Coinbase's future may depend less on a surge in crypto trading and more on two quieter forces — stablecoins and U.S. legislation — according to a group of analysts tracking the exchange. The observation comes as the company navigates a prolonged slump in trading volumes that has weighed on its core revenue stream.
The stablecoin opportunity
Stablecoins have become a growing part of Coinbase's business, particularly through its partnership with Circle on USDC. The exchange earns interest on the reserves backing the stablecoin and collects fees on conversions. Analysts say that steady, lower-risk income could eventually rival trading revenue, especially as stablecoin usage expands beyond trading into payments and remittances.
Coinbase has been pushing deeper into the stablecoin space. It now offers USDC-denominated loans and yield products, locking in users who might otherwise move funds onto other chains. For a company long tied to the boom-and-bust cycle of crypto trading, that shift matters.
Why legislation matters
The other big variable is what happens in Washington. A clear federal framework for crypto — covering stablecoins, exchange registration, and custody rules — could open the door for more institutional money and mainstream adoption. Analysts argue that regulatory clarity would benefit Coinbase more than most exchanges because the company has already invested heavily in compliance.
Without it, the exchange faces continued uncertainty over which tokens it can list and how it must handle customer assets. Legal fights with the SEC have already cost the company tens of millions in legal fees and slowed product launches. A legislative fix, many say, would remove that drag and let Coinbase compete on product rather than on legal risk.
Trading revenue still matters — for now
None of this means trading volume is irrelevant. Transaction fees still make up the majority of Coinbase's revenue, and a prolonged bear market hurts. But analysts point out that the company's valuation has historically swung with volume, and that's a risky bet. If Coinbase can build reliable income streams that don't depend on retail speculation, its long-term growth story becomes much more defensible.
The timing isn't great. Retail interest in crypto has been muted, and the exchange has cut costs to protect margins. But the analysts' argument is about what happens next — not what happened last quarter.
What to watch
The next concrete milestones are the stablecoin bill moving through Congress and Coinbase's quarterly earnings call later this month. Both will offer clues about which of these two drivers — legislation or stablecoin revenue — is actually gaining momentum.
