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Coinbase Shares Dip After Earnings Miss as Crypto Exchange Plans $1 Billion Buyback

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Cryptocurrency exchange Coinbase reported a decrease in revenue from the previous quarter Thursday, finding its customers were less engaged in trading crypto over the summer.

Company sales fell to $1.2 billion in Q3 2024 from $1.45 billion in the previous quarter, while coming in below analysts’ expectations of $1.26 billion, according to FactSet data. Meanwhile, Coinbase reported a $75 million profit compared to a $2 million loss a year ago.

“It was a solid quarter for the business across the three priorities we set forth early in the year: driving revenue, driving crypto utility, and driving regulatory clarity,” Anil Gupta, vice president of investor relations told Decrypt, adding it was the company’s fourth straight profitable quarter.

Coinbase’s stock price climbed as high as $279 in March, not long after Bitcoin’s price set an all-time high of around $73,000. While shares had since fallen to $211, as of Wednesday’s market close, the stock was still up 35% in price year-to-date. During after-hours trading, Coinbase’s stock price was down 4%, falling to $202 as of this writing.

The company attributed its decline in third-quarter revenue to decreased trading volumes, which clocked in at $185 billion compared to $226 billion in the second quarter. Representing the company’s main source of revenue, the dip was more pronounced among its retail customers.

Coinbase disclosed that transaction revenue derived from retail users dipped quarter-over-quarter to $483 million, falling 27% from $664 million. Meanwhile, transaction revenue from institutional users fell 13% to $55 million from $63 million in the second quarter.

The company also disclosed that its board of directors had authorized a $1 billion stock repurchasing program, with the “the timing and amount of any repurchases” dependent on market conditions.

In a research note earlier this month, Oppenheimer analysts attributed a forecast slowdown in trading volume to a “lack of positive catalysts together with the U.S. election overhang.” Still, Oppenheimer viewed Vice President Kamala Harris’ support of a regulatory framework for digital assets as a factor that could benefit Coinbase trading volumes in the fourth quarter.

“We continue to build great products, with a focus on some of the building blocks that are now in place to help bring one billion users on-chain,” Coinbase said in a letter to shareholders. “Looking beyond Election Day 2024, we are prepared to work with either administration and believe the odds of pro-crypto legislation are better than ever.”

When cryptocurrency prices were depressed during the bear market, Coinbase embraced subscriptions and services revenue as a way to diversify its business. Including income earned on assets backing Circle’s USDC stablecoin, subscriptions and services revenue briefly overtook transaction-based revenue in the third quarter of last year.

Oppenheimer analysts wrote that Coinbase’s stablecoin revenue will likely fall as the Federal Reserve pushes forward with its easing campaign. Coinbase reported Thursday, however, that stablecoin revenue came in at $246 million, rising sequentially from $240 million.

While lower interest rates dented stablecoin revenue, the company said in its shareholder letter that the figure was bolstered by a growing amount of USDC on its platform, which increased  7% to $6.6 billion quarter-over-quarter.

“We’re continuing to grow the native units on the platform,” Gupta said. “We’re optimistic about long-term stablecoin revenue.”

The company’s Ethereum layer-2 scaling network, Base, has been a bright spot for the exchange, serving as a popular destination for its on-chain products. In its shareholder letter, the company said that Base “solidified its position as the leader in on-chain activity,” with the number of transactions it processed rising 55% quarter-over-quarter.

Edited by Andrew Hayward

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David Marcus: From PayPal President To Bitcoin Believer

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David Marcus is taking his experience as the former head of PayPal and Meta Messenger and applying it to building on Bitcoin’s Lightning Network.

At Lightspark’s first partner summit, Lightspark Sync, he and his team rolled out new capabilities for the Universal Money Address (UMA) standard it launched one year ago. These new features will make it easier to tip, pay for subscriptions and invoice over Lightning (and in conjunction with banks in some cases).

At the summit, Lightspark also unveiled a new Bitcoin L2 it has built — Spark — which is interoperable with Lightning and which enables users to use bitcoin (and stablecoins) non-custodially.

