generate revenue, helps enhance the ecosystem and attract on-chain transaction users like DeFi. In terms of profitability, the custody business itself has a relatively high profit margin (almost pure income apart from the relatively fixed security operations cost) and has been steadily rising in synergy with the trading business in recent years (in the fourth quarter of 2024, custody fee revenue reached $43 million, a 36% increase compared to the previous quarter), providing the company with a more stable source of fee revenue.

Future Plans: Coinbase will continue to invest in enhancing custody technology security, meeting regulatory requirements (such as being a regulated Custody Trust under the New York Trust License). Additionally, there are plans to expand custody business into more asset classes and regions, such as supporting institutional staking services and providing custody for ETFs (In 2024, Coinbase has been selected as the custodian for several Bitcoin spot ETFs).

Subscription and Service Revenue (Staking, USDC Interest, etc.): This is a diversified revenue sector that Coinbase has focused on cultivating in recent years. It mainly includes:

-Staking Service: Users delegate their held cryptocurrency through Coinbase to participate in blockchain staking to receive block rewards. Coinbase takes a commission from this (usually around 15%). Staking provides users with passive income, while the platform enjoys a share of the rewards. After opening staking for mainstream coins like Ethereum in 2021, this revenue quickly grew.

-Stablecoin Interest Income (USDC): Interest income obtained through USDC has become an important part of Coinbase's revenue in recent years. In 2023, with rising interest rates and the expansion of the USDC reserve, Coinbase earned approximately $695 million in revenue from USDC reserve interest (about 22% of that year's total revenue, significantly higher than previous years). Entering 2024, as USDC market rates and circulation continued to increase, Coinbase's annual USDC-related interest income rose to about $910 million, a 31% increase from 2023. The USDC interest income in 2024 accounted for approximately 14% of the company's total revenue, slightly lower in percentage but reaching a new absolute high. The Q2 2025 financial report shows that Coinbase's stablecoin interest income has reached $333 million, accounting for 22.2% of quarterly revenue. This stable interest income mainly comes from Coinbase's revenue-sharing agreement with Circle: both parties split the interest income generated from the USDC reserve in a 50/50 manner, and all USDC stored within the Coinbase platform yield 100% of interest income to Coinbase. Therefore, USDC interest has become the fastest-growing and largest single-item business in Coinbase's Subscription and Service Revenue segment, providing the company with a recurring revenue source beyond transaction fees.

In 2023, Coinbase and Circle strengthened their strategic partnership, and both parties made significant adjustments to the original Centre (a jointly created governance organization) joint operating model. First, Coinbase acquired equity in Circle for the first time, becoming one of its minority shareholders. As disclosed, Circle acquired the remaining 50% ownership of the Centre Consortium held by Coinbase, valued at approximately $210 million in stock, in exchange for Coinbase receiving corresponding value in Circle shares. This transaction increased Coinbase's stake in Circle (specific percentage not disclosed, but gave Coinbase economic interests and certain decision-making power). Subsequently, the governance organization of USDC, Centre Consortium, announced its dissolution, transferring the issuance and governance rights of USDC solely to Circle. Despite Circle taking full control of USDC management, Coinbase, as a significant shareholder and partner, saw its influence in the USDC ecosystem rise: under the new agreement, Coinbase has substantial involvement and veto power in significant USDC strategies and partnerships. For instance, Coinbase has a veto right over new USDC partnership relationships proposed by Circle, ensuring its interests align with the development direction of USDC. Furthermore, adjustments to the revenue sharing mechanism (such as the aforementioned interest revenue split) further align the incentives of both parties in promoting USDC. A series of measures have made Coinbase more actively promote USDC applications: including driving the listing of USDC on more blockchains, offering USDC incentives and rewards in its international exchanges and wallet products (such as increasing USDC holding yields, etc.). In summary, the equity investment and agreement adjustments in 2023 significantly strengthened Coinbase and Circle's alliance in USDC. Coinbase is deeply involved in USDC governance through shareholding and also strongly supports USDC's adoption in its business, jointly expanding the market influence and market capitalization of this compliant stablecoin.

· Other Subscription Services: including Coinbase Earn (earn rewards for watching educational content), cashback on Coinbase Card debit card swipe fees, and revenue from Coinbase Cloud's blockchain infrastructure services, among others. While these are currently relatively small in scale, they have business synergies that align with the company's direction of building a comprehensive crypto platform. For example, Coinbase Cloud provides nodes and exchange interfaces to institutions and developers, in 2024, it will support multiple blockchain projects' networks going live, and in the long run, it may become a "cryptocurrency sector's AWS"-like business.

· Revenue from the Subscription and Services segment has increased from less than 5% in 2019 to the current 40-50%, becoming a stable source of income for the company during trading downturns. In terms of gross margin, since interest and fees are the main sources of revenue with low costs, the gross margin is close to 90%. In the future, Coinbase will continue to drive subscription business growth by introducing more subscription packages for high-frequency users, expanding the types of assets supported for staking, deepening the global application of USDC (including innovative uses like using USDC as collateral for U.S. futures trading). This segment is expected to become an important "stabilizer" for the company to withstand market fluctuations.

· Decentralized Business: Base Layer-2 Network

- Positioning and Vision: Base is Coinbase's Ethereum L2 based on the Optimism OP Stack launched in August 2023, with the aim of smoothly onboarding 100M+ Coinbase users to the on-chain ecosystem. The official roadmap in January 2025 emphasizes "achieving sequencer decentralization by the end of 2025" and sharing network revenue through community governance.

- Key Operational Metrics: As of August 2025, Base has approximately $15.46 billion in on-chain assets, 30.7 million monthly active addresses, 9.24 million 24-hour transactions, $204k in 24-hour on-chain fee revenue, ranking first in revenue among all L2 solutions.

- Revenue Contribution: Coinbase categorizes Base's "sequencer fees" as "other transaction revenue." In 2024, Base contributed revenue of approximately $84.8 million to Coinbase (Token Terminal data, official reports did not disclose detailed figures), and revenue of $49.7 million as of the current date in 2025. Base has become one of the most growth-oriented "on-chain revenue engines" for Coinbase, apart from trading fees and interest income.

· Other Potential Business Lines: Coinbase is also exploring new opportunities, such as the previous NFT digital collectibles market (Coinbase NFT launched in 2022, but with low user engagement, leading the company to reduce related investments in 2023), and payments and merchant tools (Coinbase Commerce allows merchants to accept crypto payments, primarily as a strategic move). These businesses currently have limited financial contributions, but strategically, they aim to complete the ecosystem loop and enhance user reliance on the Coinbase platform.

