Crypto Exchanges Chase New Revenue as Spot Trading Fees Dry Up

Trading fees are drying up across the crypto exchange sector. Coinbase, Gemini, and Bullish all reported lower trading income in the second quarter. Each is pursuing a different strategy to fill the gap.

Coinbase saw transaction revenue fall 22% from the prior quarter. Spot trading volume dropped 35%. Gemini's total revenue fell 27% over the same stretch; its trading volume collapsed 66% from a year earlier. Bullish reported a 21% decline in adjusted transaction revenue for the quarter, though it managed a 24% year-over-year gain.

Coinbase's clearest move is into stablecoins. The exchange boosted USDC rewards heading into the third quarter. Average USDC holdings on the platform climbed 44% year-over-year to $20 billion. Coinbase captures half of the USDC market economics, which makes that stablecoin growth directly meaningful to the bottom line, a company spokesman said.

The exchange also cut costs. In May, Coinbase reduced staff by 14%. The picture is two-sided: slash expenses on one end, push new product incentives on the other. Whether that balance holds depends on where USDC adoption goes from here.

Derivatives trading edged slightly higher even as spot volume fell 35%. That is not a reversal, said a person familiar with the company's strategy. Coinbase sees futures and options as a longer-term play, especially as institutional interest in crypto derivatives grows. The company has not shared specifics on where that goes next.

Gemini went a different direction. The exchange leaned into prediction markets, increasing the number of market makers and rolling out rebates for both firms and individual users. Bets on the platform nearly doubled. Revenue from that segment rose 18% to $524,000 for the quarter.

The modest number relative to the volume increase suggests the rebate program is eating into margins, said a Gemini spokesperson. The exchange is buying market share now rather than squeezing profit from it. Whether that pays off later depends on whether prediction market volume keeps growing.

Gemini also saw improvement in fee economics across both retail and institutional segments, even as overall revenue fell. Per-trade economics are getting better even if there are fewer trades. Still, a 27% revenue drop and a 66% collapse in trading volume are hard to spin.

Bullish is the odd one out. It is the only exchange of the three that grew trading revenue year-over-year, despite the 21% quarterly dip in adjusted transaction revenue. The exchange launched a rewards program aimed at boosting trading volume. It is also pushing into tokenized securities, a space that is getting more attention as the line between crypto and traditional finance blurs.

Tokenized securities are not a quick fix. Building out that business takes time, regulatory groundwork, and a customer base ready for it. If Bullish can position itself early in that market, there is an argument it is building something more durable than pure spot trading revenue. The execution details are not fully clear from what the exchange has shared.

The rewards program is a standard playbook at this point: incentivize trading activity when organic volume is soft. The question is whether users attracted by rebates stick around when the rebates shrink.

Across all three exchanges, the pattern is the same. Trading fees alone are not enough anymore. The platforms that figure out stablecoins, derivatives, prediction markets, or tokenized assets fastest probably win the next phase. Fee competition could also intensify if a new bull market kicks in and platforms fight for volume.

Gemini's prediction market revenue for the quarter came in at $524,000. Average USDC holdings on Coinbase rose 44% year-over-year, reaching $20 billion, with Coinbase capturing half of USDC market economics.