I sat down with Marcus the day before Lightspark Sync to learn more about what drives him. We also discussed his strategy in harnessing the power of Bitcoin as a neutral global settlement layer, while still meeting everyday users where they’re at regarding what type of money they like to use.

A transcript of our conversation, edited for length and clarity, follows below.

Frank Corva: I recently saw you post on Twitter that you were happy to be sick on a weekend versus on a weekday because you’re so excited about what you’re working on here at Lightspark. What about this work makes you so excited?

David Marcus: Well, the general idea of changing the way money moves around the world is something that I’ve been obsessed with for a very long time. The fact that we can really change this for potentially billions of people in a profound way is a once in a generation opportunity that I get to actually work on with an amazing team. It’s exciting when you start making progress and when you start to see product market fit.

Corva: Some members of the Lightspark team just showed me the new capabilities of the Universal Money Addresses (UMA) as well as Lightspark’s new Bitcoin L2, Spark. You’re catering to both everyday people who want to move money globally and Bitcoin enthusiasts who care about self-custody. Is the strategy to just get as many people using your products as possible?

Marcus: Just to backtrack a little bit — I don’t need to convince you, but once you get the conviction that Bitcoin is the only thing that can actually be the internet of money because it’s the only asset and network that’s neutral enough to be that, then you have to wonder: Why hasn’t it already won?

If you go back and peel the onion, you start to see, first of all, bitcoin wasn’t moving all that quickly or cheaply. That’s where the Lightning Network came in. The problem with the Lightning Network, while it’s been around for a while, was that it was really hard to implement, really hard to operate and really hard to maintain. And it wasn’t super reliable for transactions.

So, we invested a good chunk of the two plus years of our existence into really making an enterprise grade entry point into Lightning for institutional players, banks and exchanges. That really changed the game, because a lot of them were looking at the lack of activity on the Lightning Network and at the complexity of getting on the Lightning Network and then it became a self-fulfilling prophecy: there’s no activity, it’s too hard, I’m not going to do it

Corva: I’ve heard those complaints before.

Marcus: We broke that cycle by launching Lightspark Connect. That was the foundation, because if you can’t make what I call TCP/IP packets for money — fragments of bitcoin on Lightning — work really well, then you can’t do anything. That was priority number one.

Then we realized we need to enable people to move the currencies they use for their everyday goods and services on the network. That’s when we launched UMA, which is this Universal Money Address standard built on top of LNURL, and extended it so that regulated entities can not only be compliant but can also change in and out of bitcoin and get a quote from the counterparty they’re sending to for the desired currency of the recipient.

That was starting to really work, but then we realized, “Okay, we need to reach [people on] the network that are going to implement UMA natively across the world, but network effects are going to take forever.” That’s where Extend comes in. It makes Bitcoin, Lightning, and UMA compatible with the legacy payment and banking rails, which is really critical.

That’s now launching, and we’re seeing really promising traction with making the entire banking sector basically compatible with Lightning. People have the ability to send and receive money in real time 24/7, no bank holidays, no weekends, nothing.

Then we realized that institutions are building on top of UMA and are offering the ability for their customers — whether they’re consumers or businesses — to claim an UMA address, which is good for peer-to-peer payments, but there’s so much more that we can do. That’s where UMA Request and UMA Auth come in.

Corva: From what I’ve learned thus far, these seem like they will be quite important for merchants.

Marcus: With UMA Request, whether you’re a business or an e-commerce site, you can request money from a wallet [that holds] another currency, and have the transaction settled on Lightning. Then there’s UMA Auth, which is OAuth for money. It’s basically the ability for wallet holders or account holders that are UMA-enabled to delegate push and pull of funds with user set limits. If you make the credit card comparison, you can give your credit card for a subscription, but you don’t set the limit.

