Coinbase Q2 2024 Financial Report: Highlights and Financial Data

Author: insights4vc Source: X, @insights4vc Translation: Shan Oppa, Bitchain Vision

On August 1, Coinbase (COIN) announced its second quarter results for 2024.In this article, we will briefly introduce the development and current key indicators of one of the world’s largest cryptocurrency exchanges.

Origin and roadmap

Born in a San Jose family of engineers, Brian Armstrong has shown an interest in entrepreneurship since childhood.After graduating from Rice University in 2006, he started his first startup in Buenos Aires, providing services that connect mentors to students.Later, he returned to Airbnb as a programmer, where he gained insight into the potential of cryptocurrencies.In 2010, inspired by Satoshi Nakamoto’s declaration on Bitcoin, Armstrong invested $1,000 to buy Bitcoin, buying BTC at $9 each, and later dropped to $2.Despite the losses, he still insisted on this idea.

Armstrong used Ruby and JavaScript to develop software for buying and storing cryptocurrencies, and his work was similar to developing the first Internet browsers.In 2012, his startup received $150,000 in funding from Y Combinator and supported by former Goldman Sachs manager Fred Ersam, helping Coinbase build trust with the bank.

Andreessen Horowitz Fund, led by Chris Dixon, invested $500 million in Coinbase, calling the technology a “bitcoin version of Gmail.”The last round of financing brought Coinbase to $8.1 billion.Although Ersam left the startup, he remains a major shareholder and invested in companies that build corporate payment systems based on cryptocurrencies and blockchain.

In 2016, Coinbase announced the launch of Ethereum and changed its name to GDAX (Global Digital Asset Exchange).Although rumors of supporting Ethereum have been circulating for a while, it was not confirmed until after discussion and research, especially after Ethereum worked with Microsoft Azure.

In early 2017, Coinbase obtained BitLicense and trading licenses for Ethereum and Litecoin from the New York State Department of Financial Services.In November 2017, the IRS asked Coinbase to report users with transaction volumes of more than $20,000 per year.

In April 2018, Coinbase launched Coinbase Ventures, a venture fund that invests in blockchain and cryptocurrency companies.Coinbase then launched Coinbase Pro, a new interface built on the existing GDAX trading engine that automatically migrates balances and transaction history for users.

Coinbase became a public company on April 14, 2021.Subsequently, on September 20, 2021, Coinbase Prime launched with enhanced functionality to extend its services to institutional customers.

In February 2022, Coinbase closed its San Francisco headquarters to implement a decentralized office strategy and a remote working model.

Coinbase Financing Insights – Total Financing: US$1.9 billion (CC: Crunchbase)

Financing round:

• seed:

• date:September 26, 2012 |Amount of funds raised:$600,000

• Selected Investors:Y Combinator, Alexis Ohanian, IDG Capital, Trevor Blackwell

• Round A:

• date:May 7, 2013 |Amount of funds raised:$5 million

• Selected Investors:Union Square Ventures, Ribbit Capital, Digital Currency Group (DCG), SV Angel, Version One

• Series B:

• date:December 12, 2013 |Amount of funds raised:$25 million

• Selected Investors:Andreessen Horowitz (a16z) (lead the investment), Union Square Ventures, Ribbit Capital

• Round C:

• date:January 13, 2015 |Valuation:$475 million |Amount of funds raised:$75 million

• Selected Investors:DFJ Growth (lead investment), Andreessen Horowitz (a16z), Blockchain Capital, Union Square Ventures, Boost VC, Initialized Capital and other 11 companies

• Expanding Series C Financing:

• date:July 7, 2016 |Fundraising amount:$10.5 million

• Selected Investors:Mitsubishi UFJ Capital, SOZO VENTURES

• Round D:

• date:August 10, 2017 |Fundraising amount:$108.1 million

• Selected Investors:Institutional Venture Partners (IVP) (lead investment), Greylock Partners, 35Ventures, Tusk Venture Partners, Kindred Ventures, True Capital Management and other 3 companies

• Not disclosed:

