Coinbase reported third-quarter net revenue of $1.22 billion, down 35% year on year, and net income of $719 million, its first profit in a year, driven mainly by unrealised gains on crypto assets. Monthly transacting users were 7.4 million and assets on the platform $376.6 billion. Prediction markets passed $200 million in annualised revenue, while Coinbase One subscribers hit a record high. Average USDC held in the company's products reached a record $22 billion.
What it means: The results point to a crypto market with far less activity than last year, as trading revenue, Coinbase's main source of income, has dropped noticeably. The profit comes mostly from the valuation of crypto assets the company holds, which can reverse quickly, as the sharp price fall after the Binance theft showed. The more interesting trend is diversification: subscriptions, income from USDC reserves and prediction markets offset part of the decline in trading. The record USDC balances show stablecoins are increasingly used to store value and make payments, and Coinbase, as Circle's partner, shares in the interest earned on reserves. In Europe, Coinbase operates under a MiCA licence and has already begun converting customers' unlicensed stablecoins into USDC, so its USDC strategy directly affects European users. Prediction markets are not offered in the EU in the same way, as they would have to meet rules on derivatives or gambling. Dependence on price moves remains the main risk to exchanges' results.
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