So now, if you look at where we are: We basically made Lightning the thing that moves bitcoin fast and cheap — really easy to integrate, maintain, and operate. We figured out a way to move fiat currencies on top of the network in a seamless way. We extended the network to make it compatible with the old banking rails. But what’s missing for Bitcoin now to win fully and entirely and become the true open standard for moving money on the internet? I think there are two things that are holding it back.

One is self custody wallet support. If the network is a closed network and only works between custodial entities, we don’t want that. We want this thing to be as open as possible. Also, for developers, if you need to ask someone for permission to develop something, to test something, to build something, then it’s not like the internet — it’s like CompuServe or AOL.

Support for fast and cheap self-custody wallets on Bitcoin is something that we tried to figure out with Lightning, and it’s basically impossible. I mean, it’s possible but economically non-viable to park that amount of liquidity in front of every self-custody wallet for an eventual future transaction. Then, there are a bunch of different things that we explored with LSPs. They are either non-compliant or have a lot of other issues around how they move money.

The second thing was stablecoins, which are basically a version of a US-dollar denominated bank account for people who can’t have the real thing. As they grow in popularity and usage, if we can’t make them travel natively on Bitcoin, then we’re at a disadvantage. And so that’s why we built Spark, which is what we see as a totally non-linear jump forward for Bitcoin that will enable self-custody wallets to interoperate fully with Lightning.

It really extends the reach of self-custody to Lightning. It makes stablecoins a reality on Bitcoin, which they couldn’t be as well on Lightning, because, if you look at Taproot Assets and [other protocols like it], they’re pretty good on top of Lightning, but then you go back to the problem of pairwise channels for each of those stablecoins. In a world where you’re going to have thousands of stablecoins, it’s just not going to work.

We believe Spark solves the last two problems standing in a way of Bitcoin becoming the internet of money.

Corva: UMA Auth enables people to make payments within other apps. Was it challenging to build something that accomplishes this, something that makes payments and tipping not only possible but easy?

Marcus: There are several things here to unpack. First of all, making Lightning work really well for regulated entities was really hard. Once you’ve done that, you need to build something that enables them to move the money that people want to use and do it in a way in which regulated entities can meet their compliance requirements. That’s something that’s non-trivial.

Then, the Extend piece is actually understanding how payment systems work and really doing the work — which is a lot of work — to make the network compatible with existing payment rails.

So, A, it’s a lot of work. B, it’s a lot of understanding of not just how Bitcoin and Lightning work, but also how traditional payments globally work, what the regulatory landscape looks like, and what people, what companies and regulated institutions actually need to trust the network that they’re going to connect to and offer to their customers.

Corva: Do banks see the benefits in using Lightning as a settlement layer? In some ways, it seems like with what you’ve built, there would be no need for CBDCs, which would help keep smaller banks in business, because it isn’t a given that CBDCs will be able to be used for international remittances.

Marcus: Some banks do, and some others will eventually, but they’ll take a little more time.

At the end of the day, if you build a more efficient network that enables global money movement faster, cheaper, in real time 24/7 and with no blackout dates, then that’s where money is going to flow and the financial system and the ecosystem players are just going to need to adapt to that.

If you’re a bank you’re going to be able to offer global payments to your clients at a cheaper rate and have a margin on top of that, which you know is going to be very comfortable if you’re competing with the current alternatives — international wire transfers are still forty five to fifty dollars.

Corva: You’re working with Nostr Wallet Connect (NWC) and the team from Alby. It seems like you really have your ear to the ground regarding new technologies coming to market in the Bitcoin, Lightning and Nostr spaces.

Marcus: Absolutely. With Nostr Wallet Connect, there’s actually a really good solution to the problem of delegating Auth, or delegating the ability to push and pull from a wallet with a protocol, that is starting to have nascent network effects in the Bitcoin and Nostr communities.

It’s really good work, and so why not extend it and enable more things to happen with Nostr Wallet Connect for mainstream use cases? That’s the way we look at things. We look at what the entire community is building, we contribute to those efforts, and then we try to extend it to bring it to mainstream consumers so they can use it in a way that is going to be familiar and not foreign to them.

Corva: Do you have any final thoughts you’d like to share?

