Coinbase posts surprise loss on crypto trading slowdown

By Pritam Biswas and Ateev Bhandari

Feb 12 (Reuters) - Coinbase COIN.O posted a surprise quarterly loss on Thursday, marking its first since the third quarter of 2023, as the cryptocurrency exchange was hit by weaker trading volumes during a period of broad digital-asset selloff.

Digital assets slumped in the final three months of 2025, retreating from early October record highs following U.S. President Donald Trump's new tariffs on Chinese imports and threatened export controls on critical software.

Sentiment has remained largely downbeat for the sector, curbing volatility and, in turn, hurting the cryptocurrency exchange's trading desks.

The company reported a loss of $666.7 million, or $2.49 per share, for the three months ended December 31. Analysts had expected a profit of 55 cents per share, according to estimates compiled by LSEG.

Coinbase's transaction revenue tumbled to $982.7 million during the quarter, from $1.56 billion a year earlier.

The decline was largely driven by a more than 45% drop in consumer transaction revenue.

"Crypto is cyclical, and experience tells us it's never as good, or as bad as it seems," Coinbase said in its shareholder letter.

Bitcoin, the world's largest cryptocurrency, has nearly halved since its October 6 peak.

Investors also pulled money from spot bitcoin ETFs, which had helped drive the crypto rally in early 2025. U.S. spot bitcoin ETFs saw withdrawals of $7 billion in November, about $2 billion in December and more than $3 billion in January.

Shares of the company, which posted a rise in subscription and services revenue, were last up 1.2% in volatile extended trading. The stock is down nearly 40% this year.

STABLECOIN PROVIDES SUPPORT

The cryptocurrency exchange's subscription and services revenue jumped 13.5% to $727.4 million in the quarter, helped by a steady growth in its stablecoin operations.

Stablecoin revenue rose to $364.1 million from $225.9 million.

"It's all about the company's diversification and 'shock absorbers'," said David Bartosiak, stock strategist at Zacks Investment Research.

"Stablecoins and subscription revenues are going to lessen the revenue volatility and smooth things out versus its prior reliance on cryptocurrency trading revenues," he added.

Stablecoins have drawn growing support from mainstream financial institutions and moved to the center of U.S. policymaking, with the GENIUS Act, passed last year, setting out a regulatory framework aimed at boosting their adoption.

Coinbase generates revenue from USDC held both on and off its platform through a partnership with issuer Circle CRCL.N, earning interest on the U.S. dollar reserves that back the stablecoin.

Stablecoins are digital tokens designed to keep a constant value. They are often backed by traditional assets such as the U.S. dollar or government debt.

NO CLARITY ON CLARITY

Coinbase's withdrawal of support emerged as the key factor behind the Clarity Act's delay, after CEO Brian Armstrong objected to provisions that would curb stablecoin rewards, among other restrictions.

A White House meeting held earlier this month to resolve a months-long impasse between major U.S. banks and cryptocurrency firms ended without a breakthrough, highlighting deep industry divisions that continue to stall progress on the landmark digital-asset legislation.

The Clarity Act aims to create federal rules for digital assets, the culmination of years of crypto industry lobbying.