Coinbase Global, Inc. Q3 FY2025 Earnings Call

Good afternoon, and welcome to the Coinbase Third Quarter 2025 Earnings Call. My name is Anil Gupta, and I'm the Vice President of Investor Relations at Coinbase. Joining me today are Brian Armstrong, Co-Founder and CEO; Emilie Choi, President and COO; Alesia Haas, CFO; and Paul Grewal, Chief Legal Officer. During the call, we may make forward-looking statements that could differ significantly from actual results. Information regarding risks, uncertainties, and other factors that could impact our results is included in our SEC filings. Our conversation will also feature certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures can be found in the shareholder letter on our Investor Relations website. Non-GAAP financial measures should be viewed as an addition to, rather than a replacement for, GAAP measures. We will begin with opening comments from Brian and Alesia before taking questions from our retail shareholders and research analysts. Now, I will turn it over to Brian for his opening comments.

Thanks, Anil. It was another great quarter for Coinbase. We continue to drive strong financial performance and build the Everything Exchange that we had announced last quarter. Financially, Coinbase's core business is incredibly strong, and we're very well positioned for the opportunities ahead of us. Our strong financial performance in Q3 was driven by continued product execution. Total revenue was $1.9 billion, adjusted EBITDA was $801 million. We ended Q3 with $11.9 billion in USD resources and another $2.6 billion in long-term crypto investments. So just a quick refresher. Our mission is to increase economic freedom in the world at Coinbase and crypto is the technology that we're going to harness to get there. Crypto rails will power more and more of financial services over time because they're faster, cheaper and more global. With just a smartphone, for instance, anyone in the world can access trading and payments, raise money to start a business or get access to credit. Coinbase is the most trusted brand in crypto with deep technical expertise. And as finance moves to these rails with increasing regulatory clarity, we're uniquely positioned to lead and capture the upside of this paradigm shift. In Q2, we introduced the Everything Exchange, a one-stop shop to trade every asset class. Customers want one venue to trade spot crypto assets, derivatives and options, but also equities, prediction markets, commodities and more. In Q3, we executed on that vision by expanding spot coverage, growing our derivatives offering and laying the groundwork for new asset classes on our platform. In terms of spot coverage, we turbocharged our trading platform in Q3 by adding decentralized exchange or DEX integrations, which expanded access to tradable assets from about 300 to over 40,000 assets in the U.S. With DEX integrated under the hood, customers get day 1 access to new tokens as they are created, and we capture the upside when one of those takes off. We've also made strong progress in growing our derivatives product. As a reminder, derivatives account for about 80% of all crypto trading volume. And in Q3, we were the first to launch CFTC-regulated 24/7 perpetual style futures in the U.S. Early traction is strong for our U.S. style perps product, which helps drive all-time highs in U.S. derivatives volumes and market share. We closed the Deribit acquisition, bringing the #1 crypto options venue into Coinbase and Deribit plus Coinbase saw over $840 billion in total derivatives volume in Q3, driven by stronger participation from institutions and advanced traders. Next, let's touch on how we're accelerating stablecoin adoption by improving payments. The majority of global payments will shift to stablecoins over time because they allow you to send money anywhere in the world in under 1 second for less than $0.01. No other payment rail can match this. Adoption is already well underway as stablecoin market cap hit $300 billion driven by companies and financial institutions using them for payments and treasury, and we expect policy tailwinds like the GENIUS Act to continue to accelerate this. In Q3, Coinbase customers held on average, $15 billion of USDC on the platform, making us the largest contributor to USDC's all-time high $74 billion market cap. USDC continues to be the top-performing major stablecoin in the crypto ecosystem, growing more than 2x as much as the largest competitor. In closing, with regulatory clarity accelerating, crypto rails are set to power more and more of global GDP for trading, payments in every financial service. Coinbase is well positioned to be the partner of choice for companies and financial institutions, including Citi, which we just announced last week, who are looking to come on chain. Through the end of the year, we're heads down building the Everything Exchange and scaling stablecoin payments with USDC. Speaking of which, I'm super excited to share that on December 17, we're hosting our H2 product event, where we'll go through everything we've built in the second half of this year. Tune into the live stream for a closer look at the next phase of the Everything Exchange. I'll now turn it over to Alesia.