• date:October 30, 2018 |Fundraising amount:$300 million

• Selected investors:Polychain Capital, Y Combinator, Tiger Global Management, Initialized Capital, Wellington Management, Manhattan Venture Partners and 3 other companies

• Financing rounds after IPO:

• IPO Date:April 14, 2021 | Total fundraising: more than US$1.3 billion

Core team:

• Co-founder and CEO:Brian Armstrong

• Co-founder and Director:Fred Ehrsam

• President and Chief Operating Officer:Emilie Choi

• CFO:Alesia Haas

• Chief Talent Officer:LJ Brock

• Chief Legal Officer:Paul Grewal

Key developments and status of Coinbase (Q2 2024)

Regulatory clarity and advocacy

1. Regulatory progress:

• Coinbase has made substantial progress in regulatory clarity, which is crucial to the development of the crypto industry.

• Cryptocurrency legislation has now become a mainstream issue in the United States and has gained bipartisan support.The 21st Century Finance and Innovation Technology Act (FIT21) was passed overwhelmingly, clearly defining the role of CFTC and SEC in regulating digital assets.

• The IRS has released the final rules for reporting digital assets, a key step in achieving regulatory transparency.

2. Support the cryptocurrency movement:

• More than 1.3 million cryptocurrency advocates have joined the grassroots initiative, greatly affecting political support and driving regulatory change.

• The movement has become a recognized key voting group in battlefield states, prompting both parties to recognize the importance of cryptocurrency.

3. Global Compliance:

• USDC has met compliance requirements for the EU Crypto Asset Market (MiCA) regulatory framework, an important milestone in expanding the scope of compliance use of EuroDollar supported stablecoins.

Product and service innovation

1. Basic Layer 2 Solution (a more detailed overview of Basic Layer 2 in the last newsletter):

• Coinbase’s Layer 2 solution Base’s transaction volume increased by 300% month-on-month.The network now processes transactions at less than 1 cents and faster rates, increasing scalability and reducing costs.

• Base is now ranked first in Tier 2, exceeding Ethereum’s transactions.

2. Smart wallet:

• Coinbase introduces smart wallets to simplify on-chain transactions, reduce set-up friction, eliminate network fees and eliminate the need for recovery phrases.

• These wallets support multi-chain integration and can be easily integrated with major applications, improving user experience and expanding cryptocurrency adoption.

3. Partnership with Stripe:

• Coinbase’s collaboration with Stripe is designed to expand USDC’s global adoption.The partnership enables faster and cheaper transfers to more than 150 countries and enables fast fiat and cryptocurrency conversions.

• Stripe integrates USDC into its payment infrastructure, leveraging its vast network, significantly enhancing USDC coverage and practicality.

Transactions and financial market expansion

1. Trading platform enhancement features:

• Updates to the simple and advanced trading platform improve user engagement with new order types, price alert notifications and added derivatives features.

• Coinbase One is a premium subscription product that, despite slowing transaction volumes in the second quarter, has performed well due to increased USDC rewards.

2. Coinbase Financial Markets (CFM):

• CFM has expanded its futures trading products to include new contracts for Dogecoin, Bitcoin Cash and Litecoin, and introduced up to 20 times leverage for commodity futures and up to 5 times leverage for cryptocurrency futures.

• The expansion is intended to enable a wider range of traders in the United States to participate in futures trading.

3. Coinbase Prime:

• Coinbase Prime has secured its position as the principal custodian of BTC ETF products by gaining 8 of 9 ETH ETFs.

• The SEC approved the ETH ETF in May 2024, confirming that ETH is not a securities, further providing regulatory clarity and attracting institutional capital.

Coinbase (COIN)keyIndicators (8 August 2024)

Financial Analysis

Transaction revenue (million dollars)

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Data Source

All data used to calculate the ratio can be found below.If you wish to gain insight into the previous quarter’s data, you can get it from the link provided below.

Latest shareholder letter:https://s27.q4cdn.com/397450999/files/doc_financials/2024/q2/Q2-24-Shareholder-Letter.pdf

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