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Coinbase: A Stroke of Genius

Regulatory clarity supercharges Coinbase’s stablecoin-driven growth

NASDAQ:COIN
$373.85+5.36%
Updated: Jun 24, 2025
Financials & Real Estate

Bull & Bear Case

An overview of the main reasons to invest and the key risks involved.

Bull Case

Real-World Use, Not Just Trading

Utility-based services like USDC and staking are growing into core revenue engines.

Stablecoin Rules Are Now Clear

GENIUS Act provides regulatory certainty and opens stablecoin rails to institutions

More Than Just an Exchange

Deribit boosts institutional credibility, improves margins, and diversifies trading volumes

Bear Case

Interest Rate Sensitivity

USDC income highly exposed to macro rate cycles and declining global yields

Legislative Execution Risk

Regulatory momentum could reverse if political gridlock or state-level challenges emerge

Execution Risk in Derivatives Integration

Operational friction or delays integrating Deribit could limit strategic value realization

Executive Summary

Coinbase

Coinbase is one of the largest cryptocurrency platforms in the world, used by over 100 million people. It allows users to buy, sell, store, and earn rewards from digital assets like Bitcoin. Beyond trading, Coinbase offers tools for institutions and developers, and it helps power a major digital dollar called USDC.


A recent U.S. Senate bill called the GENIUS Act gives legal clarity to stablecoins like USDC. This benefits Coinbase significantly, as it's a core part of their business. Add to that a major acquisition of Deribit (a crypto options trading platform) and growing global reach, and Coinbase is evolving into a broader financial platform that earns from services, not just trading fees.


As the largest and most liquid single-stock exposure to crypto, Coinbase is increasingly seen as the gateway to digital assets becoming embedded in global financial systems. With the U.S. and other major economies progressing toward formal regulation, it stands to benefit directly. Coinbase also serves as the infrastructure for the “picks and shovels” of the Bitcoin treasury movement, enabling institutions to hold, manage, and transact in BTC securely.

Investment Thesis

Overview of buy and sell case of the business.

Why Invest?

Key pieces of information about the business that you need to know about.

Real-World Use, Not Just Trading

Coinbase is increasingly positioning itself as a hub for crypto-related financial services that go far beyond speculative trading. USDC, its core stablecoin product, acts as a bridge between traditional finance and blockchain-based services. Users are now turning to Coinbase to earn interest through staking, access decentralized finance (DeFi) applications, and manage their crypto portfolios more effectively. This shift toward utility is reflected in its revenue: services like USDC integration and staking rewards now form a major revenue pillar. As stablecoin adoption grows and new features like USDC loans and cross-border payments expand, Coinbase is well-placed to serve both everyday users and institutions in ways that traditional banks currently can't.

Stablecoin Rules Are Now Clear

With the passage of the GENIUS Act in June 2025, the legal fog surrounding stablecoins has lifted. The law establishes transparency requirements, mandates 100% reserve backing, and creates a regulatory framework that reassures users and institutions. Coinbase, being the primary distributor of USDC, stands to benefit more than any other player in the space. This development turns what was once a regulatory risk into a competitive advantage. It allows Coinbase to confidently build new products and services on top of USDC, including savings features, payments, and on-chain lending, knowing that the regulatory environment is now supportive.

More Than Just an Exchange

Coinbase’s $2.9 billion acquisition of Deribit signals a bold push into the world of derivatives and options trading, areas traditionally dominated by large institutions. Deribit brings a loyal base of professional traders and over $1 trillion in annual trading volume. Integrating this with Coinbase’s existing platform gives it one of the most comprehensive trading offerings in crypto. It's not just about adding volume. It's about increasing the quality and predictability of earnings by accessing high-frequency and institutional-grade traders. As crypto matures, such features are increasingly essential to retaining relevance in both bull and bear markets.

Catalysts

The key events that could drive investment opportunities and shift markets.

Near term
  • Passage of the GENIUS Act through the House and into law would cement stablecoin legality, providing a green light for broader adoption of USDC and related services. It would also offer immediate reputational and operational benefits to Coinbase as the primary USDC partner.

  • Strong Q2 earnings driven by sustained growth in USDC deposits, rising Coinbase One premium memberships, and increasing Base usage would reinforce investor confidence in recurring revenue growth.

Medium term
  • Launch of B2B USDC payment services will mark Coinbase’s expansion into the crypto-payments space, offering small and medium-sized businesses faster, cheaper cross-border transactions.

  • Growth in DeFi lending products, particularly those using Bitcoin as collateral for USDC loans, could attract both retail and institutional clients looking for alternatives to traditional credit markets.

Long term
  • Completion of Deribit integration, allowing seamless spot and derivatives trading from a single Coinbase platform, would open up new revenue streams and deepen institutional appeal.

  • Broader geopolitical and regulatory acceptance of crypto, including endorsements of Bitcoin and USDC as strategic financial infrastructure, could bring in sovereign-level participation and dramatically expand the addressable market.

Key Risks

Key pieces of information about the business risks that you need to know about.

Interest Rate Sensitivity

A large portion of Coinbase’s revenue from stablecoins like USDC comes from interest earned on cash reserves. These earnings are highly sensitive to prevailing interest rates. If the Federal Reserve or other central banks begin to cut rates, the yield on USDC holdings could shrink, directly impacting Coinbase’s most stable revenue stream. While Coinbase is working to diversify this income through products like payments and DeFi loans, its exposure to rate movements makes it vulnerable to macroeconomic shifts.

