The two major financial apps in the U.S. are conducting completely opposite experiments on millions of users.
Robinhood and Coinbase represent two completely different bets on what people want from money apps. Robinhood ranks 14th in the financial category of the App Store, while Coinbase ranks 20th, with both companies valued at around $80 billion.
Both are chasing the same young investors, both believing the other is doing it wrong.
One is betting that people want finance to work like other apps on their phones: simple, intuitive, and invisible. Coinbase is building the infrastructure for the transition from traditional finance to blockchain-based systems.
To some extent, both experiments have been successful.
01
The Essence of Robinhood vs. Coinbase
The key point about Robinhood and Coinbase is: they are not competitors in the traditional sense; they are conducting completely different experiments on the same subjects (us).
Robinhood looks at finance and asks, "What if we fix all the annoying parts?" They offer 15 cryptocurrencies, zero-commission trading, and an interface that makes you feel like you can buy Tesla stock without a finance degree. Their pitch is that you can eat a hot dog without needing to understand how sausages are made.
Coinbase is going in the opposite direction. They say, "What if we rebuild all finance on blockchain technology?" Coinbase's fees are higher than competitors like Robinhood, but their platform is designed for those wanting access to the complete crypto ecosystem, offering over 260 cryptocurrencies.
They bet that traditional finance will eventually shift on-chain, and they want to be the infrastructure driving that transition.
"In five to ten years, our goal is to be the number one player in global financial services applications, targeting these customer segments, because we believe crypto is consuming financial services, and we are the number one crypto company," said CEO Brian Armstrong. "All of these asset classes—money market funds, real estate, securities, debt—all will be on-chain."
Both companies went public months apart in 2021, with market capitalizations roughly at $80 billion each, targeting the same generation of mobile-first investors. But they may be building products for different species.
They are solving different problems for different users. This makes it more of a race to serve a differentiated financial future rather than a war for supremacy.
02
The race for crypto product expansion
Both companies are racing to expand their crypto products, but their approaches are completely different.
Robinhood's recent crypto announcement shows they are trying to completely outpace Coinbase. In June, they announced Robinhood Chain, their own layer-2 network that will support tokenized stocks, crypto trading, and eventually support private market assets like SpaceX and OpenAI stocks.
European users can now trade tokenized versions of U.S. stocks around the clock, not just during market hours. This is the 24/7 trading that crypto users expect, applied to traditional assets.
They also launched crypto staking for ETH and SOL, acquired Bitstamp (the oldest crypto exchange in Europe) for $200 million, and plan to roll out crypto perpetual futures for European users. They are building a crypto infrastructure that feels native to the existing stock trading experience rather than tacking on crypto to traditional brokerage.
That’s why all of this—chains, tokenized stocks, low fees—naturally feels designed for the next generation of investors who will inherit trillions.
In the fee war, Robinhood charges about 40 basis points (0.4%) for crypto trading. Coinbase may charge 1.4% or more for the same transaction. If you buy $1,000 worth of Bitcoin, it's $4 on Robinhood, while on Coinbase, it's over $14.
Robinhood accomplishes this through payment for order flow, where market makers pay for the rights to execute retail trades, just as they do with stock trades. This is a proven model that allows them to offer 'free' trading while still making money.
But Coinbase offers what Robinhood cannot: actual crypto ownership. On Robinhood, you are buying a crypto IOU, essentially a receipt for the amount of crypto Robinhood owes you. This means you cannot transfer Bitcoin to your own wallet or use it elsewhere. You can only buy and sell it within the Robinhood app.
You can’t participate in DeFi, you can’t stake most tokens, and you can’t actually use crypto for anything other than buying and selling.
For most people, this doesn’t matter; they want crypto exposure, not crypto utility. But for anyone wanting to do anything slightly complex with crypto, Coinbase is the only realistic choice among the major U.S. platforms.
03
Q2 Earnings Report Analysis
This summer's earnings revealed a lot about which approach is currently working.