Thanks, Brian, and good afternoon, everyone. As Brian mentioned, it was a strong quarter for Coinbase. We achieved total revenue of $1.9 billion, net income of $433 million, adjusted EBITDA of $801 million, and adjusted net income of $421 million. Let’s take a closer look at our Q3 results. Any comparisons I make will be on a quarter-over-quarter basis unless I specify otherwise. In Q3, our U.S. and global spot market trading volume increased by 29% and 38%, respectively. This reflects a global market. Our Coinbase's Q3 consumer spot trading volume grew by 37% to $59 billion, and consumer transaction revenue increased by 30% to $844 million. The difference in growth rates between volume and revenue was primarily due to a higher mix of advanced trading volume, which carries a lower fee rate. A few highlights that contributed to this growth include the progress we made in increasing the number of assets available for our customers, both in spot and derivatives. Additionally, our advanced trading volumes benefited from price rises in a variety of assets, as well as our dedicated efforts to attract and retain key traders through a new premium service offering. Our institutional business also reported strong results, with total institutional transaction revenue reaching $135 million, a 122% increase. The main growth driver was derivatives. Closing Deribit on August 14 contributed $52 million in revenue, fueled by the continued rise in options trading, which resulted in all-time high notional volumes. Furthermore, we experienced revenue growth in both our exchange and Coinbase Prime sectors during Q3. Now, in terms of S&S revenue, it grew by 14% quarter-over-quarter to $747 million. We observed robust inflows in native units with regard to USDC balances in our products, average loan balances across institutional financing offerings, and assets under custody. By the end of Q3, we had $516 billion in assets on the platform. Total operating expenses fell by 9% to $1.4 billion. Expenses in technology and development, general and administrative costs, and sales and marketing rose by 14% to $1.1 billion, primarily due to increases in headcount and USDC rewards. Notably, Deribit accounted for $30 million of the total operating expenses in Q3, including $16 million in deal-related amortization, most of which was recorded under sales and marketing. We concluded the quarter with 4,795 full-time employees, an increase of 12%. I want to highlight two items that impacted our GAAP profitability. First, we recorded a $424 million gain from the ongoing fair value remeasurement of our crypto investment portfolio. Second, we had an expense of $381 million in other costs, mainly due to unrealized losses tied to our investment in Circle, as their stock price decreased from the end of Q2 to the end of Q3. Including these items, our net income stood at $433 million, while adjusted net income, excluding both items, was $421 million. Let’s now discuss our Q4 outlook. The fourth quarter has started strong, and we anticipate October transaction revenue to be around $385 million. We expect subscription and services revenue to fall between $710 million and $790 million, driven by higher average crypto prices and the continued growth of our Coinbase One subscriber base. On the expense side, our estimated expenses for technology and development, as well as general and administrative costs, are projected to be between $925 million and $975 million, rising approximately $100 million at the midpoint. About half of this increase is attributed to our recent acquisitions of Deribit and Echo, while the rest is largely due to headcount growth, which we expect to decelerate in Q4 compared to Q3. Sales and marketing expenses are projected to be between $215 million and $315 million, depending largely on performance marketing spending opportunities and the USDC balances in our products, which influence USDC rewards. This outlook includes about $70 million for total depreciation and amortization for Q4, an increase from historical averages driven higher by the amortization of intangibles related to our recent acquisitions. Throughout 2025, we have invested significantly in headcount to leverage the opportunities we see and accelerate our vision for the Everything Exchange. As we approach early 2026, we plan to integrate the new employees and concentrate on execution, expecting our rate of operating expense growth to slow relative to Q4. With that, let's proceed to questions.