Let's look at Coinbase's 2024 Revenue Composition and Breakdown through a table:

Summary of Business and Product Lines

Coinbase's business has evolved from a single exchange to a multi-engine model including trading, custody, staking, stablecoins, and more. This diversification has, on one hand, reduced over-reliance on trading fees (with non-trading revenue accounting for 40% in 2024), and on the other hand, increased customer stickiness (users holding assets on the platform for staking rewards, using stablecoins, reducing the willingness to migrate elsewhere). There is synergy among the various businesses: trading leads to asset retention, asset retention leads to staking and interest income, which in turn drives users to engage in more trading. This "flywheel effect" is one of the moats Coinbase is striving to build. However, the company also needs to balance regulation and resource allocation to ensure the sustainability and compliance of each business. For example, staking and lending must comply with securities laws, stablecoins must maintain transparent reserves, etc. Overall, Coinbase's product line layout is comprehensive, pioneering the establishment of a comprehensive crypto financial service platform in the industry, providing it with a relatively robust revenue structure and growth path in the fierce competition.

5. Management Team and Governance

Regarding company management, we focus on several dimensions: 1. The background of the executives and the stability of core members; 2. The level of past strategic decisions.

5.1 Core Management Team Background

· Brian Armstrong – Co-founder, Chief Executive Officer (CEO), and Chairman of the Board, holding majority voting rights. Born in 1983, he previously worked as a software engineer at Airbnb. In 2012, he founded Coinbase, one of the earliest entrepreneurs in the crypto field. Armstrong emphasizes long-term mission and product simplicity, known internally for his principled stance (such as the 2020 release of a "non-politics" company culture statement).

· Fred Ehrsam – Co-founder and Director. A former forex trader at Goldman Sachs, in 2012 he co-founded Coinbase with Armstrong and served as the first president. In 2017, he stepped away from day-to-day management to establish the prominent crypto investment fund, Paradigm, but has remained on the board, providing insights on industry trends and company strategy.

· Alesia Haas – Chief Financial Officer (CFO). Alesia joined Coinbase in 2018, previously serving as the CFO of the hedge fund Och-Ziff (now Sculptor Capital) and as an executive at OneWest Bank, bringing extensive experience in traditional finance and capital markets. She led the company through its public listing financial preparations, emphasizing financial discipline, and decisively implemented two rounds of cost-cutting in 2022. Haas also serves as the head of Coinbase's subsidiary, Coinbase Credit, exploring crypto lending.

· Emilie Choi – President and Chief Operating Officer (COO). Emilie joined Coinbase in 2018 as VP of Business Development and was promoted to President and COO in 2020. Prior to joining, she led M&A and investments at LinkedIn (leading acquisitions like SlideShare) and was known for her expertise in strategic expansion. At Coinbase, Choi has driven a series of acquisitions (Earn.com, Xapo custody, Bison Trails, etc.) and international expansion, being seen as one of the most influential executives outside of Armstrong. She is also responsible for daily operational management, talent, and strategic project execution.

· Paul Grewal – Chief Legal Officer (CLO). Paul joined in 2020, previously serving as Deputy General Counsel at Facebook and a former federal judge. Grewal is responsible for handling legal and regulatory affairs involving Coinbase, including the 2023 legal battle with the SEC. His team plays a crucial role in compliance and policy advocacy.

· Other Key Executives: The Chief Product Officer role was previously held by Surojit Chatterjee (former Google executive), who led product development from 2020 to 2022 and departed early in 2023; the product team is now overseen by various department heads. The Chief Technology Officer (CTO) has been held by individuals like Greg Tusar and is currently a shared responsibility among engineering executives. The Chief People Officer (CPO, HR) LJ Brock oversees staff recruitment and culture building, playing a role in the company's cultural transformation. Noteworthy is also the Chief Marketing Officer Kate Rouch (former Facebook Marketing Director) and others, these talents from Silicon Valley tech and Wall Street bring Coinbase a wealth of cross-industry experience.

Executive Team Overview: The executive team presents a combination of a young and entrepreneurial founder along with professional managers from traditional finance and tech giants. This diverse background team helps Coinbase possess both technological innovation and regulatory compliance capabilities. Executives all hold substantial equity or incentive stock options, with Armstrong holding a special CEO performance stock award plan to incentivize him to achieve the company's market value breakthrough target within 10 years.

5.2 Personnel and Strategic Stability

Coinbase has experienced fluctuations in personnel and strategy but has overall maintained consistency:

· Executive Turnover: Most of the core founding team remains with the company since its inception (Armstrong, Ehrsam on the board). However, in recent years, some executives have departed: for example, former Chief Product Officer Chatterjee resigned in early 2023; the positions of Chief Technology Officer and Chief Compliance Officer have also seen several changes. Some personnel movements are related to market conditions: the bear market in 2022 and performance decline led to management streamlining. In 2020, after Armstrong released a belief in "not discussing politics," about 60 employees were laid off (including the former Chief People Officer). Nevertheless, the overall retention rate of the senior management team is high—CEO, CFO, COO have been in their positions for many years and led the company to IPO, and the General Counsel has also remained stable. This indicates a relatively mature management team, with key positions experiencing minimal turbulence.

· Strategic Direction Consistency: Since its inception, Coinbase's core mission has remained unchanged (building a trusted crypto financial system). While strategic focus adjusts with industry evolution, the overall direction is relatively clear: early on focused on Bitcoin brokerage and expanding user base; then expanded to include more cryptocurrencies and international markets; since 2020, the strategy has been to pursue a "dual-pronged" approach—serving both retail and institutional customers, while increasing subscription revenue to achieve business model diversification. Even during market downturns (such as 2018, 2022), the management team has persisted in launching new products (such as launching the USDC stablecoin in 2018 and investing in an NFT platform and derivatives in 2022), demonstrating confidence in the long-term crypto trend. Of course, there have been course corrections: for example, following the cooling of the NFT product, the company downsized resources in 2023; also, blind expansion led to two rounds of layoffs in the 2022 fiscal year, totaling about 2,100 employees being laid off (about 35% of the workforce), prompting management to enhance operational efficiency after the painful experience. Overall, Coinbase demonstrates strong strategic execution, with no disruptive pivots or major failures of overeager expansion, and decisions align broadly with industry developments.

· Strategic Consistency: If an attempt is made to quantify Coinbase's strategic consistency, such as tracking the company's early positioning in key technologies/markets, it will be found that Coinbase has essentially laid out groundwork for most important industry trends: for example, as early as 2015, it supported Ethereum (anticipating the smart contract wave), launched a stablecoin in 2018 (betting on the compliance stablecoin prospects), applied for futures licensing in 2021 (anticipating the derivatives market), and later retreated to focus on its own L2 solutions. These decisions align highly with later industry developments, indicating that the management has good industry judgment. Of course, the company has also made mistakes, such as missing out on the DeFi decentralized exchanges boom in 2019-2020 (failing to seize the decentralized finance market like DEX until later through developing Base). However, considering Coinbase's emphasis on compliance, this may have been a deliberate strategic trade-off.