Legislative Execution Risk

Although the GENIUS Act passed the Senate, its implementation still hinges on successful reconciliation with House legislation and final passage into law. If amendments or compromises water down the supportive elements of the bill, or worse, if the bill fails. It could reignite regulatory uncertainty. This would again put pressure on stablecoin issuers and exchanges like Coinbase that depend heavily on compliant and scalable infrastructure for their services.

Execution Risk in Derivatives Integration

Coinbase’s acquisition of Deribit opens up a massive new business line, but the integration comes with challenges. Regulatory approval is still pending, and merging the two platforms, both technically and culturally, requires significant coordination. Missteps could delay product launches or alienate institutional clients. Additionally, while Deribit has historically been profitable, aggressive incentives or rebates to attract users may compress margins in the short term. Failure to execute effectively could undermine what is meant to be a strategic diversification.

Follow the Experts

Quickly navigate key insights from industry experts and leverage their knowledge and market intelligence.

Brian Brooks profile

Brian Brooks

Former Acting OCC Comptroller

97k audience

Expert Insights

article

"Coinbase's regulatory victory could set the precedent for how crypto is governed in America."

Meltem Demirors profile

Meltem Demirors

Chief Strategy Officer, CoinShares

271k audience

Expert Insights

article

"USDC’s integration into on-chain finance is Coinbase’s silent growth engine."

Mike Colonnese profile

Mike Colonnese

Managing Director, Senior Crypto & Blockchain Analyst at H.C. Wainwright & Co

1.5k audience

Expert Insights

article

"We remain buyers here and are raising our price target to $350 from $330… the company’s market share gains and bullish management outlook make the stock still undervalued relative to its fair valuation"

AInvest Editoral team profile

AInvest Editoral team

Finance

1.3k audience

Expert Insights

article

“Public companies are increasingly including crypto assets in their balance sheets, a trend supported by the regulation that will come into force in 2024… this trend also brings new systemic risks, particularly for companies that finance crypto purchases with convertible debt.”

article

“The weakening of the dollar’s global dominance and the rise of Bitcoin as a hedge against inflation could also increase interest in crypto.”

article

“Coinbase’s unique position as a gateway to institutional and retail crypto adoption... is amplified by its recent inclusion in the S&P 500 Index.”

Maxwell Mutuma profile

Maxwell Mutuma

Crypto-ecnomic analyst

1k audience

Expert Insights

article

“Higher liquidity levels, including a growing M2 money supply, provide favorable conditions for asset price stability… this environment also benefits market capitalization expansion across digital assets.”

article

“Advancing regulatory frameworks are expected to accelerate growth and introduce new structural changes across the digital asset landscape.”

Park Yeung profile

Park Yeung

Head of Governance at LBS Blockchain

70 audience

Expert Insights

article

“Coinbase remains heavily exposed to market risk in the cryptoeconomy. Its shares represent a (levered) bet on the price appreciation of underlying crypto assets because its significant operating leverage magnifies earnings volatility.”

Travis Hoium profile

Travis Hoium

Asymmetric Investing

34k audience

Expert Insights

article

“Coinbase stock could reach $1,000 per share by 2030 if momentum behind blockchain technology and stablecoin regulation continues. The company's growth and potential are significant, especially with crypto mass adoption on the horizon.”

article

“Coinbase is positioned as the infrastructure provider for the next wave of blockchain adoption, capturing value from both trading and the broader ecosystem.”

Investor Materials

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External Insights

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What the Pro's Are Asking

Here are the questions that professional investors are asking before making an investment decision.

How durable is Coinbase's subscription and services revenue?

Coinbase’s service revenue stream, driven by staking, USDC yield, and premium subscriptions, is growing quickly. Investors want to know whether this income is sustainable or sensitive to crypto prices or interest rates. The resilience of these services, especially USDC earnings, will be tested if macro conditions shift. Investors also look for transparency on how Coinbase plans to scale these services while managing regulatory, technology, and product competition risks.

How will regulation shape growth going forward?

The GENIUS Act’s Senate passage was a major milestone. Now, investors are watching for final legislation and how state or global regulations align. Will clarity encourage more banks, asset managers, and governments to partner with Coinbase? That’s the hope. Analysts are also tracking how Coinbase positions itself to benefit from evolving European MiCA laws and potential APAC market reforms.

Can Coinbase dominate Bitcoin treasury infrastructure?

Institutions are showing interest in holding BTC on balance sheets. Coinbase, with its Prime offering and trusted custody services, is uniquely positioned to be the infrastructure behind this trend. This could open up a significant new customer segment. Investors are now exploring whether Coinbase can provide broader B2B treasury and payments rails that mirror traditional banking, but with crypto-native benefits.

How is Coinbase competing with DeFi and TradFi?

Investors are closely watching whether Coinbase can retain its user base and margins as DeFi platforms offer alternatives and TradFi players enter crypto. Differentiation through security, regulation, and UI/UX is essential. Analysts want to see Coinbase’s ability to capture new users while maintaining compliance, especially as it rolls out more DeFi features through Base and integrates third-party dApps.

What’s the impact of interest rates on revenue?

USDC income is currently a major profit driver. If global rates drop, Coinbase will need to accelerate the development of fee-based, utility-oriented products like payments, lending, and institutional services. Investors are interested in how quickly Coinbase can decouple from rate cycles by building on-chain revenue streams. There’s also a focus on whether Coinbase could offer additional yield-sharing models to enhance platform stickiness.