Beyond Bitcoin: The Coinbase Evolution
Why COIN Is More Than Just a Crypto Exchange in 2025
Coinbase at a Glance
Coinbase (NASDAQ: COIN) is more than just a crypto exchange—it's the most visible U.S.-regulated gateway to the digital asset economy. Founded in 2012 and going public via direct listing in 2021, it has grown into a platform that serves over 100 million verified users, institutions, and developers globally.
During the first quarter of 2025, Brian Armstrong, Co-Founder and CEO of Coinbase stated “Coinbase was founded to increase economic freedom in the world. We think cryptocurrency is the most important technology to update the financial system and create that economic freedom for people all over the world. Many people today don’t have access to good financial services and it’s holding back progress. Everyone deserves access to basic financial infrastructure, good, sound money, free from high inflation, the ability to get a loan, make payments without high fees and delays, and to choose what to do with their own money. Greater economic freedom is correlated with all sorts of outcomes we want in society like higher GDP per capita, self-reported happiness and income for the bottom 10%. It’s foundational to all progress”.
A summary of the different business units:
Retail & Institutional Trading
Custody Services (Coinbase Custody)
Stablecoin partnerships (notably with USDC)
Blockchain infrastructure (Base, its Layer 2 network)
Venture investing (Coinbase Ventures)
The Investor Thesis: Why Buy COIN?
1. Crypto as an Asset Class Is Here to Stay
The thesis begins with conviction in digital assets as a long-term investable category. Coinbase stands to benefit from broader adoption, regardless of whether the next bull run comes from Bitcoin ETFs, tokenized assets, or Web3 gaming.
As of mid-2025, cryptocurrency token adoption continues to expand, reaching new milestones and becoming more integrated into both global financial systems and daily use cases.
Here's a look at the current state of token adoption:
Global reach and user base
An estimated 861 million people globally use crypto, reflecting an 11.02% penetration rate.
The top 10 countries account for a significant portion of this user base (39.35%, or about 338.82 million users).
India leads with the highest number of crypto users (107.3 million), followed by the United States (65 million).
Institutional engagement and investment
North America's dominance in the cryptocurrency market is largely fueled by institutional activity, particularly in the United States.
The launch of Bitcoin and Ethereum Exchange Traded Funds (ETFs) in the US has further propelled crypto into the mainstream, attracting institutional investors.
Surveys indicate strong institutional interest, with a 2023 Nomura survey suggesting allocators expect to have between 5% and 10% in digital assets in the next three years.
2. Regulatory Moat
While regulation has been a headwind short-term, it could become a major moat. If the U.S. tightens rules, Coinbase—with its compliance-first reputation—becomes the only viable on-ramp for institutions. Its status as a publicly traded, audited company is rare in crypto.
3. Diversification Beyond Trading Fees
Coinbase has actively diversified revenue streams. While trading fees still dominate, subscription and services revenue—from staking, custody, and interest on USDC reserves—now represent over 40% of net revenue. In Q1 2025, these services helped smooth earnings during market volatility.
During the first quarter of 2025, Coinbase announced the acquisition of Deribit, the world’s leading crypto options exchange with over $30 billion of open interest and $1 trillion in trading volume outside the U.S. last year. This makes Coinbase the number one crypto derivative platform globally by open interest. And represent the biggest move yet to accelerate the international roadmap and build out this comprehensive trading platform. And traders benefit from having spot, futures, and now options together under one roof.
4. Base Layer Growth
Its Layer 2 solution, Base, is quietly becoming a critical part of the Ethereum ecosystem. As Base scales, Coinbase could monetize blockspace, capture MEV (maximal extractable value), and drive developer demand—all without the regulatory baggage of exchange fees.
5. Venture Arm Optionality
Through Coinbase Ventures, the company has stakes in dozens of promising crypto startups—many of which could be tomorrow’s unicorns. This adds asymmetric upside optionality, similar to Shopify's early stake in Affirm or Square's investment in Tidal.
📉 Risks to Watch
Regulatory Overhang: Ongoing SEC litigation still clouds visibility. A forced delisting of tokens could hurt volumes and confidence.
Revenue Dependence on Trading Volumes: Despite diversification, a long crypto winter would hurt COIN’s core business.
International Competition: Binance and others dominate global market share, especially in regions with looser regulation.
Retail Weakness: Fees are still high for retail traders—leaving room for disruption if zero-fee trading gains traction.
Final Thoughts: The Infrastructure Play
Coinbase isn’t just a bet on crypto prices—it’s a bet on crypto infrastructure. If crypto matures into a regulated, mainstream financial layer, COIN could become a modern-day Visa x Nasdaq x AWS hybrid. That’s a powerful narrative.
It’s not for the faint of heart. But if you believe digital assets are inevitable, then a stake in Coinbase is a levered play on that future—with real assets, compliance credibility, and software muscle to back it up.
Disclosure: This content is for informational and educational purposes only. It does not constitute financial, investment, or legal advice. I am not a licensed financial advisor. Always do your own research and consult with a professional before making any investment decisions.