Coinbase Earnings Disappointment Mitigated by USDC Interest Income

Transaction revenue was down 44% quarter over quarter


Blockworks exclusive art by axel rangel


Coinbase posted lower-than-expected third quarter revenue but beat on earnings per share after the close Thursday, sending the stock whipsawing in after-hours trading. 

The cryptocurrency exchange reported $590 million for the quarter. Analysts had projected $641 million. Transaction revenue — historically Coinbase’s biggest money-maker — was down 44% from the second quarter. 

“As I look back at the quarter, obviously there were macro headwinds, and that ties directly into our trading revenue,” Coinbase CEO Brian Armstrong said during the company’s earnings call Thursday. 

Coinbase, like competitor Robinhood, benefitted from interest income this quarter. The exchange, which owns stablecoin USDC along with issuer Circle, collects interest payments on the stablecoin’s reserves. With ever-rising rates, the payouts have increased. 

In the second quarter, Coinbase’s interest income increased five times to $32.5 million. In the third quarter, the figure jumped 213% to $101.8 million. 

Monthly transacting users fell to 8.5 million, down from 9 million in the second quarter. 

“Macro conditions deteriorated in Q3, resulting in the daily average crypto market cap and volatility declining 30% and 24% sequentially, respectively,” Coinbase wrote in its shareholder letter. “This drove lower crypto trading volume and a continued shift in our retail customer’s behavior from trading to ‘hodl’ing.’”

Regulatory clarity is going to be essential to bringing back token prices and interest in the crypto industry, Armstrong said. 

“There’s an opportunity to see the token prices potentially decouple from the broader macro environment, and we don’t know if that will happen,” Armstrong said. “Unfortunately, regulation by enforcement [is having] pretty chilling effects on the US market. It’s harming US industries in the sense that it’s encouraging them to go offshore.”

The earnings come a day after Coinbase recorded a major departure: Chief Product Officer Surojit Chatterjee said he was leaving the company after about a year and a half. 

“It’s time to get off the ride and catch my breath,” he wrote on LinkedIn Wednesday. 

COIN ended the New York trading session down 8.1%. The stock dropped an additional 2% in after-hours trading on earnings, before bouncing back and rallying 7.5% as of 4:35 ET.

“We’re taking a very trusted compliance approach, globally,” Armstrong said. “We’re not trying to cut any corners. I think that’ll pay off for us.” 

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg


Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.


MicroStrategy discloses the purchase of 16,000 bitcoin throughout November


Digital asset firms face potential new regulatory landscape under Treasury’s proposed authority expansion


Uniswap Labs will be providing trading APIs to Talos investors through Fireblocks


DYDX supply will climb by up to 80% after the Friday unlock, but a couple factors make a massive sell-off appear unlikely


Switzerland-based Pando Asset, which has crypto products trading on the SIX Swiss Exchange, now looks to the US


Binance does not hold the required licenses to advertise and serve customers in the Philippines, the country’s securities regulator said