Thanks. So let's begin with pre-submitted questions from retail shareholders. Many of the top questions touch on similar topics, so for efficiency we'll group by theme. The first topic is about competition. What's the plan to improve product innovation and velocity and increase market share? How are you thinking about listing stocks in prediction markets given the success of others. Brian?

We've dedicated significant time to investing in policy and achieving regulatory clarity both in the U.S. and internationally, and this effort is beginning to show results, which is encouraging. It's expanding the total addressable market for crypto and fostering trust and regulation. As more people enter the space, our infrastructure services enable a considerable portion of that growth. However, this also means we face increasing competition, so we must ensure we execute effectively. Since Q2, we've discussed our vision for the Everything Exchange and have made considerable strides in areas where we excel, such as DEX integrations, where we increased from 300 to 40,000 tradable assets in Q3. We were also the first to introduce CFTC-regulated U.S. perpetual style futures contracts, which are performing well. We're focused on further developments because we believe every asset class will migrate on-chain, reflecting our customers' demand for features like prediction markets and tokenized stocks. The Everything Exchange is pivotal to the next phase of our development, and I'm excited to share more details at our product showcase on December 17—please join the live stream for that. The Everything Exchange complements the various features we've integrated into Coinbase, like DeFi borrow-lend, USDC, global payments, and the Coinbase card, which users really appreciate. Base is experiencing strong momentum, and we believe all these elements will come together as we strive to become the number one financial app, and that's our long-term goal.

Thanks, Brian. So the second topic is Base. Brian, can you elaborate on how you're thinking about a Base network token and in particular, how shareholders could be beneficiaries of the distribution? And Alesia, can you talk about the monetization of the Base network and how that might evolve over time?

Yes. So I'll start it off. We're still early on exploring a Base network token. But the high-level goal is to help bring 1 billion people on chain and just to really grow the developer ecosystem around Base. So there's not any specifics that we're going to announce today on the governance or distribution model or the timing of it exactly. But we are going to build this in the open and just continue talking with our customers, investors, regulators to make sure that we get it right. So Alesia, anything you want to add?

I'll just speak about monetization. So on the Base chain, we monetize through sequencer fees. And we've talked historically about how we have direct monetization through sequencer fees, but we also monetize indirectly as those who are building apps on Base often will then incorporate USDC. They will often need to be able to buy other crypto. They may need custody solutions. And so we do monetize the other products and services by the growth of the overall ecosystem and the growth of on-chain developers. What I would share, though, is the Base app that we are building that on Base will have other monetization opportunities. The Base app is monetizing through trading fees, it is monetizing through advertising. And while it's early days, we see opportunities to have revenue profiles that look similar, honestly, to the Coinbase main app in terms of transaction fees, maybe some subscription fees, maybe advertising fees, some various different ways that we can monetize in that app. But we'll talk more about that as that grows over time.

Thank you both. We will now take questions from the research analysts. Our first question comes from Craig Siegenthaler of Bank of America.

Our question is on Echo. So how will Echo help expand your network by making it easier for crypto companies to raise and invest via private sales or public sales with Sonar?

Yes, I can start and then Emilie can add anything if she'd like. We believe that every type of financial service will transition to being on-chain, with crypto acting as the technology to modernize the financial system. Capital formation is a key component of this. We think it can be made much more efficient, fees can be lowered, and access can be improved for people worldwide, which will ultimately stimulate the economy. Thus, we found Echo to be an innovative company that we decided to acquire to establish a foothold in this area. Our goal is to make it easier for anyone to raise money. The advantage of integrating with Coinbase is that we now manage over $500 billion in assets and have a significant base of retail and accredited investors eager to invest in unique assets. This creates a powerful two-sided marketplace as we focus more on capital formation and the role of crypto in enhancing it.

