Coinbase Loss Deepens as Clarity Act Debate Intensifies

• Coinbase reports $666.7M quarterly loss as transaction revenue and trading volumes decline.
• Stablecoin and subscription revenue grow, helping cushion impact of weaker crypto market activity.
• Clarity Act faces delays amid dispute over stablecoin rewards and banking requirements.

Coinbase reported a shocking quarterly loss as tensions over U.S. digital asset legislation intensified, placing the exchange at the center of a policy dispute involving banks and the White House. The company posted its first quarterly loss since the third quarter of 2023, while debate over the proposed Clarity Act and stablecoin rewards exposed divisions across the crypto and traditional finance sectors.

Coinbase recorded a net loss of $666.7 million, or $2.49 per share, for the fourth quarter ended December 31. Analysts surveyed by LSEG had expected earnings of 55 cents per share. Transaction revenue fell to $982.7 million from $1.56 billion a year earlier, reflecting weaker market activity during a broad digital-asset downturn.

Consumer transaction revenue declined by more than 45% year over year. The company attributed results to cyclical conditions in crypto markets. Bitcoin prices retreated from early October highs, and U.S. spot Bitcoin exchange-traded funds recorded withdrawals of $7 billion in November, roughly $2 billion in December, and more than $3 billion in January.

Despite weaker trading volumes, subscription and services revenue rose 13.5% to $727.4 million. Stablecoin-related revenue increased to $364.1 million from $225.9 million. Coinbase draws income from USDC reserves held on and off its platform through a partnership with Circle, earning interest on U.S. dollar reserves backing the token.

Related: Hyperliquid Overtakes Coinbase With $2.6T Trading Volume

Stablecoin Policy Dispute Stalls Clarity Act

At the same time, legislative progress on the structure of the digital asset market has slowed. The Clarity Act, designed to establish federal rules for digital assets, has been delayed by disagreements between cryptocurrency firms and major banks.

Coinbase CEO Brian Armstrong said the company is seeking a “win-win” framework that advances the administration’s crypto agenda while addressing banking concerns. He confirmed that Coinbase attended recent White House meetings and stated that the industry remains aligned in discussions.

Armstrong objected to provisions that would restrict stablecoin rewards and impose additional banking license or insured depository institution requirements on fund flows. Online commentary from industry participants argued that limits on third-party stablecoin yields could affect consumer returns and venture-backed firms.

Related: White House May Drop Support for Clarity Act If Coinbase Holds Its Stance