5.3 Strategic Capability Review

The main cases of management's success and failures in key decisions are:

· Successful Strategic Cases: Early Compliance Emphasis – Since its inception, Coinbase has placed a high emphasis on compliance, actively applying for U.S. FinCEN registration and state licenses as early as 2013. This decision proved to be very wise later on: when competitors were forced to withdraw from the U.S. market due to compliance issues, Coinbase had established a regulatory moat, accumulated deep trust from U.S. domestic users (Coinbase has never experienced a major incident of customer fund theft), expanded its market share in the U.S. domestic market. Another success is the IPO timing choice – The management seized the peak of the 2021 bull market for a direct listing, bringing ample capital strength and brand endorsement to the company, and also rewarding early investors and employees, thereby boosting team morale. Another example is the acquisition strategy – the 2019 acquisition of Xapo's institutional custody business made Coinbase one of the world's largest crypto custodians in one fell swoop, seizing the institutional market opportunity. These demonstrate that the management's strategic vision and execution prowess are quite good.

· Failed Strategic Cases: Over-rapid Expansion Leading to Layoffs – During the 2021 bull market, Coinbase's workforce surged from about 1700 to nearly 6000 by early 2022 (currently around 3700+), with many departments being overstaffed. Armstrong openly admitted that being "overly optimistic" in personnel expansion led to efficiency decline. As the market turned cold in 2022, the company had to carry out two large-scale layoffs, affecting morale. Another setback was the underperformance of the new product NFT Marketplace – Coinbase invested resources in launching an NFT trading platform in April 2022, hoping to replicate OpenSea's success. However, due to entering late and lacking differentiation, coupled with the overall downturn in the NFT market, the platform's monthly trading volume remained sluggish for a long time, and the company eventually almost abandoned its operation. The management's attempts in some areas did not meet expectations, there were deviations in market assessment, but the overall losses were limited, and stop-loss measures were taken in time.

Overall, Coinbase's management is good, with a high level of core team stability. Their strategic decisions align with industry trends, and they have not missed major industry opportunities. Although there have been issues with cost control and some product exploration failures, the overall performance is commendable.

6. Operations and Financial Performance

In this section, we will focus on Coinbase's revenue, profit, costs, and balance sheet to evaluate the company's profitability and stability.

6.1 Income Statement Overview (5 Years)

Coinbase's revenue and profit performance are highly dependent on the cryptocurrency market, showing a "roller-coaster" pattern:

· Revenue: In 2019, the total revenue was only $534 million. In 2020, driven by the Bitcoin bull market, it increased to $12.8 billion (+140%). In 2021, during a full-blown bull market, revenue skyrocketed to $78.4 billion (+513% year-on-year). In 2022, amid a bear market, annual revenue plummeted to $31.5 billion (-60%), further dropping to $29.2 billion in 2023. In 2024, with the market rebounding, revenue strongly bounced back to $65.64 billion, doubling from 2023. In the first quarter of 2025, Coinbase continued its strong momentum from the end of 2024, achieving total revenue of approximately $20.3 billion, a 24% year-on-year growth. However, revenue in the second quarter of 2025 experienced a sequential decline: the total revenue for the quarter was about $15 billion, a significant 26% decrease from Q1 2025's $20.3 billion. This was mainly due to a 16% decrease in cryptocurrency market volatility in the second quarter, leading to a decline in trading volume as investor trading sentiment weakened. It is evident that Coinbase's revenue still highly depends on market fluctuations, with significant short-term fluctuations. Nevertheless, compared to the same period last year, the company's first-half total revenue still grew by approximately 14%. Overall, over the past 5 years, the company's revenue has shown a "roller-coaster" pattern, with significant cyclical elasticity: the compound annual growth rate (CAGR) of revenue from 2019 to 2024 is approximately 40%. However, annual fluctuations can reach more than ±50%. The boom-and-bust cycles are still evident in the first half of 2025.

Coinbase Revenue (TTM) Trend, 2020.9-2025.6, Source: seekingalpha

Coinbase Revenue (including forecast), 2020-2026, Source: seekingalpha

· Revenue Structure: Transaction fees have always been the main source, but their proportion has been gradually decreasing. In 2021, transaction revenue was 6.9 billion, accounting for approximately 87%; in 2022, transaction revenue dropped to 2.4 billion, accounting for 77%; in 2023, transaction revenue was only 1.5 billion, accounting for 52%; in 2024, transaction revenue rebounded to around 4 billion, accounting for about 61%. Correspondingly, subscription and service revenue (staking, interest, custody, etc.) increased from less than 5% in 2019 to 48% in 2023, with the proportion slightly decreasing to about 35% in 2024 (absolute amount 2.3 billion). In the first quarter of 2025, transaction fee revenue was approximately 1.26 billion (YoY +17.3%), accounting for over 60% of quarterly revenue; subscription and service revenue reached 698 million (YoY +37%), contributing over 30% to revenue, primarily driven by the increase in USDC stablecoin interest income and the growth of Coinbase One subscription product users. In the second quarter of 2025, transaction revenue and subscription revenue showed opposite trends: transaction fee revenue for the quarter was about 764.3 million, accounting for around 54% of total revenue; subscription and service revenue reached 655.8 million, a 9.5% increase YoY, accounting for about 46%, almost reaching the scale of transaction revenue. Growth in the subscription segment is mainly driven by businesses such as USDC interest and custody: the average USDC reserve balance in the second quarter increased by 13% from the previous quarter to 13.8 billion, contributing significant stablecoin interest income to the company. At the same time, staking business and institutional custody fees showed steady growth, and Coinbase's subscription revenue continued to reach new highs. Subscription/service revenue in the first half of 2025 accounted for approximately 44% of the company's total revenue, a significant increase from the 35% for the full year of 2024, further consolidating Coinbase's business diversification trend. This shift in revenue structure has reduced the company's reliance on transaction fees, helping to mitigate the impact of market volatility on revenue.