Marcus: We’re really excited. We feel like all of these capabilities that we’ve been hard at work on in are almost two and a half years of existence are reaching a tipping point right now where basically there are all of the capabilities that are required for Bitcoin to decisively win at becoming the open internet for money, and now it’s just a matter of executing, of finding all of the entities that are going to not only share that vision but execute it with us.

That’s why — to your point about me not wanting to be sick on a work day — I feel like this is just too exciting to not work on every day.



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Coinbase, Visa Direct Roll Out Instant Funding Amid Soaring Bitcoin Demand

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U.S. publicly-listed crypto exchange Coinbase has rolled out real-time account funding for its customers in the U.S. and Europe amid a fervent market that has witnessed increased trading activity in recent days.

Through integration with Visa Direct, Coinbase users with eligible debit cards can now deposit funds into their Coinbase accounts in real-time, removing traditional delays in transferring money, Visa said in a statement on Tuesday.

It comes as the price of Bitcoin, the world’s largest crypto by market capitalization, soared to just below its March all-time high near $73,700 on Tuesday. Exchanges, like Coinbase, collect revenue from those seeking to speculate on the asset class and typically earn higher fees on rising crypto prices.

With millions of users already using debit cards linked to their Coinbase accounts, the companies said the new functionality allows users to take advantage of trading opportunities more readily.

“Providing real-time account funding using Visa Direct and an eligible Visa debit card means that those Coinbase users with an eligible Visa debit card know that they can take advantage of trading opportunities day and night,” Yanilsa Gonzalez Ore, head of Visa Direct for North America, said in the statement.

In addition to real-time deposits, users can purchase cryptos directly with their Visa debit cards and withdraw funds to their bank accounts without delays.

The new service complements Coinbase’s existing Visa debit card, which is available to U.S. customers. Coinbase launched the card in October 2020, which allows users to spend Bitcoin and other cryptos for online and in-store purchases and convert crypto to cash at ATMs.

The integration with Visa Direct comes just two weeks after Coinbase ended its Paycheck Direct Deposit service, a feature that had previously allowed users to allocate part or all of their paycheck to be paid in crypto. 

Even though complaints poured in from users for the abrupt ending of the feature, the exchange expects to “bring back a better retail direct deposit experience in the future,” it said at the time.

Edited by Sebastian Sinclair

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Golden State Warriors Name Coinbase as Crypto Sponsor, Replacing FTX

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Coinbase has struck a deal with the Golden State Warriors NBA team, the latest sign that digital asset companies are taking a fresh look at the value of U.S.-based sports marketing deals—and that teams and leagues are keen on such deals after many were burned in the wake of FTX’s collapse.

As part of the deal, the crypto exchange’s branding will be featured prominently across the Warriors’ Chase Center and the team’s limited-edition merchandise, Coinbase said in a statement this week. The trading platform will also run on-chain giveaways and game-day activations for Warriors fans.

The deal deepens Coinbase’s existing multi-year partnership with the NBA, as U.S.-based sports marketing deals experience a broader resurgence in the crypto industry.

“Our exclusive partnership with the Golden State Warriors gives fans simple and fun ways to try it out,” Coinbase Chief Marketing Officer Kate Rouch said in a statement. “We’re excited to bring Dub Nation on-chain.”

Coinbase did not disclose the official terms of the deal, including its cost and duration. Neither Coinbase nor the Warriors immediately responded to Decrypt‘s request for comment.

This latest agreement comes amid a resurgence in crypto companies’ partnerships with American sports franchises. In the year to date, crypto companies have forged three times as many sports-related deals as they did in 2023, CoinGecko data shows.

Many sports marketing deals fell apart in 2022, shortly after digital assets exchange FTX collapsed, plunging the crypto market into a deep rout. The Warriors were one of the teams that had signed with FTX, in a $10 million deal announced in December 2021. Other teams and leagues were similarly burned in the fallout of the exchange’s abrupt closure and bankruptcy.

Edited by Andrew Hayward

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