In this phone conference, Coinbase's management, including the CEO, CFO, etc., discussed the company's financial performance and results for the second quarter of 2025. The meeting covered shareholder letters, risks and uncertainties in SEC filings, as well as non-GAAP financial measures, followed by an investor Q&A session.

In the most recent quarter, Coinbase performed exceptionally well, achieving a total revenue of $15 billion and an adjusted EBITDA of $5.12 billion, while accumulating a total USD resource of $93 billion, including an $18 billion crypto investment portfolio. The company is committed to promoting economic freedom and aims to become a leading global financial services platform, focusing on services such as crypto custody, trading, payments, staking, lending, etc. In this quarter, Coinbase made significant progress in core business growth, stablecoin payments, and regulatory clarity.

The company is committed to creating a cryptocurrency trading platform that covers all asset classes, called "Everything Exchange", allowing users to trade various assets such as stocks, commodities, real estate, and cryptocurrencies on a single platform. It has currently enabled trading of over 300 types of cryptocurrencies and is about to integrate decentralized exchanges, providing access to millions of tokens. In addition, the platform has launched a globally compliant derivative suite, including 24/7 Bitcoin and Ethereum contract trading, as well as perpetual contract futures in the United States. It has also acquired leading cryptocurrency options exchange Derivate to enhance its derivative trading capabilities.

The conversation revolves around the strategy of updating and innovating the global financial system through blockchain technology, specifically through the issuance and trading of "tokenized equations." This aims to leverage the efficiency, global coverage, 24/7 trading, and instant settlement advantages of cryptocurrencies to attract a portion of the traditional equity market. It also emphasizes the potential of using stablecoins for payments, as well as collaborating with business and government institutions to provide compliant and secure solutions for cryptocurrencies, thereby driving innovation and adoption in the entire industry.

In the second quarter, despite the decrease in volatility of cryptocurrencies and a slight increase in the price of Bitcoin, the market value of non-Bitcoin assets declined, leading to poor overall market performance. Coinbase focused on execution and business growth during this quarter, achieving historical highs in various aspects such as USDC collateral, custody, and derivative trading volumes. Despite a decrease in trading volume and trading revenue, the company conducted in-depth analysis on consumer and institutional spot trading, trading fee adjustments, as well as subscription and service revenue. In addition, the company also emphasized the positive response to new products such as the Coinbase Card, applications, perpetual futures, and Coinbase Commerce.

This quarter, the company's total operating expenses were $1.5 billion, a decrease of 9% compared to last quarter, excluding the $307 million data theft incident and related expenses in May. The total number of employees in the company has reached approximately 4300, an increase of 8%. The quarterly financial performance was affected by three factors: the $307 million data theft incident expenses, $1.5 billion unrealized strategic investment gains, and $362 million fair value gains on the cryptocurrency investment portfolio. Net income was $1.4 billion, adjusted EBITDA was $512 million, excluding the three aforementioned impacts. Adjusted net profit was $33 million. Looking ahead to the third quarter, the company has a strong start and is expected to benefit from rising asset prices and high volatility. Trading revenue is expected to be around $360 million, while subscription and service revenue is expected to be between $6.65 billion and $7.45 billion, an increase of approximately 8%. Technology development and general administrative expenses are expected to be between $800 million and $850 million, while sales and marketing expenses are expected to be between $190 million and $290 million. The company plans to increase hiring efforts, especially focusing on the product development area.

Coinbase has shown great interest in tokenizing securities and plans to achieve global asset allocation by integrating traditional brokers to ensure asset custody and risk management. They believe that tokenizing assets and putting them on the blockchain will unlock a vast amount of value, including enabling instant settlements, 24/7 trading, fractional ownership, etc. At the same time, Coinbase emphasizes its advantages in product trust, compliance, and usability, promising to continue to advance the development of related products and share progress in future quarters.

The conversation discussed expectations for Coinbase's Base platform in terms of blockchain identity and revenue growth, as well as strategies for competing with mainstream tech companies by providing innovations such as decentralized identity and stablecoins. Additionally, it mentioned the collaboration with PNC Bank and plans to collaborate with other banks in the future, aimed at promoting the widespread adoption of blockchain technology and self-custody wallets, with the goal of attracting one billion users to join the blockchain ecosystem.

Coinbase helps other companies easily enter the cryptocurrency market by providing Cryptocurrency as a Service (CA), a service similar to Amazon's AWS. Currently, approximately 240 institutions are using Coinbase's infrastructure, including PNC, JP Morgan, eCoro, Revolut, and Webu. As more large companies seek to integrate cryptocurrency technology, Coinbase looks forward to working with more Fortune 500 companies.

The discussion focused on the application of stablecoins and payment stacks in the current market environment, especially considering the Clarity Act and the increase in new market participants. Participants explored target customer groups, market differentiation strategies, and whether there are plans to disrupt traditional payment giants such as Visa or the banking system. Additionally, the wide range of the payment field was mentioned, including merchant payments, e-commerce websites, and P2P payments, demonstrating a deep analysis and strategic thinking of the entire payment market.

