Coinbase released an earnings report that made two groups of people sweat at the same time.
The first group is obvious: COIN shareholders who saw the company slide into the red while crypto prices and activity cooled. Coinbase reported revenue of approximately $1.78 billion and a loss of -$2.49 per share for the quarter, when analysts were expecting a profit.
Although the company is still generating cash, it appears to have taken a big hit to its bottom line, with a quarterly net loss of $667 million and adjusted EBITDA of $566 million, according to Coinbase’s own documents.
The second group is less obvious. These are people who don’t own any COIN but are still dependent on Coinbase’s plumbing.
If you buy a Spot Bitcoin ETF through a brokerage app because you wanted to go public without worrying about wallets and keys, the majority of your Bitcoins will end up in Coinbase.
Once these ETFs launch, Coinbase will become the custodian for much of the category, including key products like BlackRock’s IBIT, and Coinbase is referenced in the fund’s documentation through its relationship with Coinbase Prime.
Over time, the market has piled up significant amounts into the ETF wrapper, with Bitcoin ETP reportedly holding about 7% of Bitcoin’s peak supply, or about 1.5 million BTC in its snapshot.
So the emotional question people have when Coinbase “fails” is simple. Is the administrator in trouble?
That question is understandable, but the composition is messy and the numbers flying around on social media can quickly become ridiculous. The way to see it is practical. Custody is supposed to be boring. Trading is intended to be circular. In revenue, these two truths collide.
Coinbase made a mistake, and that mistake touched the most sensitive nerves.
Coinbase’s quarter fell short because parts of its business that looked like a casino stopped functioning like a casino during the bull market.
Coinbase’s transaction revenue decreased to approximately $983 million, with consumer transaction revenue decreasing significantly. This is in line with what many ordinary people have been feeling for the past few months: fewer “everybody’s trading” moments, fewer viral coins, fewer late-night adrenaline.
This is also where Coinbase is changing its identity. Subscription and services revenue for the quarter was approximately $727 million, with the same report highlighting stablecoin revenue growth as a tailwind.
In Coinbase’s own letter to shareholders, the company also removed a near real-time data point of approximately $420 million in trading revenue through February 10, warning them not to extrapolate too aggressively.
That’s the push and pull. The market wants Coinbase to become more stable. The market will also punish Coinbase when this quarter shows that cryptocurrency activity remains mood-dependent.
Even the conversation surrounding Coinbase’s business model is divided into tribes.
For X, Milkroad focused on the “financial infrastructure” story, pointing to an expanded product lineup and more stable revenue streams.
Skeptics, on the other hand, argued that the quarter was a sign that financial institutions could retreat and regulations could squeeze stablecoin-related revenues.
Both groups are reacting to the same fact: Cryptocurrencies are entering a stage where flow and policy can be more important than atmosphere, and Coinbase is in a position close to both.
Storage issues, what if Coinbase has a bad year?
When people hear “Coinbase is the custodian,” they often imagine that Coinbase is taking directional risk on Bitcoin itself. That’s not how custody works.
ETF Bitcoin is held on behalf of the Fund. The fund’s shareholders own shares in the ETF, the ETF owns the Bitcoin, and the custodian safeguards the Bitcoin under a regulated framework. The greater operational risks in custody are things like management, compliance, operational resiliency, and the ability of qualified custodians to meet their obligations, not whether Coinbase has a weak trading quarter.
That being said, the reason this is such a heavy subject is trust. Custody is the basis for retirement account holders to be able to say, “I’m OK with having Bitcoin exposure; someone else owns Bitcoin.”
So the real question in 2026 is something less dramatic and more specific: Will anything in this earnings report change the likelihood of custody failure, disruption, or a strategic exit from the custody business?
The short answer is “no.” There is nothing in public financial documents that suggests a withdrawal.
If anything, Coinbase has spent years expanding into parts of cryptocurrencies that operate more like traditional market infrastructure. The company is still positioning itself as a platform that wants to handle more institutional activity, more payments, more prime services, and more global derivatives.
