Crypto Exchanges Shift Strategy as Trading Revenue Drops in Q2

Coinbase and Gemini posted lower trading revenue in the second quarter. Bullish, the institutional-focused exchange, also reported a decline. The prolonged bear market is pushing the largest listed crypto exchanges to lean harder on new products.

Coinbase's transaction revenue fell 22% to $599 million from a year earlier. Spot trading volume dropped 35% to $146.4 billion. The gap between trading and non-trading revenue narrowed to $44 million from $132 million a year ago, the company said. Average USDC held in Coinbase products jumped 44% to $20 billion. Coinbase cut 14% of staff in May and lowered full-year cost guidance by $100 million.

Gemini took a different approach. The exchange tripled the number of market makers on its prediction market this year. It started paying rebates to those firms and rewards to users. Bets on the platform nearly doubled in the quarter. Revenue from the prediction business rose only 18% to $524,000, Gemini said. Total exchange revenue dropped 27% from the prior quarter and 38% year-over-year to $12.5 million. Trading volume fell 66% to $3.8 billion.

Bullish saw adjusted transaction revenue fall 21% in the quarter to $29.9 million. That figure was still 24% higher than in the same period last year, the only year-over-year gain among the three exchanges. Bullish is expanding its tokenized securities business.

Falling trading revenue did not mean worse fee economics. Gemini said fee economics "continued to improve in both retail and institutional trading segments" despite the revenue drop. Transaction revenue at Coinbase fell 22% and spot volume dropped 35%. Derivatives volume at Coinbase rose 3% to $1.061 trillion.