Crypto exchange Coinbase reported strong Q2 results with $1.4 billion in revenue. Despite a decrease in trading volumes from Q1, the exchange was still able to achieve its third straight profitable quarter. Meanwhile, its Base blockchain introduced Basenames for improved on-chain identity management. Despite its recent success, Crypto.com surpassed Coinbase in trading volume, likely due to an increase in institutional clients and the launch of spot Ether ETFs. However, ByBit is facing some challenges as it stopped operations in France because of regulatory issues.
Coinbase Reports Impressive Q2 Performance
Coinbase shares rose 3.2% hours after its latest Q2 results filing, which reported $1.4 billion in revenue along with an impressive year-on-year increase in crypto trading volumes. The crypto exchange reported $266 billion in consumer and institutional trading volumes, matching analyst estimates, though it was a decrease from the $312 billion reported in Q1.
Revenue gains were largely driven by subscription and services revenue, including stablecoin revenue, blockchain rewards, and fees. This contributed to a 17% increase in revenue from Q1, and is almost double the revenue from Q2 of 2023. This rise was also partly due to Coinbase serving as a custodian for several asset managers issuing spot Bitcoin exchange-traded funds (ETFs).
Coinbase Q2 summary (Source: Coinbase)
Transaction revenue from crypto trading activity doubled from Q2 2023 to $780.9 million, although it declined from the first quarter. Of this, $664.8 million came from consumer-based transactions, which fell short of a $695 million estimate from investment research firm Zacks. Meanwhile, institutional transaction revenues were $63.6 million, which was also more than the $55 million estimate.
This was the third straight profitable quarter for Coinbase and the sixth on an adjusted EBITDA basis, with a net income of $36 million for the quarter.
Coinbase also reported $319 million in pre-tax cryptocurrency losses in its investment portfolio, mostly paper losses due to lower market prices at the end of Q2 compared to Q1. Despite these challenges, Coinbase still achieved regulatory progress in Washington DC, which it described as a victory.
According to Coinbase, crypto legislation is gaining bipartisan support in the US, with real momentum in both the House and the Senate for passing meaningful legislation. Before the earnings report, Coinbase's share price fell 5.2% to $212.6 on Aug. 1 but rebounded by 3% after the results were posted, according to Google Finance data.
Coinbase share price (Source: Google Finance)
Base Blockchain Debuts Basenames
Coinbase is already working on making Q3 just as successful. The team behind the Base blockchain introduced Basenames, a new tool that is designed to make alphanumeric blockchain addresses more human-readable. It leverages the Ethereum Name Service (ENS), which provides users with .eth addresses. Basenames will then offer addresses like vitalik.eth or tom.base.eth.
At Coinbase’s BaseCamp Summit, Base Head of Product Thomas Vieira stated that Basenames aims to facilitate connections among builders and improve on-chain identity management.
Users can register a name by connecting various wallets, including MetaMask, Rainbow, and Coinbase Wallet. The platform also features a webpage for searching and interacting with other Basename addresses, and allows users to customize profiles with bios, social media handles, and relevant skills. Basenames will also function as an on-chain resume that will let users back up their claimed talents with verifiable blockchain data.
According to Vieira, Basenames address a key issue of connecting builders in the community, and makes it much easier to find collaborators. Another goal of the tool is to reduce errors in sending payments by providing easily recognizable addresses, similar to ENS and Unstoppable Domains. Basenames will feature a Base-specific domain extension, like base.eth.
The product is initially available to attendees of BaseCamp and will be rolled out to the general public in the next few weeks.
Crypto.com Surpassed Coinbase in Trading Volume
Crypto.com surpassed Coinbase in trading volume. This was mostly driven by an expanding list of institutional clients and the launch of the first spot Ether ETFs in the United States. The centralized crypto exchange saw a 23% increase in reported 24-hour trading volume, reaching $3.27 billion. This was enough to surpass Coinbase’s $2.59 billion, according to Messari data.
Top exchanges by volume (Source: Messari)
Giuseppe Giuliani, the managing director of Crypto.com, attributes this growth to stronger market conditions and an improved product offering. He stated that the acquisition of new clients, including large institutions and advanced retail traders, has been a major factor in the exchange’s rising volumes. The launch of the spot Ether ETFs on July 23 played an especially crucial role as Crypto.com saw double-digit growth in Ether spot and perpetual volume week-on-week.
The exchange has also seen increased interest from companies in the traditional finance sector, with Bitcoin’s open interest hitting a record $39.46 billion on July 29. Giuliani pointed out that there has been a nearly fourfold increase in open interest on Crypto.com since the beginning of 2024, which was primarily driven by new institutional entrants from both traditional finance and crypto-native backgrounds.
ByBit Halts Operations in France
Unfortunately, things are not going well for all crypto exchanges. ByBit announced on Aug. 1 that it is stopping operations in France and will be restricting account features for French users because of "recent regulatory developments" by France's financial regulator, Autorité des Marchés Financiers (AMF).
French users' accounts will be set to "close-only" mode starting Aug. 2, which will prevent new positions from being opened or new funds from being deposited. From Aug. 13, all open positions will be automatically liquidated, and card services will be suspended. French clients can still withdraw any remaining funds from their ByBit accounts.
ByBit did share that it intends to return to the French market in the future after securing the necessary regulatory licenses. The AMF issued a warning to French residents on May 16, stating that ByBit has been blacklisted since 2022 for failing to register as a Digital Asset Services Provider (DASP). The AMF then warned that the exchange could be shut down at any time.
In June, ByBit surpassed Coinbase to become the world's second-largest exchange by trading volume after gaining market share from Binance, which faced regulatory challenges globally. France's AMF also targeted Binance in December of 2023 in the middle of founder Changpeng Zhao's legal issues in the United States, forcing Zhao to relinquish ownership of Binance France to shareholders with equal stakes in the company.