· Profit: Benefiting from a high-margin business model, Coinbase exhibits strong profitability when transaction volume is high. It incurred a loss of 30 million in 2019; achieved a net profit of 322 million in 2020 (profit margin 25%), with net profit climbing to 3.624 billion in 2021 (profit margin approximately 46%), exceeding the sum of all previous years. However, it suffered a huge loss of 2.625 billion in 2022 (profit margin -83%), making it the worst year in history; it returned to a slight profit of 95 million in 2023 (profit margin 3%). In 2024, net profit reached 2.579 billion (profit margin around 39%), second only to the peak in 2021. It is evident that Coinbase's profit and loss fluctuate significantly in sync with revenue. Net profit for Q1 of 2025 was 66 million US dollars, appearing to decline significantly compared to the previous quarter, but this was mainly due to factors such as the first-quarter drop in fair value of crypto assets, equity incentives, and litigation expenses. Excluding the adjustments for after-tax gains/losses on crypto asset investments and other one-time items, the adjusted net profit for the quarter was 527 million US dollars, reflecting the core operating results more accurately. On the other hand, in the second quarter of 2025, Coinbase's profitability showed a dramatic surge: GAAP net profit reached 1.429 billion, a skyrocketing YoY increase (Q2 2024 net profit was only 36 million), with a net profit margin of approximately 95%. However, this abnormally high profit mainly came from non-recurring income: the company recognized 1.5 billion in strategic investment gains from the revaluation of equity holdings in stablecoin issuer Circle, as well as 362 million in gains from the crypto asset investment portfolio. After deducting the above one-time gains, the adjusted net profit for Q2 was only around 33 million (the adjusted net profit needs to add back nearly 438 million US dollars in taxes related to the excluded two non-recurring income items), much lower than the 527 million in Q1 2025, reflecting a significant weakening in the core business's profitability due to the decline in transaction volume. Overall, Coinbase's profitability still fluctuates greatly with revenue: in a bullish market, net profit can reach over three to four tenths of revenue, while in a bearish market, without strict cost control, losses may occur. However, the company was able to quickly restore its profit and loss balance from a huge loss in 2022 to profitability in 2023 through cost-cutting measures and layoffs, demonstrating a certain level of cost flexibility and operational resilience.

· Cost Structure: From a cost perspective, Coinbase's costs are mainly composed of operating expenses (R&D, sales, and general administration), with direct transaction costs relatively low. Sales and marketing expenses usually account for less than 10%, reduced to below 5% after 2022, with restrained marketing spending. R&D and general administration expenses together account for about 20-30%, including a significant amount of equity incentive expenditure: for example, a one-time stock-based compensation expense at the time of the 2021 IPO, with continued equity expenditure of around $3-5 billion annually in 2022-2023 (employee stock options). The cost-to-income ratio (operating expenses/revenue) was significantly diluted during the bull market (approximately 22% in 2021), but soared during the bear market (surpassing 100% in 2022). In 2023, following cost reductions through layoffs, the cost-to-income ratio decreased to 70%. Since 2024, the company has continued to tightly control costs, aligning human resources and project spending with business needs. It is noteworthy that in Q2 2025, a significant data breach occurred, resulting in litigation and compensation expenses totaling approximately $307 million, causing a sharp 15% quarter-over-quarter increase in total operating expenses to $1.52 billion for that quarter (excluding this one-time project, core operating expenses actually continued to decline). At the same time, stock-based compensation (SBC) expenses remain a significant portion of costs and require continuous attention — annual SBC expenses of around $3-5 billion in 2022-2023, Q2 2025 single-quarter SBC expenses have already reached $196 million, slightly up 3% from Q1, indicating that full-year SBC expenses may exceed $700 million at this rate. Overall, Coinbase's cost structure is flexible, with human resources and project expenses able to adjust with the market, but attention must be paid to the dilution effect of equity incentives.

6.2 Profitability and Efficiency (5 years)

Evaluate Coinbase's profit quality and operational efficiency by combining various ratio indicators:

· Gross Profit Margin: Maintained at a high level of 80-90% in the long term, reflecting the high-profit nature of the transaction fee business. For example, the gross profit margin was around 88% in 2021, about 81% in 2022, rose to 84% in 2023 as the revenue decreased (due to the high proportion of interest in the revenue structure with no corresponding cost), and was 85% in 2024. Even though transaction volume declined in Q2 2025, the gross profit margin remained around 83%. This indicates that regardless of market conditions, most of Coinbase's revenue can be converted into gross profit, placing it in a leading position among its peers (compared to traditional securities brokers' gross profit margins of 50-60%).

· Net Profit Margin: Highly volatile. The net profit margin was 46% in 2021, comparable to the most profitable tech companies; was -83% in 2022, indicating significant losses; recovered to 3% in 2023; and reached 39% in 2024. The adjusted net profit margin after excluding extraordinary items in Q2 2025 was only about 2%. On average, Coinbase's net profit margin is around 30-40% in normal/prosperous market conditions, demonstrating strong profit leverage; but during downturns, it may incur losses, requiring timely cost reductions to return to profitability.

· ROE/ROA: Due to profit fluctuations, Return on Equity (ROE) and Return on Assets (ROA) are highly volatile. In 2021, ROE exceeded 60% (high profits coupled with limited net asset expansion from IPO); in 2022, a negative ROE of -40% was observed; in 2023, ROE was less than 2%; and in 2024, ROE rose to around 25%. As for Return on Assets, in 2021 ROA was about 20%, decreasing to around 15% in 2024, indicating a slight efficiency drop after the expansion of the balance sheet. Overall, Coinbase's ROE in profitable years is much higher than that of traditional financial companies, but its stability is lacking.

· Per Employee Efficiency: Due to significant fluctuations in the number of employees, we measure efficiency using revenue per employee. In 2021, during the bull market, per employee annual revenue reached around $1.9 million; it dropped to below $500,000 in 2022 and rebounded to the range of $800,000 to $1 million per employee in 2023 post-layoffs. This is still higher than the average revenue per employee of most traditional financial institutions, placing it at a medium to high level, demonstrating the economies of scale of its digital platform model. It is expected that in the future, with a more reasonable workforce size (currently about 3,700 employees), revenue per employee can stabilize at around $1 million. If there is another super bull market, it may exceed this level.

Comparison of Per Employee Revenue for Financial Institutions in the Trading Category (2024)

6.3 Cash Flow and Capital Expenditure (5 Years)

Coinbase's operating cash flow also exhibits cyclicality but maintains an overall positive trend:

· Operating Activities Cash Flow: In 2021, Operating Cash Flow (OCF) was very strong, with approximately $10 billion in net operating cash flow for the whole year (due to a surge in customer transaction volume leading to fund deposition). Free cash flow was significantly positive that year. In 2022, there was an operating cash outflow of around $2 billion, reflecting losses and changes in working capital. In 2023, through cost reduction and interest income, operating cash flow returned to positive around $520 million. In 2024, OCF surged, with the financial report indicating a net operating cash flow of $25 billion for the full year, more than doubling year-on-year. This was partly due to profit recovery and customer fund growth.

· Investing Activities Cash Flow: Coinbase is not a heavy asset company, and its Capital Expenditure (CapEx) is relatively low. The main investments are acquisitions and platform development investments. From 2019 to 2021, annual capital spending averaged only a few tens of millions of dollars (used for servers, offices, etc.). In 2022, it increased to around $150 million (company's purchase of office buildings and data center expansion). In 2023, CapEx contracted again to about $50 million. Regarding acquisitions, the company spent considerable cash around 2021 (such as acquiring Bison Trails, Skew, totaling around $100 million). Acquisitions slowed down in 2022-2023. In 2024, the company made small acquisitions like One River Asset Management. The overall investment cash flow was a net outflow but of a small scale, not affecting the main business cash supply. In addition, by the end of 2024 and early 2025, the company announced a significant acquisition plan for the derivatives exchange Deribit: the total transaction price was around $2.9 billion, with about $700 million in cash payment (the remaining amount was through the issuance of approximately 11 million shares).