Yes, agreed. We're really excited about it. The management team for Echo has a great nose for what the most compelling companies will be to launch. And so if Echo launches these great companies and tokens and those are successful, it helps us deeply because we're moving up the stack. And where coins are issued before they graduate to the exchange. So it's kind of vertical integration that we think is quite powerful for the whole ecosystem of Coinbase products.

Let's take our next question from Ken Worthington at JPMorgan.

The pace of announced M&A seems to be rising for Coinbase versus what we may have seen in recent years. How is the more regulatory and political certainty in the U.S. impacting the pace of innovation? And would you expect this pace of innovation to drive Coinbase to be more active in M&A as we look forward? And then in terms of the innovation that we're seeing, are there certain themes that you are focused on trying to capture as we look forward?

Thanks for the question. I'll start and then Brian and Alesia can chime in. To provide some context, we've worked very hard to achieve regulatory clarity, which we believe creates more opportunities, strategic bets, and greater predictability for mergers and acquisitions and investments. Companies now have more certainty compared to a time when regulations were enforced sporadically. We often look to some of the most successful tech companies in history and how they leveraged M&A to significantly boost adoption, which makes us excited about the opportunities ahead. As for the areas we're interested in, we stay focused on the company's outlined priorities, including trading, payments, and other areas that are appealing to Coinbase. We also keep an eye out for potential strategic opportunities. We're consistently evaluating whether to buy, build, partner, or invest, and determining the best approach at any given time.

Yes. I'd just say, you're right. The pace has picked up. The political environment definitely helps with that. And all of this M&A is really in service of our core focus around trading and payments. So it's been great.

Our next question is from Pete Christiansen at Citi.

And nice execution on a bunch of partnership deals signed in the quarter. I do want to ask about Coinbase's operational infrastructure. I mean we've had some really busy trading days in the last quarter. There's been cloud service providers, multiple have had issues this year. I know that Coinbase has spent a lot this year bulking up customer service. How would you assess where Coinbase is in terms of its operating infrastructure today? Redundancy? And how are you thinking about investments there going forward? That would be helpful.

Yes. I mean I can start off. Like many companies, we were impacted by AWS outages. I think it always raises this question of, should we be pursuing a more robust multi-cloud approach? We already do use multi-clouds in a variety of ways, but we haven't made what would be a substantial investment to make every service in the company redundant to a certain cloud outage. So it's always a trade-off. Now these clouds are also kind of working hard to build their own redundancy. And so you always have to factor that into other priorities and investments that you could make and look at the cost-benefit analysis.

And I would just say in terms of some of the things we're really excited about as well, we're very invested in automation. Currently, 65% of our customer support interactions are fully automated. We're trying to push that number up rapidly. And then we're also rolling out deep reasoning LLM agents to automate the majority of compliance investigations in 2026. So there's a lot of really interesting areas for automation over the next several years as well.

Yes. And I guess your question made me think of actually on October 10, there was also a record level of activity across crypto exchanges. And in that case, we actually operated very well without disruption. We didn't have any downtime or degraded latency around market data or anything like that. So that was a result of a lot of investments we've made over the last year or two in doing load testing and making sure we didn't have any reversions as new software is being developed. Several major exchanges experienced extended outages during that time, and we didn't have any. So I was really proud of how that part came to be.

Next question is from Ben Budish at Barclays.

In your shareholder letter, you mentioned a new type of premium service for advanced retail traders. Could you elaborate on that a bit more? Additionally, is there anything to infer about the current competitive landscape in retail trading? It appears that there are new cryptocurrency exchange competitors as well as established competitors seeking to enhance their offerings. How would you assess the state of competition in that area? And could you provide more details about this service?

Maybe I'll start and then feel free to add on, Brian. Our white glove service has been made available to some of our high-value advanced traders. So this is not a service available to all of our retail traders, but to our very specific high-value advanced traders. And it provides some concierge-level support, personal account management, and really makes commitments around time to resolve issues, ensuring they can trade seamlessly without encountering any hiccups with our services. With regards to our broader retail program, we are really pleased to have our trading volume exceed overall U.S. spot volume in the quarter. So we're really seeing strong adoption of our products and services. There's more to do there, as Brian said, which is why we are building towards the Everything Exchange to continue to meet our customers where they are and provide broader access to all assets they would like to trade.

