Extracts from Coinbase’s shareholder letter:

Q2 was a strong quarter of execution for Coinbase and marked continued progress in our journey to build a company that is increasingly efficient and financially disciplined. One year ago in Q2 2022, we started reducing our expense base to operate more efficiently. One year later, we’re proud to say that our quarterly recurring operating expenses have dropped nearly 50% Y/Y (defined as technology & development, general & administrative, and sales & marketing). This includes a 30%+ Y/Y reduction in headcount which, while painful, has paved the way for a more efficient environment where our teams are exhibiting stronger execution, and yielding results. In Q2, we again generated positive Adjusted EBITDA and increased our $USD Resources for the first time since late 2021, all while continuing to grow our product suite.

Our ambition remains unchanged: to build trusted and easy to use products and services to bring over 1 billion people into crypto. In Q2, we made further progress toward this bold goal such as expanded access to derivatives products to customers outside the US, being selected by many leading asset managers to provide critical infrastructure underpinning their proposed bitcoin spot ETF products, and more recently, made tangible steps to move our Base product from pilot to general availability. As we look ahead, we are expanding our focus towards crypto use cases beyond trading. As an example, Base is an investment in blockchain infrastructure which we expect will drive down transaction costs and increase transaction speed – key attributes we believe will unlock new use cases over time.

This quarter also represented progress for crypto regulation, both in the US and globally. In the US, we’re beginning to see a pathway for bipartisan legislation that could enshrine consumer protections and an equitable market structure framework, while also recognizing the importance of keeping crypto innovation in the US. Likewise, the EU saw the implementation of its long-planned Markets in Crypto-Assets Regulation (MiCA), which institutes uniform market rules for crypto in all 27 EU member states.

Total revenue was $708 million, down 8% Q/Q. Net revenue was $663 million, down 10% Q/Q. Other revenue grew 26% Q/Q to $45 million, driven by higher invested cash balances and higher interest rates. Recurring operating expenses collectively declined 1% Q/Q to $664 million. Net loss was $97 million and Adjusted EBITDA was $194 million. Our balance sheet strengthened to $5.5 billion in $USD resources which increased $156 million Q/Q.

Transaction Revenue 


Q2 total transaction revenue was $327 million, down 13% Q/Q. Transaction revenue was driven by a 37% Q/Q decrease in trading volume (resulting in a market share gain, as we outperformed the global crypto spot market which declined 48% Q/Q) and partially offset by higher realized fees due to a mix shift in our quarterly trading activity.

Q2 institutional transaction revenue was $17 million, down 24% Q/Q. Institutional trading volume was $78 billion, down 37% compared to Q1. Our institutional trading volume decline was primarily driven by lower Markets volume (consisting of market maker volume on our trading platforms) given the low volatility environment. Meanwhile, we continued to see trading volume growth on Coinbase Prime, which helped support a higher blended average fee in Q2 compared to Q1.

Our institutional clients remain committed to their long-term plans around digital innovation. Coinbase Prime trading volume growth was driven by continued elevated institutional onboarding, and ongoing recognition by our clients that Coinbase offers the high quality, trusted platform with a comprehensive suite of products from custody and trading to financing that they increasingly seek.

In Q2 we launched:

Expanded Derivatives Access:  In a continued effort to accelerate our global expansion strategy, we expanded access to perpetual futures products for customers outside the US in May. This is a crucial development in the derivatives market, as it has the potential to unlock latent demand from institutional and sophisticated investors that, until now, had few regulated, trusted platforms to choose from. Following approval from the Bermuda Monetary Authority, our product allows institutional clients in eligible jurisdictions, outside of the US, UK and some EU jurisdictions, to trade perpetual futures, which constituted 75% of global crypto trading volume in 2022.

We now have over 50 institutions onboarded and have traded $5.5 billion in notional contract volume in the first seven weeks of trading. While we are in the early days of investing to build liquidity and grow institutional participation, we are also working to bring new features and additional products to market over the second half of the year, such as additional asset trading books and spot tradinga We remain committed to partnering with high-bar global regulators and are encouraging the US to follow the progressive regulatory frameworks seen in emerging crypto hubs.

Coinbase Prime Financing: In Q2, we launched the first of its kind integrated crypto prime finance offering to enable active and complex trading operations for large financial institutionsa Coinbase Prime now features a fully integrated trading, financing and custody solution, allowing clients to deploy long and short leverage based on dynamic, risk-based margining aligned with best in class traditional finance principles.

In addition to launching our own products, supporting broader crypto adoption is one of our prioritiesa We have built many products which enable other developers or institutions to build on top of our products to offer their own crypto productsa A good example of this was seen in Q2 with many leading asset managers of ET2 applications selecting Coinbase as a key partner.

A number of firms and national stock exchanges have applied for bitcoin spot ET2s so far this year, which, if approved, we believe will transform the crypto landscape by broadening the asset class’s reach to new investor demographics via a highly regulated, familiar product formata Having partnered with the majority of potential issuers, including BlackRock, we believe Coinbase is strategically positioned to foster this expansion and take a leading role in the ET2 landscape by providing comprehensive support with our secure crypto custody, seamless settlement, advanced trading, and comprehensive API reporting services.

The full letter can be read here 

Source: Coinbase