Coinbase is heading into its second-quarter earnings with Wall Street lowering expectations after weaker cryptocurrency spot trading weighed on volumes and transaction revenue.The US-listed exchange is due to release its results after the market closes on Thursday, with investors focused on whether subscription services, stablecoin income and derivatives can offset softer activity in its core trading business. Analysts have cut estimates after market data indicated that Coinbase processed about $152 billion in trading volume during the quarter, below earlier expectations of roughly $178 billion.
The gap reflects a sharp slowdown in spot trading as subdued digital-asset prices, geopolitical uncertainty and reduced retail participation limited turnover across major exchanges. Bitcoin declined during parts of the quarter, while activity in smaller tokens remained restrained, reducing the fees Coinbase earns when customers buy and sell assets.
Several Wall Street firms, including Barclays, Benchmark, Clear Street and Compass Point, lowered their forecasts before the earnings announcement. Some analysts expect adjusted earnings before interest, tax, depreciation and amortisation to fall below consensus because of weaker institutional trading revenue and blockchain rewards.
Revenue estimates have also moved lower. Market expectations point to quarterly revenue of about $1.3 billion, compared with roughly $1.5 billion a year earlier. Forecasts vary widely because Coinbase’s financial performance remains highly sensitive to cryptocurrency prices, customer activity and changes in asset volatility.
The company entered the quarter under pressure after reporting first-quarter revenue of $1.41 billion, down more than 30 per cent from the same period a year earlier. First-quarter results missed Wall Street forecasts, while adjusted EBITDA stood at about $303 million, also below expectations.
Coinbase nevertheless increased its share of cryptocurrency trading during the first quarter, reaching a company record of 8.6 per cent. It also said assets held on its platform represented about 12 per cent of the global cryptocurrency market, strengthening its position as a major custodian for retail and institutional customers.
Management has sought to reduce dependence on spot trading through an expansion into derivatives, payments, subscriptions, stablecoins and tokenised financial products. Coinbase’s trailing 12-month derivatives volume rose 169 per cent year on year during the first quarter, while retail derivatives produced more than $200 million in annualised revenue.
Subscription and services revenue will therefore be closely watched. The division includes stablecoin income, custody fees, blockchain rewards and interest-related earnings. Stablecoin revenue is linked mainly to USD Coin, which Coinbase operates through a commercial partnership with Circle.
Interest earned on the reserves backing USD Coin has provided a valuable source of recurring income, although lower interest rates or weaker stablecoin balances could limit growth. Investors will also examine whether the company’s custody business benefited from institutional demand and cryptocurrency exchange-traded products.
The focus extends beyond quarterly numbers to legislation being considered in Washington. A market structure bill known as the Clarity Act could establish clearer regulatory boundaries for digital assets and shift oversight of many cryptocurrency trading activities away from securities regulators.
Supporters argue that clearer rules would encourage financial institutions to enter the sector, expand token listings and reduce legal uncertainty for exchanges. Coinbase has spent heavily on lobbying and political engagement, making regulatory reform central to its long-term strategy.
The legislation faces obstacles in the Senate. Democratic lawmakers have demanded stronger consumer protections and restrictions addressing financial conflicts involving public officials. Banking groups have also raised concerns that interest-bearing stablecoin products could draw deposits away from traditional lenders.
The timing has added uncertainty. Senate leaders have sought progress before the August recess, but disagreements could delay a vote. Analysts have warned that failure to secure bipartisan support before the midterm election campaign intensifies may push comprehensive legislation further into the future.
Coinbase’s share price has reflected those competing pressures. The stock has benefited at times from regulatory optimism and the prospect of greater institutional adoption, but it remains vulnerable to shifts in cryptocurrency prices and trading activity.
Competitive pressure is also increasing. Robinhood, Kraken and other platforms are expanding across cryptocurrency, equities, prediction markets and derivatives. Robinhood’s second-quarter cryptocurrency revenue fell 38 per cent year on year even as strong equities, options and event-contract trading lifted its overall results, underlining the weakness across digital-asset transactions.
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Cryptocurrency