· Free Cash Flow: Taking into account operating cash flow minus capital expenditures, Coinbase had a significant free cash flow in profitable years: $9.7 billion in 2021, negative in 2022, recovering to around $400 million in 2023, and around $2.56 billion in 2024, demonstrating ample cash generation capability. Coinbase invests excess cash in purchasing secure assets (short-term government bonds, etc.) or holds some in crypto assets.

· Financing Cash Flow: In 2021, the company raised approximately $3.25 billion through convertible bonds and corporate bonds, while also going public without issuing new shares (direct listing with no fundraising). There were no significant financing actions in 2022. In 2023, Coinbase actively repurchased or redeemed a portion of its bonds, repurchasing $4.13 billion of debt at a discount to reduce interest expenses. The company has no dividend plans and only executed small-scale stock buybacks for equity incentive hedging at the end of 2022 and in 2023. The overall financial policy is skewed towards being conservative and prudent.

· Cash Reserves: In the first quarter of 2025, Coinbase's cash and equivalents had reached $9.9 billion, while the cash and cash equivalents disclosed in the second quarter were $7.539 billion, showing a significant decrease but still remaining ample.

6.4 Balance Sheet Robustness (5 years)

Coinbase's balance sheet is relatively robust, characterized by high liquidity and low leverage:

· Debt Level: During the 2021 bull market period, the company issued debt twice: $1.25 billion in convertible bonds due in 2026, and $20 billion in senior notes due in 2028 and 2031. Therefore, the peak long-term debt was approximately $3.25 billion. In 2022-2023, the company did not incur further debt, and by the end of 2023, the redemption/buyback of bonds reduced the debt to around $28 billion. With an adjusted EBITDA of around $3.35 billion in 2024, the net debt/EBITDA is around 0 (net cash position) or gross debt/EBITDA of <0.9 times, indicating a very low leverage ratio. The overall debt ratio has been maintained at a low level post listing. It is worth noting that as of 2024, Coinbase has not used bank loans, and all debt is in the form of public market bonds, eliminating drawdown risks, with long-term maturities and low short-term repayment pressure.

· Liquidity: Coinbase holds a large amount of cash and equivalents, with an extremely high Quick Ratio. Excluding customer deposit liabilities (which correspond to equivalent customer assets), the company's core operational liquid assets far exceed current liabilities. In the 2025 half-year report, its Quick Ratio (excluding customer-related items) exceeded 3.19x, meaning cash and cash equivalents could cover all short-term liabilities more than three times. Of particular note is that its USDC reserves are highly liquid (exchangeable with the U.S. dollar at a 1:1 ratio daily). In 2023, there was a brief USDC temporary unpegging event, yet the company quickly redeemed customer withdrawals without experiencing any liquidity run issues.

· Asset Quality: The assets consist mainly of cash, cash equivalents, and short-term investments (such as high-rated bonds), accounting for over 60%. The scale of self-owned crypto assets is not large, with the fair value of crypto assets held in Q2 of year 25 being 1.839 billion, composed of: BTC 11,776 coins corresponding to 1.261 billion (68.6%), ETH 136,782 coins 340 million (18.5%), and other crypto assets 238 million (12.9%). Relative to the company's net asset size, it is manageable, and even price fluctuations would not severely impact its solvency.

Overall, Coinbase has relatively high financial security: low leverage, abundant liquidity, and it has withstood multiple stress tests. At the same time, its strong balance sheet gives Coinbase the ability to counter-cyclically invest in the market, such as maintaining R&D investment and international expansion during the industry downturn in 2022-2023, which is beneficial to its long-term competitive position.

6.5 Industry Comparison

Compare Coinbase with other listed or comparable trading platforms for the financial indicators of the 24-year and Q2 of year 25.

We compare Coinbase to Robinhood, Kraken, and Binance:

· Robinhood (US Stock Broker & Crypto Trading Platform): The net revenue in 2024 is approximately 29.51 billion, a year-on-year growth of 58%, achieving its first-ever annual profit with a net profit of 14.11 billion (a loss of 5.41 billion in 2023). Benefiting from interest income driven by high-interest rates and a trading rebound, Robinhood achieved a gross profit margin of 94% and a net profit margin of about 48% in 2024. In the first quarter of 2025, the revenue was 9.27 billion (a 50% increase year-on-year) with a net profit of 3.36 billion. With improved performance, Robinhood's stock price has risen significantly since the end of 2024 and currently has a market value of over 950 billion US dollars.

· Kraken (US-based veteran crypto exchange, not listed): The surge in trading volume in 2024 drove revenue to approximately 15 billion, a 128% year-on-year growth, approaching a historical high. The full-year adjusted EBITDA is about 4 billion, with an EBITDA profit margin between 25%-30%. By the end of 2024, Kraken's platform assets reached 428 billion, with 2.5 million monthly active paying users and an average annual income per user exceeding 700 US dollars. In Q1 of 2025, Kraken achieved revenue of 4.72 billion (a +19% year-on-year, a marginal 7% decrease quarter-on-quarter), while Q2 revenue was approximately 4.116 billion, with a further -13% quarter-on-quarter decrease. As a non-listed company, Kraken's latest valuation is not publicly disclosed. According to reports in the media, in 2021, it sought financing with a valuation of over 10 billion US dollars. Based on the Kraken private equity price on the Hiive private equity trading platform at $42.8, the corresponding valuation is around 91 billion, almost doubling in the past three months. The doubling of revenue in 2024 indicates a significant increase in its actual business scale, and the valuation multiple relative to revenue may be lower than for the listed companies Coinbase and Robinhood.

· Binance (World's largest cryptocurrency exchange, not publicly listed): As an industry leader, Binance's trading volume and user base far exceed its peers. Its financial data is not regularly disclosed, but previous industry analyses have estimated a 2023 revenue of approximately $16.8 billion, a 40% increase from the previous year, roughly 2.7 times the revenue of Coinbase during the same period. Binance is said to have achieved over $12 billion in revenue and nearly $10 billion in profit in 2022, demonstrating remarkable profitability and business scale (with a profit margin of around 80%). Due to not being publicly listed, Binance does not have a publicly disclosed market value and valuation multiples; however, based on its revenue and profit volume, even with a conservative valuation multiple, its implied market value could still reach the hundreds of billions of dollars. In terms of regulatory environment, Binance has faced compliance pressure and legal challenges in multiple locations such as the U.S. and Europe, adding uncertainty to its future growth and potential listing prospects. Overall, Binance, with its overwhelming market share, leads the industry in absolute scale, but compliant publicly listed platforms like Coinbase reflect higher market confidence in valuation metrics (such as P/S ratio, EV/EBITDA multiples), which is related to regulatory transparency and business model differences.

