Author: Lin Wanwan EeeVee, Dongcha Beating
Editor: Jack, Dongcha Beating
Coinbase has learned the 996 culture from the Chinese.
CEO Armstrong boasted on Twitter: the New York team has gathered, working overtime to develop the Everything Exchange (universal exchange), from 9 AM to 9 PM, and sometimes even later.
An originally ordinary dynamic sparked fierce division in the comments. Western netizens criticized it as a pathological overwork culture, while Asian netizens downplayed it, saying, 'It's normal in China; there's nothing to brag about.'
However, 996 is just the surface; behind it is Coinbase's true anxiety.
In Q1 2025, Coinbase's net profit plummeted 94% year-on-year, and trading revenue declined across the board; the Q2 financial report showed a net profit of $1.4 billion, which seemed high at first glance, but this figure largely came from paper gains from Circle's investments rather than from self-generated income.
Thus, Coinbase's actual spot trading business continues to shrink, while the encirclement by ETFs, on-chain trading, and Robinhood makes this once 'king of compliance' increasingly passive.
This is not a dilemma unique to Coinbase; exchanges are all seeking a more competitive 996 and a transformation with greater profit margins.
Because the problems facing Coinbase and others are becoming increasingly acute: how much longer can the golden age of crypto exchanges last?
From Washington to Wall Street
As early as five or six years ago, Coinbase understood that if it wanted to go further, it could not bypass the four words: legal compliance.
One afternoon in 2019, Brian Armstrong walked into Capitol Hill for the first time. He carried slides, preparing to explain crypto to lawmakers like an entrepreneur facing investors.
But the problems that presented themselves made him both laugh and cry, 'Oh, so you are the CEO of Bitcoin?'
Some people even ask, 'Is this a video game?'
At that moment, he realized that this was not a debate, but a 'cross-species communication'.
In fact, this is not the first time Armstrong has been forced to confront 'misunderstandings'. Before Coinbase went public, he recalled numerous lonely moments as a founder: in those years when crypto was still in a gray area, almost no banks were willing to cooperate with Coinbase; even the most basic payroll and corporate accounts became challenges.
He admitted that every negotiation at that time felt like 'begging' the traditional financial system for a lifeline.
In the early days of entrepreneurship, Armstrong naively believed that as long as he complied with the law, he could focus on product development. However, as Coinbase grew, he realized that the ambiguity of regulation itself became a weapon.
SEC Chairman Gensler used 'lack of clarity' as an excuse to launch attacks on the entire industry; Senator Elizabeth Warren even tried to portray crypto as 'financial poison'.
This experience made him realize the importance of 'compliance' earlier and deeper than the outside world imagined. Compared to many other companies in the industry chasing traffic, Coinbase chose a seemingly slower path from the very beginning: proactively applying for licenses, executing KYC/AML, and communicating repeatedly with regulators.
Armstrong then understood that if he did not actively shape the rules, he would have to wait for others to make the final judgment.
So he began to change his approach. In addition to continuing to fly to Washington as an 'educator', he formed a policy team, funded the creation of StandWithCrypto.org, created a 'pro-crypto index' for each legislator, and even invested in the super PAC Fairshake.
In 2024, the US election finally brought 'crypto voters' to the forefront. Anti-crypto lawmakers were voted out, and pro-crypto newcomers were successfully elected. Washington finally realized: there are actually 50 million Americans who have used crypto wallets. This is not a marginal topic but a voting machine that can be manipulated.
In Wall Street, Armstrong played a different card: compliance.
On the eve of its IPO in 2021, Armstrong mentioned in a media interview that Coinbase was able to knock on the door of NASDAQ not only because of its business achievements but also because it was ahead in compliance.
In 2025, he pushed for the Genius Act to be implemented, which requires stablecoins to be 100% backed by cash or US Treasury reserves. This is not only a legislative victory but also Coinbase's 'moat'. As a shareholder in Circle, it shares in the interest income from USDC. In the entire year of 2024, Circle's reserve interest income was approximately $1.68 billion, of which about $910 million was paid to Coinbase.
Stablecoins have become a story that both Wall Street and Capitol Hill can agree on: to the government, it continues the dollar's hegemony; to capital, it provides stable cash flow.
In this way, Coinbase completed an identity transformation. In Washington, it is a lobbying machine shaping rules, while in Wall Street, it is a compliance entry point connecting capital.