Robinhood crushed their quarter, with total revenue growing 45% year-over-year to $989 million. Their crypto revenue specifically exploded by 98% to $160 million (growing from about 10% of total revenue last year to 16% this quarter), even as the overall crypto market remained relatively stable. They now have 26.5 million funded accounts, holding $279 billion in total assets, a 99% increase from last year.
Plus, with about 520,000 new crypto users added through the Bitstamp acquisition, and the $7 billion in nominal crypto trading volume generated after the acquisition is completed in June 2025.
The company ended the quarter with $279 billion in platform assets, a 99% increase from last year, along with $13.8 billion in net deposits. Funded accounts grew 10% to 26.5 million, while cash sweep balances surged 56% to $32.7 billion, indicating stronger wallet shares per customer.
Meanwhile, Coinbase experienced what polite people would call a "challenging quarter."
Total revenue fell 26% to $1.5 billion from Q1, below analyst expectations, with trading revenue down 39% due to retail trading drying up. Stocks fell 16% on earnings day as investors tried to figure out whether this is a temporary fluctuation or if people really don’t want to pay high fees for complexity.
"We still see their growth facing long-term risks due to above-average retail trading fees and increasing competition from platforms like Robinhood," said Arca analyst Alex Woodard. "Coinbase needs to implement cheaper trading fees and continue expanding its product offerings through acquisitions to avoid losing market share."
But calling this quarter a failure overlooks the bigger picture.
Coinbase reported $1.4 billion in net income, actually higher than their $512 million adjusted EBITDA, due to $1.5 billion in unrealized gains from portfolio and strategic crypto holdings. These paper gains propelled net income far above their core operational performance.
Even excluding these one-time windfalls, adjusted net income remains a solid $33 million, displaying real profitability in a weak quarter.
Under the surface, there are many things to like, with operating expenses rising, but primarily due to a one-time hit of $307 million from the data breach in May. Core costs—such as technology, administrative, and marketing—actually decreased, showing real cost control, and their USDC business continues to hum along, with stablecoin revenues reaching $332 million, driven by a 13% increase in average balances, with assets under custody reaching a historic high of $245.7 billion.
Prime Financing balances also reached record levels. This is part of Coinbase Prime, their institutional service, which operates like traditional prime brokerage—providing custody, trading, lending, and financing services to hedge funds, family offices, and other large crypto investors. Prime Financing specifically refers to margin lending, where institutions can borrow against their crypto holdings to make additional trades or investments.
Coinbase continues to ship: launching new derivatives products, growing their Base chain, and rolling out the Coinbase One Card. So yes, revenues are down, but the fundamentals look stronger than ever.
Prime Financing balances also reached record levels. This is part of Coinbase Prime, their institutional service, which operates like traditional prime brokerage—providing custody, trading, lending, and financing services to hedge funds, family offices, and other large crypto investors. Prime Financing specifically refers to margin lending, where institutions can borrow against their crypto holdings to make additional trades or investments.
Coinbase continues to ship: launching new derivatives products, growing their Base chain, and rolling out the Coinbase One Card. So yes, revenues are down, but the fundamentals look stronger than ever.
04
Coinbase's Infrastructure Empire
But Coinbase's infrastructure play is more complex than it appears on the surface.
Coinbase is custodian for $245.7 billion for institutions—this is a record high, representing a significant portion of the entire institutional crypto market, and when you buy Bitcoin ETFs through a 401k, you may be using Coinbase's infrastructure.
Coinbase is the primary custodian for 80%+ of all Bitcoin and Ethereum ETFs in the U.S., controlling about $113.4 billion of approximately $140 billion in total crypto ETF assets. When BlackRock's IBIT or Fidelity's FBTC need a place to store billions in Bitcoin, they call Coinbase. When PayPal wants to launch the PYUSD stablecoin or when JPMorgan needs crypto payment rails, they use Coinbase's backend.
