Coinbase began the way many big companies do: as a side project. Brian Armstrong, a former fraud engineer at Airbnb, built a bitcoin wallet app on his own time. In 2012, he applied to the startup accelerator Y Combinator under the working name "Bitbank," then launched as Coinbase in San Francisco with co-founder Fred Ehrsam, a former Goldman Sachs trader.
More than a decade later, Coinbase is the largest U.S.-based cryptocurrency exchange and the world's biggest bitcoin custodian, according to the company.
How Coinbase makes money
Coinbase serves everyday investors, big institutions through its Coinbase Prime service, and software developers. Its revenue comes from several places:
- Fees on crypto trades.
- Subscriptions and services, including custody, staking and its Coinbase One membership.
- Interest income tied to the USDC stablecoin.
- Newer products like derivatives and prediction-market contracts.
The numbers
Coinbase went public on the Nasdaq under the ticker COIN through a direct listing in April 2021. In 2025, it reported $7.18 billion in revenue and $1.26 billion in net income.
2026 has been harder. In the second quarter, reported July 30, revenue fell to $1.22 billion from $1.5 billion a year earlier, and the company posted a net loss of $359.5 million, according to CNBC. It was the company's third straight quarterly miss as crypto trading slowed.
There was good news inside those results. Coinbase's share of crypto trading volume hit a record 10.3%, up from 9.1% in the first quarter. It logged its 14th straight quarter of positive adjusted EBITDA, a measure of operating profit. And prediction-market revenue grew 106% from the previous quarter.
Why the direct listing mattered
Most companies go public through a traditional IPO, in which the company sells new shares through banks at a price set the night before trading begins. Coinbase instead chose a direct listing, in which existing shareholders simply began selling their shares on the open market, with the price set by supply and demand on day one. Direct listings skip the underwriting fees of a traditional IPO but also skip the price stability that comes from banks lining up buyers in advance, so they tend to suit companies, like Coinbase at the time, that are already well known and don't need to raise new cash.
Regulation as a competitive edge
Crypto has long operated in a gray area of U.S. law, with regulators sometimes disagreeing over whether a given token or service counts as a security. Coinbase built its business around registering with regulators, holding state money-transmitter licenses and pushing for clearer federal rules, even when that meant slower rollouts than less cautious competitors. That bet paid off as big institutions, pension funds and public companies began looking for a crypto partner they could trust to follow the rules, giving Coinbase an edge once the industry started maturing and facing closer scrutiny after high-profile collapses at other crypto firms.
Lessons for entrepreneurs
- Start small and solve your own problem. Coinbase started as one person's wallet app.
- Build trust before the market is ready for it. Coinbase leaned into working with regulators early, which became an advantage when large institutions arrived.
- Diversify revenue early. Relying on one volatile income stream is risky; Coinbase's other businesses cushioned its 2026 slump.
- Watch your costs. Staying operationally profitable through downturns gives you room to keep building.
- Expect long cycles. Crypto-related businesses can go through years-long slumps, and you need the cash and patience to survive them.
The bottom line
Coinbase shows how a simple side project can grow into critical financial infrastructure. Its 2026 struggles also show that even leaders in hot industries face tough stretches. For founders, the takeaway is to earn trust, spread out your revenue, and build a business that can survive the bad years.
Sources: https://www.ycombinator.com/blog/coinbase-from-yc-to-ipo/, https://www.cnbc.com/2026/07/30/coinbase-coin-earnings-q2-2026.html, https://investor.coinbase.com/
Content on The Evergreen Edit is for educational and informational purposes only and is not individualized financial, investment, tax or legal advice. Learn more.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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