Yes, not much to add. I would just say that in trading, I mean, there are whales that drive a disproportionate amount of volume. And so it's important for them to have a dedicated relationship manager who can help them resolve any issue, but it also has a partially sales function. So I think it's just a good example of us maturing as a company and recognizing our best customers.

Let's go now to Owen Lau from Clear Street.

Could you please talk about innovation in Coinbase's business? It has global payout, I think it enables businesses to send and receive USDC with lower fees. You're also making an announcement with Citi to develop digital asset payment capabilities. I know it's still early here, but I'm wondering what you have heard from the banks and merchants so far about these deal capabilities? And have you started to see more merchants moving into blockchain or even considering moving into blockchain?

Sure, I'll begin. We are experiencing strong growth in our first-party business with retail, businesses, and institutions. I take great pride in Coinbase having developed infrastructure to support other companies. We refer to this product as the Coinbase developer platform or CDP, which is often viewed as crypto-as-a-service. We have successfully onboarded 264 institutions that are utilizing this product, including major firms like JPMorgan, BlackRock, Citi, PNC, and fintechs such as Stripe, PayPal, Revolut, and Webull. I believe this will become an increasingly significant aspect of our business, offering diverse revenue streams and enabling us to participate in value creation as more companies adopt crypto solutions. This trend will encompass banks, fintechs, payment service providers, and even companies unrelated to financial services. For example, we are collaborating with Shopify to facilitate payments. I see parallels with what Amazon achieved with AWS, as I believe this third-party infrastructure has the potential to become a robust business for us in the future.

Owen, maybe I could add on here for you, though. We've really been building the various infrastructure layers and are pleased to have a more vertically integrated payments product that we're bringing to market. It starts with Base, which is our Layer 2 solution, USDC, and other stablecoins. We've now built out payments APIs. And we're now bringing those forward to our customers via Coinbase the Base app and then directly to businesses. So what we're seeing here is, one, we are a partner of choice. We continue to win mandates from large financial players, fintechs, as Brian shared. But we're also seeing small and medium-sized businesses really come to our platform as we enable them to more efficiently manage their capital and their liquidity through instant settlement via stablecoins while earning rewards on any idle funds that they hold in USDC. So we've seen great early traction with over 1,000 businesses onboarded, and we have a growing wait list.

Let's go next to Devin Ryan at Citizens.

Great. Just want to ask a question about Deribit. Obviously, you haven't had it on the platform for too long, but it seems like it's doing well here out of the gate for Coinbase. So just love to kind of think about the integration thus far, what that informs around potential future product development and cross-sell opportunities for Coinbase? And just more broadly, if you can just touch on the scaling plan now that it's fully integrated or part of Coinbase.

So it officially just closed in August, and we onboarded 100 employees in September. So they had record volume in the month of August. Their revenue has been growing. And where we are right now is we're really working to integrate their products seamlessly with our products so we can bring together spot derivatives and derivatives meaning both perpetual futures, futures, and options, all under one roof. We, in the quarter, had brought forward for our U.S. customers, spot and derivatives cross-margining, and it enables capital efficiency where our customers really value the ability to get better leverage and better margin on their trading products. So we think that that is a future that we can bring forward to options as well. So the goal is going to be integrated for the next few quarters so we can bring everything under one roof and enable side-by-side trading of these products and services to our institutional clients.

We'll take our next question from Patrick Moley at Piper Sandler.

I just had one on the Everything Exchange. I was wondering if you could update us on the timeline or some of the milestones we should be looking out for as you introduce new asset classes to that platform.

Yes. Well, some of them are already live, right? I mentioned the DEX integration, the U.S. style perps. And December 17 is going to be another milestone for us. We're hosting that H2 product event, where we'll be giving an update on everything we've been working on in the second half of this year. So that will be a good one to tune into on the live stream.