Armstrong once said: 'As long as you grow big, even if you don't care about the government, the government will care about you.'
This phrase also serves as a footnote; Coinbase's new battlefield has long surpassed the exchange itself.
The 'CEX crisis' in the financial report
Simply being legal and compliant is far from enough for exchanges.
Although still one of the largest crypto trading platforms in the world, Coinbase's financial report for the first half of 2025 is filled with anxiety.
Total revenue in the first quarter reached $2 billion, an increase of 24.2% year-on-year, which sounds decent, but in the context of a 94% year-on-year drop in net profit, this number has almost lost its meaning. A net profit of $66 million not only fell far below market expectations but also made investors truly feel for the first time: the old model of centralized exchanges is collapsing.
The decline in spot trading revenue is particularly noticeable.
Institutional trading decreased by 30% year-on-year, and retail decreased by 19%. Behind this, there are certainly factors related to the cooling market. Since 2025, the volatility of Bitcoin and Ethereum has drastically reduced, with the market transforming from a 'roller coaster' to 'calm winds', causing both institutions and retail investors to lose the impulse for frequent trading.
But deeper pressure comes from the restructuring of the market landscape.
The launch of ETFs directly rewrote the path for investors. After Bitcoin, Ethereum, Solana, and XRP all applied for ETFs, which were originally Coinbase's core trading coins.
Compared to the 0.5% trading fees typical of CEXes, the annual management fee of 0.1%–0.5% for ETFs appears much cheaper, naturally causing funds to flow to Wall Street.
At the same time, the wealth creation effect on the chain has kept more users on the chain.
The boom of Meme and DeFi has led native investors to form new habits: centralized exchanges are no longer trading venues but merely 'cross-chain bridges for deposits and withdrawals' and 'temporary wallets for stablecoins'. The rise of decentralized derivatives has further accelerated the outflow of funds.
New platforms like Hyperliquid have quickly attracted traders from regions with strict regulations like the US, thanks to their flexible listing mechanisms, higher leverage, and more extreme experiences. In the eyes of these users, Coinbase's 'rule-following' has become a constraint.
More lethal competition comes from the heart of traditional finance.
Robinhood announced its full-scale entry into crypto, targeting Coinbase's most valuable young retail investor demographic. For them, the interface provided by Robinhood is more familiar and the fees are lower, making the one-stop experience of US stocks and crypto more convenient. For large funds, the 'brokerage halo' of Robinhood is even more attractive than Coinbase.
This multiple pressure was starkly magnified in the financial report for Q2 2025. Coinbase disclosed that its total revenue for the quarter was approximately $1.5 billion, a decline of 26% quarter-on-quarter; the net profit under GAAP was as high as $1.4 billion, which seemed glamorous at first glance, but most of it came from Circle's investments and paper gains from crypto asset holdings.
Once these one-time factors are excluded, the adjusted net profit is only $33 million. More critically, the core spot trading income is only $764 million, a year-on-year decline of 39%.
On paper, there is excitement, but in reality, it is bleak. Coinbase's profits no longer rely on trading, but rather on stablecoin revenue for survival. This is a brutal report card and possibly a signal of the end of a golden age.
When trading platforms no longer rely on trading business
In the face of difficulties, Coinbase proposed a new vision.
In a recent interview, Coinbase CEO Brian Armstrong proposed a plan: all assets will ultimately go on-chain, so they want to create an Everything Exchange (universal exchange).
In his eyes, crypto is not an isolated industry but a technology that can upgrade the financial system as a whole.
Armstrong particularly mentioned the current situation of US stocks: today, if an Argentine wants to open an account with a US brokerage, they need a very high wealth threshold. For ordinary investors in most countries, US securities are almost a 'market exclusive to the wealthy'.
However, if stocks are tokenized and moved on-chain, it can break down these barriers, allowing anyone in the world to buy and sell US assets at any time.
In his vision, Coinbase is no longer just a platform for matching trades, but a 'universal exchange' that handles all assets going on-chain, an open, inclusive financial operating system that operates around the clock.
Because of this, Coinbase has begun to take a series of actions to align with Armstrong's vision: over the course of six months, it has acquired Spindl, Iron Fish, Liquifi, and Deribit.