The discussion is centered around using stablecoins and full-stack solutions to improve and accelerate B2B cross-border payments, pointing out that this is a market worth about $40 trillion, with B2B accounting for 75%. The annual transaction volume of stablecoins has grown rapidly, from zero growth two years ago to $100 billion now. Through partnerships with Circle's USDC stablecoin and an efficient Layer 2 solution called Base, companies are able to offer fast, low-cost global payment services. Additionally, the company provides payment APIs for developers and businesses, as well as a way for consumers to spend cryptocurrency in the Coinbase app, forming a comprehensive solution. Collaborations have been made with companies like Shopify, and more partnership opportunities are expected in the future.

Coinbase does not see itself as a direct competitor to Visa and MasterCard, but rather hopes to innovate the payment industry by collaborating with these payment giants and leveraging the advantages of decentralized protocols. Coinbase aims to improve the use of cryptocurrencies for payments by building infrastructure and first-party products, providing better rewards for consumers, and helping merchants reduce payment fees. Through partnerships with merchants like Shopify, Coinbase demonstrates how using stablecoins like USDC can enhance payment efficiency and reduce transaction costs, while also offering consumers additional cashback rewards. Furthermore, the widespread adoption of stablecoins may change existing payment networks, but also provide new revenue streams for related companies.

A participant in the phone conference requested to follow up on a previous discussion about basic issues and asked if they could switch back to email communication to ensure that everyone could hear their question.

Today, the chairman of the U.S. Securities and Exchange Commission (SEC) announced the launch of Project Crypto, aiming to promote innovation in the cryptocurrency field through a single licensing system. This new licensing system not only reduces compliance and operational costs for companies, but also simplifies regulatory inspections and supervision. In addition, Chairman Atkins' speech also emphasized the government's positive attitude towards the cryptocurrency industry and commitment to the subsequent formal rulemaking, providing more hope for the future of the cryptocurrency industry.

Coinbase plans to play a key role in the field of asset securitization, not only as a center of liquidity and brokerage, but also participating in asset trading, product manufacturing, custody, and income streams such as lending. The company is actively exploring ways to help clients raise funds in a native cryptocurrency manner, while working with the SEC to ensure compliance. Although there is no specific launch time yet, they are committed to advancing this vision in a correct and trustworthy manner.

The discussion is focused on the growth strategy of USDC (USD Coin) on the Coinbase platform, including attracting retail and institutional investors, as well as focusing on integrating with more partners such as banks, neobanks, and remittance companies to drive widespread adoption of USDC and interoperability of the ecosystem. By sharing economic benefits, attracting more distribution partners, and emphasizing the network effects of stablecoins, it is believed that USDC, as the largest regulated USD stablecoin, is poised to gain a larger market share in the payment network.

The discussion focuses on the profit model of digital currency payment business, including stablecoin services, reducing transaction fees, and collecting securitization fees from transactions. At the same time, the discussion also touches on collaborations with banks such as PNC and JP Morgan, emphasizing that partners will have full control over the user experience, while Coinbase will provide white-label solutions, playing a role similar to AWS, focusing on infrastructure development and not directly involved in brand promotion.

The conversation revolves around a one-stop encrypted currency service solution designed for global developers and content creators. This service includes not only payment functions on a global scale, but also extends to services such as wallet creation, asset custody, reward income, and the creation of new encrypted currencies, forming a self-service model similar to AWS. Through this method, customers can choose the service modules they need based on their own requirements. In addition, the commercialization model of this service mainly relies on existing products, aiming to achieve profitability by increasing the volume of institutional business transactions and assets under custody, and is expected to promote the continued growth of these business lines.

Discussed how platforms can attract and retain users through reward programs based on the value brought by stablecoin holders increasing trading volume and product usage, such as USDC. In addition, analyzed the differences between stablecoins and tokenized money market funds, as well as how users may choose or switch products based on asset utility and network effects. It was emphasized that despite the Genius bill prohibiting stablecoin issuers from paying interest, platforms continue to provide users with competitive returns through rewards instead of interest.

Discussed the economic model and profit methods of integrating decentralized exchanges on cryptocurrency platforms, including transaction fees and investment returns. At the same time, introduced the early market performance and future prospects of cryptocurrency perpetual contracts launched by the platform under CFTC regulation in the United States, emphasizing that the current focus is on increasing market share and liquidity rather than immediate profits.

In the face of the challenge of data leakage, Coinbase is reexamining and strengthening its customer service strategy, especially in response to complex hacker attacks. The company plans to internalize some of its business processes, increase the use of automation and AI technology, and enhance user satisfaction. In addition, Coinbase is opening a new office in North Carolina to expand local customer service capabilities, investing $25 million in rewards to track down threat actors, and strengthening cooperation with law enforcement agencies to enhance system security and protect user data.