Let's now compare the Q2 data for Coinbase and Robinhood over the past 25 years:

Overall, the key indicators of the two companies are relatively similar in terms of revenue scale. Currently, Coinbase has a market cap of $79.8 billion, while Robinhood has a market cap of $101.8 billion. However, the revenue structure of the two companies is quite different. Coinbase's revenue comes from: trading + subscriptions/custody/stablecoin/derivatives; while Robinhood's revenue consists of: brokerage fees + interest income (the spread between interest earned on user funds deposited in banks and financing and securities lending income) + subscriptions/options/crypto trading. In recent years, the Robinhood platform has rapidly expanded its assets and user base, and even acquired Bitstamp to drive internationalization, positioning itself as a direct competitor to Coinbase in the U.S. and globally.

In summary, Coinbase's financial performance reflects the high-growth, high-volatility nature of the industry. However, with good cost control and a solid balance sheet, the company has maintained its survivability in downturns and achieved outstanding profitability in upturns. This performance resilience is both an investment highlight and a risk: if the crypto market continues to thrive, Coinbase is poised to replicate the profitability peak of 2021; conversely, in a bear market, the company needs to tighten its expenses to avoid a repeat of the loss in 2022. Currently, even with a re-entry into a bull market, the company has maintained a lean personnel structure and controlled expenses well. Going forward, it will be crucial to focus on whether the expansion of subscription services can smooth out cyclical impacts, making the company's financial performance more robust.

7. Competitive Advantage and Moat

Coinbase's ability to thrive in the competitive cryptocurrency industry and become a leader is closely related to the multiple moats it has built:

Brand Trust and Compliance Advantage

As one of the early entrants into the compliance race, Coinbase has built a strong brand reputation. It is one of the few exchanges that has obtained licenses in various states in the U.S. (having obtained 46 state/territory money transmission licenses since 2013, allowing it to operate legally in all 50 states), is registered with FinCEN, and holds a New York trust charter. Since its inception, Coinbase has not experienced any major user asset loss events. This has helped Coinbase establish a "safe and trustworthy" image in the eyes of users, especially after events such as the collapse of Mt. Gox, FTX, and thefts from several other cryptocurrency exchanges. For large institutions and mainstream users, Coinbase is often the preferred or even the only choice. For example, in the U.S. where regulatory agencies restrict trading, many traditional funds can only use licensed trading platforms, giving Coinbase a natural market share. Additionally, Coinbase actively cooperates with regulations (KYC/AML, etc.), has earned a good reputation among policymakers, and has lobbied for favorable regulations. The moat formed by the brand and compliance is difficult to replicate quickly and at a low cost by latecomers (license application processes typically take 12–18 months, accompanied by ongoing requirements such as adequate capital reserves, anti-money laundering, and annual cybersecurity audits; newcomers looking to obtain licenses in all states must invest hundreds of millions of dollars in compliance costs)—even if a new platform is technologically competitive, without regulatory endorsement and a long history of incident-free operation, it is challenging in the short term to displace Coinbase's position among conservative investors and novice users. This trust advantage also brings a premium: Coinbase can charge relatively higher fees because users are willing to pay for security and reliability.

Network Effects and Liquidity

There are significant network effects in the exchange business: more users and trading volume bring deeper liquidity and a better trading experience, attracting more users in turn. After years of operation, Coinbase has amassed a large global user base and significant trading volume. According to statistics, 67% of U.S. cryptocurrency holders have used Coinbase. Such a high coverage rate makes Coinbase the "gateway" platform in the cryptocurrency space. New coins and projects often aim to land on Coinbase to reach a broad user base. A large number of users also mean sufficient order book depth and smaller bid-ask spreads, which are crucial for the trading experience. Especially during extreme price fluctuations, platforms with deep liquidity can better accommodate large trades without significant price slippage, further solidifying professional traders' reliance on Coinbase. Network effects are also reinforced through word of mouth: the more users there are, the stronger the referral effect, and newcomers tend to choose platforms that their friends are using, creating a positive feedback loop. Breaking this virtuous cycle is very difficult for competitors unless they provide extremely differentiated services in a niche market (such as zero fees or support for special assets). Currently, Coinbase's network effects in the European and American markets appear stable.

Economies of Scale & Business Diversification Stickiness

Coinbase's scale advantage is not only reflected in the liquidity network effect but also in cost efficiency and business portfolio. As a publicly traded company, Coinbase can raise enough funds to invest in system security, product development, compliance teams, which lowers the cost per unit transaction. Smaller platforms often cannot afford expensive compliance and security investments. Coinbase's operational efficiency improves as its customer base expands, creating an economies of scale moat. Additionally, the company's diversified business segments (trading, custody, staking, stablecoins, etc.) reinforce user stickiness—users on Coinbase not only trade but also earn interest on deposits, participate in staking for rewards, make payments with USDC, etc. Multiple needs are satisfied on the same platform, increasing the switching cost.

Technological and Security Barriers

Although the barrier to entry in terms of trading technology is relatively lower compared to high-tech industries, Coinbase has built up certain technological barriers over the years in high-frequency matching, wallet security, multi-chain support, etc. Its trading engine has withstood peak bull markets (such as the 2021 daily trading volume in the hundreds of billions of dollars), demonstrating stability in handling extreme trading volumes. In terms of wallet security, Coinbase has not experienced a large-scale hack to date, a record that many peers in the same league find difficult to claim (even Binance has a record of being hacked for hundreds of millions). Furthermore, Coinbase has developed many in-house systems such as tools for analyzing and monitoring suspicious transactions, preventing market manipulation, professional API interfaces, etc., providing reliable technical support for institutions and partners. These are not easy to replicate in the short term. Particularly in terms of security and risk management, any new platform that experiences even one serious vulnerability could suffer a severe blow to its reputation, whereas Coinbase's years of security investment have built a barrier in users' minds.

Sustainability Discussion on Moats

Can the above-mentioned moats be sustained in the long term? Let's evaluate them one by one:

In terms of brand and compliance, as more mainstream institutions get involved and regulatory rules are introduced, Coinbase's existing license accumulation will become more valuable. The advantage of being a pioneer may further expand as it has established a reputation base that is difficult to shake, and it has experience and scale advantages in licensing applications and compliance costs compared to latecomers. However, regulatory uncertainty could still present challenges (for example, the worst-case scenario is a shift in U.S. regulatory style after government and congressional changes, limiting Coinbase's main markets).