Let's go next to James Yaro from Goldman Sachs.

Could you help us think through the impacts of the crypto liquidations on October 10 on markets as well as on the various market participants? Do you see any medium-term ramifications? And are there any lessons learned that you think could improve market function going forward?

I'll start, and others can add on. So obviously, the events of October 10 led to some liquidation as folks had to delever to address the sharp sell-off in certain assets. We are really pleased that we did not see significant liquidations on our platform. And as Brian shared earlier, our platforms really withstood the volatility quite well during that window. In part, that's due to the design of our products and the approach that we've taken to leverage with our products. One of the observations that I would have broadly in the market is today, there are very few of us that are publicly traded that have as much transparency into our operations, our risk management, our balance sheets. And so we do have these risks and throughout the overall ecosystem of operational errors that then lead to deleveraging events. I think over time, you'll see more and more companies come into a regulatory framework; more and more companies will go public. And so this risk will reduce over time because transparency then helps all risk, and the more sunlight the better in some of these areas. But I would say that the market rebounded quite nicely from this, and I don't see any systemic losses or any kind of continued fallout from that sell-off.

We'll take our next question from Andrew Jeffrey at William Blair.

I appreciate the question. Brian, I definitely agree with your vision on stablecoins. Could you elaborate on your thoughts regarding the timing for more commercial adoption beyond cryptocurrency? Additionally, what role do you see Coinbase playing in cross-border commerce, and how might your economics be affected as USDC becomes more widely used?

Yes, it's interesting to discuss. Regarding the last part, I haven't seen any changes in economics yet. We're still in the early stages of this, and it's growing rapidly, so it will be intriguing to see how this evolves. We have several ways to monetize, such as Base sequencer fees and USDC, allowing us to charge directly for the payments. Looking at the bigger picture, payments are clearly the next significant use case for crypto. Trading was the starting point, but payments are expanding tremendously now. It's a huge market, with cross-border payments amounting to roughly $40 trillion annually. B2B transactions make up 75% of that, which is an initial use case for stablecoins. We're currently seeing about $100 billion in annual stablecoin transactions, which is growing quickly. We plan to engage in this area across various fronts, including building payment solutions for businesses. Coinbase serves small and medium-sized enterprises by offering products and services related to invoices and vendor payments. Much of this involves cross-border transactions, though it remains impactful even domestically. Since launching this product recently, we've onboarded about 1,000 businesses, with another 1,000 on the waitlist. We're also incorporating payments into our Coinbase retail app and the new Base app, which should be powerful. We believe we are one of the few companies that can connect businesses and consumers effectively within this two-sided market, similar to how Shopify utilizes USDC checkout for their merchants. For these merchants, reducing the usual 2% to 3% fees for online money transfers can be significant. It shouldn't be necessary to incur those fees, especially since we can facilitate transactions in under a second for less than a penny, regardless of the amount involved. This adds considerable value, allowing us to pass some savings back to consumers, as seen with Shopify offering 1% back for USDC payments, while merchants also benefit. This creates a win-win situation. Lowering friction in the economy can lead to a significant increase in activity and make a dramatic impact. Another innovative aspect in the payment space is a protocol we developed called x402. This allows attachment of stablecoin payments to any web request. You might know about the 404 error for "file not found" on the Internet. There's also a code 402 in the HTTP specification that denotes "payment required." However, it hasn't been widely implemented in browsers because payment input traditionally occurs on websites rather than browsers. We decided to launch this anyway, and it has garnered considerable attention recently, with partners like Cloudflare, Vercel, and Google collaborating with us. This has prompted many to sign up for the Coinbase developer platform to begin creating these integrations. While it's still early, the potential for payments over the Internet, particularly for AI agent transactions, is an emerging opportunity. We released an open-source toolkit called AgentKit, which enables any AI agent to integrate a stablecoin wallet. We're witnessing various developments in payments at the forefront, and I believe this area will be significant for both crypto and Coinbase.