The point of derivatives is important. Last year, Coinbase announced the acquisition of Deribit. This is a very direct bet on the part of the cryptocurrency market where experts spend most of their time.
Also, because hedging and positioning never completely stops, derivatives tend to continue ringing even when spot volume cools. Storage becomes a spoke in a wheel, and revenue is no longer hostage to the retailer’s mood swings.
A quiet signal: US financial institutions are acting risk-off
If you want to understand why Coinbase’s quarter felt heavy, take a look at where the marginal buyers were.
About $4.57 billion was outflowed from Spot Bitcoin ETF from November to December, and about $1.8 billion has already been outflowed since the beginning of 2026. This kind of flow regime changes the overall atmosphere of the market.
This is where the custody angle leads to the revenue angle.
When ETFs have a steady flow of inflows, the entire ecosystem feels institutionalized in real time.
Weeks of ETF outflows can feel like the adults have left the room, even if the long-term story remains intact.
Coinbase sits in the middle of that emotional swing, as it is both a trading venue and the primary storage infrastructure.
Policy subplot, stablecoin rewards becoming a bargaining chip
Coinbase’s CEO also puts it in easy-to-understand terms where much of the real risk lies.
In a post on X, Brian Armstrong said Coinbase is focused on a “win-win” market structure, emphasizing: genius It was passed six months ago and is being re-litigated directly impacting customers. He also outlined continued engagement with the White House and banks.
Separately, our coverage frames current market structure negotiations around trade-offs and the development of broader legislation in exchange for stablecoin reward limits.
This is important to the revenue conversation because stablecoin-related revenue is one of the cleaner, more stable ways for Coinbase to grow without relying on the retail trading frenzy. Even with features like rewards built in, Coinbase will still be able to build a stablecoin business, but the packaging will change, the growth curve will change, and the investor narrative will change.
That’s why some commentators are treating this quarter as much as a policy story as an earnings story.
Is Coinbase “in trouble” and what should ETF holders focus on next?
Coinbase is no longer a fragile startup. The company is a publicly traded company with diversified businesses and a strategic position in the part of cryptocurrencies that are actually used by institutions. A weak quarter is still a weak quarter, and markets can be forgiven for being disappointed, but disappointment is different from a structural collapse.
For those who hold spot Bitcoin ETFs and just want to know if custodian risk has increased, here’s a well-founded checklist that provides more information than the EPS headline.
- First, be aware of custody concentration and market structure. Because concentration affects both directions. This gives ETFs a clean operational backbone and creates a single point of failure for the category’s reputation.
- Second, the change in Coinbase’s growth mix will depend on stablecoins and rewards, so keep an eye on the headlines on stablecoins and rewards policies. The triangle between the White House, banks, and the cryptocurrency industry that Armstrong described publicly is not a stage, but a business environment.
- Third, look at flows and the US premium. Because it telegraphs whether a financial institution is leaning. Premium gap coverage and ETF outflow reports indicate that Tape is in a risk-off mood, and Coinbase’s next few quarters will reflect that.
- Finally, it will be interesting to see if Coinbase can continue to execute on its “all apps” ambitions. Because the long-term path out of cyclical returns is to own more stacks. Coinbase is entering stock trading and prediction markets in a broader expansion story, and this is part of the same effort to widen Coinbase’s reach.
The simplest way to say it is this.
Coinbase’s lack of revenue looks scary. Because it reminds everyone how cyclical cryptocurrencies are. Coinbase, which handles most of the ETF management, looks scary because of the concentration of trust. Combine these and you have the perfect social media storm.
Reality is less cinematic and more important.
Coinbase is trying to become the kind of company that looks viable even in its worst quarters. Because this business is built on rails and services that people continue to use when trade is down.
That’s the bet investors are pricing in, and that’s the bet ETF holders should be concerned about. Because boring custody will only remain boring if the operator remains stable, compliant, and dedicated to the job.
(Tag translation) Bitcoin