The network effect is likely to be robust, as long as Coinbase does not face a trust crisis or prolonged technical failure, users are unlikely to leave easily. However, it is worth noting that the rise of decentralized finance (DeFi) may weaken the network effect of centralized platforms among some professional users (some users are turning to DEXs like Uniswap and on-chain trading platforms like Hyperliquid for self-trading), but currently, the DeFi experience and liquidity are not sufficient to significantly disrupt Coinbase. Moreover, Coinbase's own strong development of Base and smart crypto wallets is also a hedge against and response to this trend.

Economies of scale and network effects become more significant as a company expands its business. As Coinbase grows, its cost structure becomes more favorable, its user ARPU increases, creating a positive feedback loop. However, there are risks: having too many business lines may dilute management focus, and different business lines may face complex regulatory requirements, requiring assurance of "no leaks in the ship."

Continuous investment is needed to maintain technological barriers to entry. Coinbase invests heavily in research and development each year (with R&D expenses totaling $1.2 billion in 2023, accounting for 40% of revenue, a year-over-year increase of 11% in absolute terms, but a decrease to 22% of revenue share). As long as this level of investment is maintained, its technological leadership should continue.

In conclusion, Coinbase has established a certain degree of moat, especially in the U.S. domestic market, particularly excelling in trust and regulatory compliance branding. As the industry matures, the strong are likely to get stronger—funds and users will gravitate towards top-tier compliant platforms, bolstering Coinbase's moat. Unless a significant global change occurs (such as a disruptive shift where decentralized exchanges completely replace centralized exchanges, or a major mishap by Coinbase itself), its competitive advantage is expected to endure in the foreseeable future.

8. Key Risks and Challenges

Key risk factors that Coinbase still needs to face:

Macroeconomic and Industry Cycle Risks

The cryptocurrency market is highly cyclical, and Coinbase's performance is heavily dependent on transaction volume and asset prices. During a bear market similar to those in 2018 or 2022, trading activities may significantly contract, putting pressure on the company's revenue and profitability, potentially leading to losses again. Macroeconomic contractions (such as tightened liquidity and a high-interest-rate environment) can also dampen market speculation and asset prices. Additionally, the crypto market is still immature and vulnerable to single events (exchange bankruptcies, hacker attacks, whales selling off, causing a general loss of confidence). For example, the 2022 FTX liquidation event led to a sharp drop in industry trading volume, although Coinbase did not have direct risk exposure, its overall business inevitably suffered.

Regulatory Policy Uncertainty

Regulation is one of the biggest uncertainties hanging over Coinbase. Currently, the focus is particularly on the United States: previously, institutions like the SEC had not clearly defined which tokens are classified as securities, and whether exchanges are providing services in violation of regulations (this has now significantly improved). Additionally, the U.S. has not yet introduced clear digital asset trading laws, and the uncertainty remains about whether the Clarity Act will pass this year. If it is delayed until next year, along with midterm elections, there could be more uncertainty. Internationally, regulatory changes in other countries may also affect Coinbase's overseas expansion plans.

Technical Security and System Stability Risks

As a platform holding billions of dollars in user assets, Coinbase faces serious network security risks and technical operational challenges. Any hack leading to customer asset theft would have a devastating impact on the company's reputation and finances. The entire cryptocurrency industry is prone to frequent hack incidents, and despite Coinbase's good track record, vigilance is still required in the future. In addition, the risk of system crashes or interruptions during high-volume trading periods is also a concern. In the past, Coinbase has experienced several brief outages during periods of extreme market volatility, resulting in user complaints. If the platform is unable to process transactions at critical times, users may turn to other channels. Furthermore, new products (such as smart contracts) may contain code vulnerabilities, and business operations like staking may have protocol risks, all of which need to be handled with caution.

Compliance Costs and Legal Dispute Risks

With increasing regulation and standardization, the benefit is that the path to compliant operation has become clearer, but the compliance costs borne by Coinbase could also rise. For example, obtaining and maintaining licenses in various countries, anti-money laundering monitoring, personnel audits, etc., are all huge annual expenses. Increased regulatory inspection frequency can also distract management attention. If future laws require exchanges to fulfill additional obligations (such as transaction reporting, user asset capital requirements), it will add to the burden and impact profits. At the same time, being an industry benchmark makes Coinbase susceptible to lawsuits. Apart from regulatory agencies, legal risks such as class-action suits and user disputes also exist. Once involved in litigation, the company may not only have to compensate for losses but also risk damaging its brand. For example, in 2022, some users sued Coinbase for misleading advertising. Although the amount was not large, it tied up company resources. Such legal disputes may be numerous. Coinbase needs a strong legal team (currently led by a strong CLO), but legal risks cannot be completely avoided and may cast a shadow on its reputation.

Intensified Market Competition Risks

Although Coinbase's current position is strong, the competitive landscape is constantly changing. In terms of major competitors, international platforms such as Binance still pose a challenge to Coinbase in some markets (e.g., lower fees, more coins). If Binance successfully navigates regulatory challenges, its large user base could once again threaten Coinbase's global market share.

· Traditional Financial Giants Entering the Market is Also a Potential Threat: For example, Intercontinental Exchange (ICE) previously acquired another U.S. cryptocurrency exchange, Bakkt. Nasdaq and others are also making inroads. In the future, it is not ruled out that large investment banks or tech companies may launch their own cryptocurrency trading services, using their resources and funding advantages to attract customers.

· Innovation Model Competition: The rise of Decentralized Exchanges (DEX) and DeFi poses a long-term challenge to centralized platforms. Although the current DEX experience is lacking, the technology is advancing, and some experienced users have already begun transitioning to a self-custody trading approach. In the event that DEXs surpass centralized exchanges in performance and liquidity in the coming years, Coinbase may lose high-end users. Additionally, Fintech brokerages (such as Robinhood) expanding support for crypto trading have also siphoned off some retail traffic.

Mergers and Integration Risks

Coinbase has conducted multiple acquisitions and business expansions during its expansion, such as the aforementioned NFT platform, a series of startup teams, etc. However, there are risks in integrating new businesses and teams: cultural integration, technological integration, and unmet expectations. The NFT business is an example of the acquisition team not synergizing well with internal resources, resulting in poor performance. In the future, Coinbase may continue to accelerate its expansion through acquisitions (e.g., acquiring payment companies, custodians, etc.), and each acquisition may bring integration challenges or underperformance risks. Moreover, large-scale acquisitions also involve regulatory approval risks, especially since Coinbase is already a market leader, any of its acquisitions in the industry could face antitrust scrutiny in the future (e.g., acquiring another U.S. exchange could be blocked).