Our next question comes from Bo Pei at US Tiger.

In the shareholder letter, you mentioned scaling back rebates and incentives in derivatives. Could you quantify how that's affecting take rate and whether you expect this to help margin expansion in Q4 and 2026?

Bo it's a great question. So we have scaled back those incentives, and you can see that in the overall institutional growth. We did not attribute any change in take rate. And it's very difficult to look at take rate for the institutional business given the acquisition of Deribit, and given the growth of the derivatives platform, which is not reported in underlying trading volume. So there's been no change to the overall pricing of any of the products and services in any material way quarter-over-quarter, but there has been a lot of mix shift and just change in the drivers of the total institutional platform. We are pleased to be able to change the incentives in derivatives because we've seen more liquidity and just more solid sticky organic open interest growth in that platform, which has enabled more profitable growth for our international derivatives business.

Our next question is from Alex Markgraff at KeyBanc Capital Markets.

Alesia, maybe one for you. Just as we think about the many new products and elements of the Coinbase platform, just hoping we could just sort of step back and maybe you could remind us how you're thinking about managing margins across these various products and platform elements? Any way to sort of frame the vision for contribution margin across these new items?

So we do have a big mix of products and they do all monetize separately. In some cases, we have launched products with the sole growth of retention and acquisition. In the case, for example, of the Coinbase card. So what we look to do is monetize the overall customer relationship. For example, on the institutional side, we have many of our customers who are now engaged with three-plus products and services, and we look to the overall customer relationship and the customer economics versus single product economics. So we're focused on growing overall profits. We're focused on how do we drive total adjusted EBITDA growth at the company level. And that is how we think about it versus targeting a specific margin by product at this time.

We'll take our next question from Dan Dolev at Mizuho.

Guys, great results here. I got, I guess, two quick questions. On the take rates, I appreciate you answering on the institutional take rates. Is there any way you can help us think about how this looks a couple of quarters out? And then I have a very, very quick follow-up, if you don't mind.

As we shared before, we don't focus on outlook that far in our public comments. We are focusing on meeting our customers where they are, engaging them with products and services. And we are constantly experimenting with our pricing on the retail side to understand how best our customers engage. Right now, we're really pleased to see the growth of the Coinbase One subscribers. We introduced the new basic tier last quarter and the basic tier along with Coinbase Card is showing a lot of traction. So over time, we anticipate more and more customers will monetize through many products and services, and we're reducing the overall reliance on trading fees as a single monetization as it was many years ago. But we will adjust fees as needed by the market, and that has been our long-standing approach.

We'll go now to Ed Engel from Compass Point.

Alesia, in the past, you've talked about how 2025 was a bit of a reinvestment year just as you capitalize on the better political environment. I guess with the step-up in fourth quarter OpEx, I'm just kind of thinking, are you still ramping up hiring through the end of the year? Or is most of that headcount growth behind us? I guess I'm just trying to gauge whether this kind of 4Q guidance is a fully baked-in number for some of the reinvestment you made this year?

Great question. So as we shared in my opening comments, the outlook for Q4 on our tech and dev and G&A combined is up roughly $100 million quarter-over-quarter. About half of that step-up in cost is due to the two acquisitions we made, one being Deribit, the second being Echo. And then the other half is due to headcount growth. So we are still growing headcount in the fourth quarter, although at a much slower rate than we did in the third quarter.

Let's go now to Zach Gunn at FT Partners.

I just also wanted to ask on the payment side of things. Historically, when we think about driving adoption of the new payment modality or platform, it takes anywhere from 3% to 5% of overall transaction value to incentivize either consumers, merchants, or businesses switching. So can you just talk about what Coinbase is doing to incentivize adoption of its payments platform?