The first three companies serving the Base chain: Spindl provides an on-chain advertising stack that allows developers to directly acquire users; Iron Fish brings a zero-knowledge proof team to build privacy modules on Base; Liquifi offers token management and compliance services and plans to integrate with Coinbase Prime to facilitate institutional and RWA projects.
The combined efforts of the three have lowered the threshold for developers on Base, creating a complete tool stack.
The most significant acquisition was Deribit. Contract trading is more stable and profitable than spot trading, but Coinbase has long been constrained by US regulations and has been absent for a long time. The $2.9 billion acquisition of Deribit allowed it to gain a leading share of the options market and a large institutional client base.
Less than a month after the acquisition was completed, Coinbase launched perpetual contracts under CFTC regulation, effectively 'seamlessly taking over' Deribit's capabilities.
If the acquisition is Coinbase's violent breakthrough against the ceiling of trading revenue, then its ongoing business expansion represents a deeper identity transformation.
It focuses on 'doing heavy lifting': stablecoins, wallets, public chains, and institutional services. These seemingly basic pieces are sketching out a new Coinbase: not just a trading platform, but a Web 3 version of Apple + Visa + AWS.
The first step is stablecoins. Coinbase does not directly issue USDC but takes a huge interest spread through revenue sharing with Circle. Conflicts arise: Circle is dissatisfied with it 'earning a lot but contributing little'. Coinbase realizes it must bring USDC into more scenarios.
Thus, it began subsidizing USDC deposits and partnered with Shopify to launch a payment API, embedding stablecoins into real-world cash registers and financial systems, allowing USDC to truly become a payment tool. Behind this is the push from a16z, which has always viewed stablecoins as 'the TCP/IP of internet finance.'
The second step is the wallet. Coinbase Wallet has been upgraded to a smart wallet, eliminating mnemonic phrases and allowing for one-click creation, while integrating NFT display, on-chain identity, and social features. It even connects to Lens and Farcaster, turning the wallet into a 'crypto social circle'.
Once users' funds, identities, and social relationships are bound together, the wallet becomes Coinbase's traffic entry point. Combined with the Base chain, this system increasingly resembles iOS: Wallet is the App Store, Base is the operating system, and USDC is Apple Pay. Coinbase no longer relies on market fluctuations to make profits but can extract 'on-chain taxes' from the cycle of 'identity + funds + social'.
The third step is the institutional entry. Coinbase Prime has already served over 500 funds and asset management companies and is a major platform for USDC custody. In the future, if assets like RWA and STO are truly brought on-chain at scale, Prime could very well evolve into the Goldman Sachs and BlackRock of the chain, becoming a stable source of income.
Unlike most platforms, Coinbase no longer relies on retail investors' emotions and trading heat to sustain itself. What it wants to control are the more fundamental elements: funding entry (USDC), account entry (Wallet), trading entry (Base), and institutional entry (Prime).
The future of Coinbase is not a bustling trading hall, but a 'universal exchange', a financial operating system that can handle all assets and operate around the clock.
The role of the settlement layer allows it to transcend short-term noise and volatility, making crypto the underlying layer, turning trading into a public service, and transforming users into network nodes. This may be the next vision Armstrong has for Coinbase.
'996' swept through exchanges
Exchanges have never lacked 'competition'.
In the past, the competition was about who could launch coins faster, who could provide more subsidies, and who had lower transaction fees. That was a lively, superficial competition: when traffic comes in, profits follow.
However, today's competition is completely different. ETFs have taken the incremental growth of major coins, on-chain DeFi and Meme have kept native users on the chain, and brokers like Robinhood have taken away the new generation of retail investors. After the market pie shrinks, relying solely on spot trading can no longer support the future of a platform.
Thus, the method of competition was forced to upgrade. OKX is locking in users with its wallet; Binance is converting Alpha incentives into traffic returns; Coinbase is building a framework for a 'universal exchange' using acquisitions, stablecoins, wallets, and institutional services.
This is a heavier, more profound 996. It is not a short-term promotional war but long-term infrastructure overtime. They are no longer competing for immediate trading volume; they are competing for who can control funding entry, identity entry, and the settlement network in the next decade.
In the past, the competition was about seizing territory and grabbing traffic; now, the competition is about building strongholds and engaging in prolonged battles.
Exchanges understand that the feast of traffic has ended. The winning hand for exchanges is no longer in the ups and downs of spot contracts but in who can occupy the advantageous position on the ecological chessboard.