Global Geopolitical and Legal Environment Risks

As a multinational corporation, Coinbase also faces risks arising from political and economic changes in various countries. For example, certain jurisdictions may suddenly ban crypto trading, or international sanction events (e.g., restrictions on Russian users during the Russia-Ukraine conflict) may entangle Coinbase in complex compliance requirements. Exchange rate fluctuations, changes in tax policies, etc., could all impact Coinbase's international business profit. While these are not core risks, the company's management needs to have global resilience.

Of the above risks, regulatory and market cycle risks can be said to be the most significant, and will continue to have a major impact on Coinbase's future performance. The company has taken measures to address these challenges, but there is still considerable uncertainty.

9. Valuation

We use a relative valuation method for Coinbase's valuation and consider both bullish and bearish extreme scenarios to evaluate the target price range.

Valuation Method:

· Price-to-Sales Ratio (P/S): Due to Coinbase's significant performance volatility, using valuation metrics like P/E ratio results in instability; the P/S ratio provides a relatively intuitive scale. Historically, Coinbase has traded at nearly 20 times P/S at its peak, and less than 3 times P/S at its bear market trough. The current stock price corresponds to approximately 11.7 times P/S based on the past year's actual revenue (this high multiple reflects investor expectations for continued rapid revenue growth in the future). Compared to most other platform-oriented fintech companies, this multiple is at a moderate level, especially considering the significantly lower multiple compared to the platform-oriented Robinhood. Considering Coinbase's high gross margin and high growth elasticity that are benchmarked in the mid-range, a P/S range of around 10-15 times is reasonable, corresponding to a Coinbase market value of 67-100.7 billion, with stock prices ranging from $232–348 (calculated using a fully diluted share count of 2.89 billion shares, to be conservative).

Coinbase's Price-to-Sales Ratio Compared to Exchange-Traded Platform-type Publicly Traded Companies

· Enterprise Value/EBITDA (EV/EBITDA): Traditional exchanges are mostly valued based on EBITDA. Coinbase's current EBITDA (TTM) is approximately 3.18 billion, corresponding to a current EV/EBITDA of about 24 times. Slightly higher than the multiples of traditional exchanges such as CME and CBOE at 18-22+, but much lower than Robinhood's 63 times. Of course, compared to traditional exchanges, Coinbase has greater growth potential, but at the same time, it also has greater performance volatility, higher uncertainty, and a lower discount rate. Under the benchmark assumptions of the regulatory environment and industry development, the author believes that an EV/EBITDA range of 20-30 times could be considered for Coinbase, corresponding to an equity value (EV) of approximately 63.6-95.4 billion, with a corresponding stock price of $220 - $330. If a more substantial safety margin is desired, a discount of 20-30% could be applied to the base of EV/EBITDA 20-30 times as a buying range (PS similarly).

10. Conclusion

Summary: As a global leader in cryptocurrency asset exchange and services, Coinbase has the potential to continue growing in the cryptocurrency financial wave due to its brand trust, extensive user base, and product diversification. The company has experienced rapid growth and sharp pullbacks in the past few years, but the management has responded positively, successfully maintaining financial stability and strategic focus. The long-term value of Coinbase is promising based on the following key points:

· Its strong reputation in compliance operations and security reliability is beneficial for continuously attracting mainstream funds and institutions.

· The rise of diversified revenues like subscriptions and interest has made the business model more resilient with multiple support legs, enhancing its countercyclical capabilities compared to the past.

· A strong balance sheet and ample cash provide the company with cushioning and offensive capabilities in technological innovation, international expansion, and adverse environments.

· Long-term industry trends still point to growth: blockchain and digital assets are expected to increasingly integrate into mainstream finance, with Coinbase holding a good ecological position.

However, although the amplitude of its revenue and profit fluctuations with the industry cycle is expected to be less pronounced than the previous cycle, it is still challenging to avoid extreme ups and downs, a situation that has already been hinted at in the latest quarterly report.

In addition, Coinbase is in a highly competitive race, facing direct competition in the U.S. market from Robinhood and Kraken, while overseas there is intense competition from numerous offshore cryptocurrency exchanges, decentralized exchanges like Uniswap, and the on-chain exchange Hyperliquid are also rapidly growing.

It can be said that Coinbase's competitive challenge coexists with the opportunities of the era.

Catalysts and Watchlist: In the coming quarters, it is recommended to focus on the following factors and events that may impact Coinbase's stock price:

· Regulatory Progress: The dynamics of the U.S. Congress regarding cryptocurrency regulation, such as the passage of Clarity, would be beneficial for the development of cryptocurrency and Coinbase's business.

· Macroeconomic and Industry Indicators: Bitcoin price trends, overall transaction volume changes, on-chain activity data, etc. If mainstream coin prices hit new highs, it will bring about amplified trading volumes and a surge in new users, which is a significant positive development. Monthly industry trading volume trends should also be tracked to capture market turning points in advance.

· Product and Market Expansion: Progress in Coinbase's derivative business (such as approval in the U.S. to offer comprehensive cryptocurrency futures services), international market growth (user growth curve post-licensing), and new products (such as Base on-chain ecosystem prosperity). These are key to diversifying sources of revenue. If there is a significant increase in derivative trading volume or a noticeable increase in overseas revenue share in a quarter in 2025, it can validate the effectiveness of the company's growth engine.

· Industry Trends: Competitors' strategies, such as whether competitors like Binance and Kraken encounter regulatory bottlenecks or strategic contractions, will help Coinbase gain market share. In addition, opportunities for cooperation with traditional financial giants (such as BlackRock) entering the cryptocurrency field (such as Bitcoin ETF choosing Coinbase as a custodian/market partner) are also worth noting.

· Operational Metrics: Monthly active trading users (MTU) changes, trends in assets under management (AUM), fee levels, etc. An increase in MTU will indicate an improvement in retail investor activity; a rise in AUM indicates net inflows of funds to the platform. If the fee rate stabilizes or declines, it signifies changes in the competitive environment, necessitating an analysis of whether it is a strategic fee reduction for volume exchange or due to pressure.

11. Appendix

Glossary:

· MTU (Monthly Transacting User): Monthly Transacting User, defined as a retail user who has made at least one transaction (buy, sell, stake, etc.) within any 28-day period. Quarterly MTU is the average of each month. This metric reflects the activity of retail users.

· Adjusted EBITDA: Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization, is a non-GAAP metric used by Coinbase management to measure operational performance, with adjustments including equity incentives, one-time legal expenses, etc. A negative value in 2022 represents an operational loss.

· Coinbase One: A retail-oriented subscription service that offers benefits such as zero-fee trading up to a certain amount, priority customer support, etc., for a monthly fee. It aims to increase user stickiness and generate subscription revenue.

· MiCA: Markets in Crypto-Assets Regulation in the European Union, set to be implemented in 2024-2025, providing a unified regulatory standard for cryptocurrency issuance and services within the EU.

· TTM: Trailing Twelve Months, information covering the past consecutive 12 months up to the latest financial reporting period.

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