Yes, you're correct that there are significant network effects in payments, so we understand the challenges of entering new markets. Fortunately, it's not just Coinbase facing established players; the beauty of crypto lies in its decentralized, open networks with numerous companies involved globally. It's similar to the Internet competing with proprietary systems rather than just one entity. Currently, we have around $500 billion in assets on our platform, and a growing number of people worldwide are using and holding crypto. This positions us in situations where crypto can become meaningful, though it won't suit every merchant. For instance, a typical Starbucks might not reach the necessary threshold, but in certain e-commerce sectors, a substantial number of customers may prefer to pay with crypto. This could facilitate microtransactions and access markets where credit card use is limited. Initially, we expect growth to occur in areas with the highest unmet needs, and over time, crypto will increasingly replace traditional payment methods due to its speed, lower costs, and global reach. However, this will take time. It's also important to note that when discussing payments, many people think about small transactions like coffee purchases. In reality, most cross-border payments are B2B transactions, which is where we see significant growth in crypto adoption. This segment is underserved, with businesses seeking faster access to funds and reduced exposure to foreign exchange risks. These are the areas where we anticipate early adoption, eventually expanding to encompass a larger share of total payments.

Let's go next to Joseph Vafi from Canaccord.

Just as a quick side note, just finishing lunch here on the West Coast that I bought with my Coinbase One card. So thanks for a great product. But just maybe double-click on Deribit here a little bit more. And Alesia, I appreciate the commentary on cross-product margin capability and efficiency there. But as you look forward, the distribution of the Coinbase platform is so big. Do you see this as a big share gain or share creator in option transactions? And then can you just remind us on margin structure on a transaction margin basis, how your options and derivatives compare to spot?

Deribit is already the market leader in options. They had over 75% market share for options. Notably, this is all non-U.S. And so there is a path to grow the market for options in the U.S. That is going to be a multi-quarter roadmap of bringing both the regulatory licenses and product to bear in the U.S., but we think that's a huge opportunity for us. But more importantly, we believe that bringing these products to trade all under one umbrella will be able to grow overall trading volume on all of our products on our platform. And we've already seen, just by having Deribit closed for a few weeks on our platform, that existing clients have more confidence in the combined balance sheet and now bringing options to the Coinbase balance sheet, they are trading at higher volumes and trading and holding more assets on our platform. So the brand strength, the balance sheet strength that we're able to now put behind Deribit and their strong product and risk management is having outsized benefits for both of us. And we can follow up with you about the margin differential. Obviously, there's no margin on spot trading. We do offer leverage on those assets, but they're very customized by product. So they look different in each market, and they look different to different customer groups. I don't have a simple way of answering that question for you.

We'll take our final question from Gus Gala at Monness, Crespi and Hardt.

I wanted to talk a little bit about the competitive environment between September and October. September was a fantastic month in terms of outgrowing the market at spot; in October it seemed to reverse that. Just trying to parse out, is this competitive pressure, like present in the system, maybe seeing more aggressive pricing competition from peers in terms of promos, incentives stealing away? Or is it just a mix issue? Just trying to understand what's going on there.

We've always faced competition. We are a platform that has multiple customer types, multiple products. And so we all have faced competition since we've been founded on different products, and different customer groups within our portfolio. Our focus and our goal is always to deliver the most trusted and easiest to use products to our customers. And we've been really proud of our continued growth in market share, trading volumes, size, and scaling up these various product offerings. So when you think about the competitive pressures in the month of October, there's nothing specific to talk about. Generally, we are always looking for ways to continue to build and delight our customers.

Yes. I hope we answered your question on that. I was a little distracted because I was tracking the prediction market about what Coinbase will say on their next earnings call. And I just want to add here the words Bitcoin, Ethereum, blockchain, staking and Web3 to make sure we get those in before the end of the call.

All right well, we've taken all of our questions. That's it for today. Thanks for joining us, and we'll talk to you again next quarter.

Before we end, I just want to invite anybody to join us on our X Spaces call next week. And so please follow us on X. Brian and I will be taking additional questions on Monday.