Coinbase has over 240 institutional clients, 420+ liquidity providers, and regulatory licenses that most competitors cannot match. Their custody division is chartered by the New York State Department of Financial Services, a regulatory approval that took years to obtain and will take competitors years to replicate.
Their 'everything exchange' strategy is beginning to show results beyond custody. They just launched perpetual futures with up to 10 times leverage, bringing derivatives trading previously only available on offshore exchanges to U.S. retail traders. They are integrating decentralized exchanges directly into their app, allowing you to trade Ethereum or any token existing on Base without leaving Coinbase.
Their Base layer-2 network processed over 54,000 token launches in a day, surpassing Solana. But the real genius is how Base integrates with everything else Coinbase does; ETF providers can use Base for instant settlements, companies can tokenize assets directly on the network, and retail users can access the infrastructure that drives tens of billions in institutional money.
05
Robinhood's generational takeover
While Coinbase builds infrastructure for institutions, Robinhood is executing what may be the smartest long-term play in finance: capturing an entire generation before they get wealthy.
Similar strategies worked well; Disney built its empire by capturing the hearts of children in the early 20th century when they didn’t have wallets. From cartoons to theme parks, Disney became part of childhood itself. When those kids grew up and started making money, they brought loyalty, spending on movies, merchandise, streaming, and vacations, turning that early emotional bond into a multigenerational cash machine.
Robinhood dominates among young investors in a way that should worry traditional brokerages.
About 50% of Robinhood customers are millennials, about 25% are Gen Z, and 20% are Gen X.
The average Robinhood user starts investing at ages 19-22, compared to those in their 20s on other platforms and baby boomers in their 30s.
Robinhood even guides new users quickly through their first sell action, not because they want people trading constantly, but because locking in actual gains creates an emotional hook that brings users back. Once someone earns real money on the platform, even if just $50, they are psychologically invested, and it becomes hard to break that.
Their expansion into everything financial makes sense in this context.
Robinhood Gold, their $5 monthly subscription, bundles a 3% cash-back credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers grew 60% year-over-year to 2 million users who are using Robinhood for banking, cards, and retirement.
The platform now holds $279 billion in assets under custody, seeking a share of a 'great wealth transfer' involving $84-124 trillion in assets moving from baby boomers to younger generations over the next 20 years.
Over the next twenty years, this wealth will transfer from the baby boomer generation to the younger generation, with no one knowing exactly who gets what or when. But Robinhood bets that if you build habits early, you don’t need to predict inheritance patterns; you just need to be there when the money shows up.
06
So, who is actually winning?
The two stocks have similar market capitalizations, with Robinhood at $81 billion and Coinbase at $85 billion. In their year-to-date performances, Robinhood is up 135%, while Coinbase is only up 30%, with most of that coming last month.
Bank of America analyst Craig Siegenthaler recently raised his price target for Robinhood to $119 while lowering Coinbase's from $383 to $369, reasoning: "Robinhood's crypto revenue is exploding, while Coinbase is too reliant on retail users abandoning volatile altcoin trading."
Coinbase's global market share dropped from 5.65% to 4.56%, recovering slightly in July, while Kraken recorded the largest growth in the U.S. market share this year. Coinbase faces a classic dilemma: lower prices harm margins or hold firm and risk losing traders. They chose margins, charging for previously free stablecoin trades while Robinhood's rates remain about 50% lower.
Mizuho just reaffirmed its $120 price target for Robinhood after meeting with CEO Vlad Tenev, citing the company's crypto resilience and positive push for tokenized stocks.
"We are particularly impressed with the opportunity for tokenized stocks in Europe, moving towards the high-end market, and potentially toward teenagers, with 15% of net deposits coming from competitors, focusing on NPS/execution as key growth drivers, and crypto price inelasticity," said the analyst.
But Coinbase has institutional credibility, while other exchanges compete on trading fees. Coinbase is establishing relationships with institutions that will determine how crypto integrates with traditional finance in the next decade.