From Coinbase shareholder letter:

Q2 was a quarter of strong progress for Coinbase and the crypto industry. In addition to solid financial results and continuing to build trusted products to help drive crypto adoption, Coinbase and the crypto industry made great strides towards achieving regulatory clarity in the US, which we believe will be a major unlock for innovation in the industry.

We generated $1.4 billion in total revenue and $36 million in net income* in Q2. Adjusted EBITDA was $596 million, and Q2 marked our 6th consecutive quarter of positive Adjusted EBITDA. We are making good progress on diversifying our revenues, as subscription and services revenue reached nearly $600 million. Lastly, our balance sheet strengthened to $7.8 billion in $USD resources, up $733 million Q/Q.

We also saw extraordinary strides in achieving regulatory clarity, which serves as a vital unlock for Coinbase and the broader cryptoeconomy. Advancing crypto legislation is now a mainstream issue. Stand With Crypto has amassed over 1.3 million crypto advocates, many in swing states, politicians on both sides of the aisle have taken notice, and there is real energy in both the House and Senate around passing legislation.

We will continue driving this forward through the fall elections and beyond. On the product front, we made innovative updates to expand utility, speed, efficiency, and ease of use in Q2. These updates are highlighted by 300% Q/Q growth in the number of transactions on Base — our Layer 2 solution — the expansion of USDC through partnerships and compliance, the launch of smart wallets, improvements to Simple and Advanced trading, and the expansion of Coinbase Financial Market’s derivatives offering.

Coinbase $COIN Q2 2024 results 👇🏻 pic.twitter.com/3P8masZwwH

— Jevgenijs Kazanins (@jevgenijs) August 1, 2024

Transaction Revenue

Total crypto market capitalization decreased 11% Q/Q when comparing the end of Q2 to the end of Q1, as crypto asset prices were elevated towards the end of Q1 in connection with the launch of the BTC ETF products. The average crypto market capitalization increased 20% Q/Q over the same period. Meanwhile, crypto asset volatility – a key driver of revenue – declined approximately 13% when comparing the Q2 average with the Q1 average, resulting in softer crypto spot market trading conditions in Q2 compared to Q1, particularly in the US.

Total Coinbase trading volume* was $226 billion, down 28% Q/Q, outperforming the US spot market – where we derive the majority of our trading volume – which declined 30% Q/Q. Total transaction revenue was $781 million, down 27% Q/Q, and benefited from growth in derivatives and Coinbase Wallet trading fees, where we do not report trading volume associated with revenue.

Q2 institutional transaction revenue was $64 million, down 25% Q/Q. Q2 institutional trading volume was $189 billion, down 26% Q/Q.

USDC Expands Adoption Through Partnerships and Compliance

Stablecoins are crucial for making the financial system more accessible and equitable, merging the benefits of cryptocurrencies with the reliability of fiat currencies. To expand adoption of crypto, Coinbase and Stripe announced a partnership in Q2. Stripe integrated USDC on Base, enabling faster, cheaper transfers to over 150 countries and quick fiat-to-crypto conversions for US customers.

Coinbase now includes Stripe’s fiat-to-crypto onramp in Coinbase Wallet, allowing instant crypto purchases with credit cards and Apple Pay. This collaboration leverages Stripe’s vast network and Base’s efficient transaction infrastructure, significantly expanding USDC’s global reach and utility, and reinforcing our commitment to improving the financial system.

Additionally, USDC is the first stablecoin to achieve MiCA compliance, marking a significant milestone in expanding compliant access to USD-backed stablecoins and paving the way for broader adoption across Europe.

Coinbase Financial Markets (CFM) Expands Contracts, and Expands Leverage

CFM is focused on making futures trading more accessible to a broader range of traders in the US. CFM expanded Coinbase Advanced to include more contracts, becoming the first platform to offer crypto futures for Dogecoin, Bitcoin Cash, and Litecoin, as well as the ability to trade futures on the Coinbase mobile app on both iOS and Android. Additionally, CFM introduced up to 20x leverage on commodity futures and 5x leverage on crypto futures, providing more opportunities for our traders.

Coinbase Prime Strengthens its Position as the Platform-Of-Choice for Institutions

In Q2, Coinbase won custodial mandates with 8 of 9 ETH ETFs – building on top of our foundation as the trusted primary custodian for 9 of 11 US BTC ETFs products. ETFs provide a simplified way to invest in funds that own ETH and open up a regulated avenue for additional capital to enter the crypto market. In May 2024, ETH ETFs were approved by the SEC, and these products launched in July 2024. This is another huge step forward for regulatory clarity as it confirms what we have been saying for years: ETH is not a security.

Source: Coinbase

Tom Duff Gordon, VP of international policy at Coinbase, said in an email: “The performance seen over this quarter demonstrates the extraordinary progress we as a company have made towards driving regulatory clarity on a global scale. Crypto has proven to be more than just a trend; it represents a fundamental shift in the financial system. Today’s rising consumers think the current financial system is unfair and outdated, and our performance to date reflects this sentiment. The Stand with Crypto movement has amassed over 1.3M crypto advocates globally, including in the UK.

At Coinbase, we’re uniquely positioned to capture the growth from regulatory clarity, as we continue to build trusted products that contribute to driving a fairer, cheaper, faster financial system. Looking forward, our focus for Q3 will continue to be pushing for further regulatory transparency, building on the growing momentum to pass bipartisan law in the US, potentially as early as this year.”