Fees earned from customers trading crypto on the Coinbase platform dropped 13 per cent from last quarter and 50 per cent from a year ago to $327 million, the lowest since the end of 2022

Coinbase’s crypto trading revenue declined in Q2 amid regulatory pressure on the biggest US crypto currency exchange, resulting in a net loss that increased from the first quarter.

The decline came as the exchange squared off with the US SEC, which sued the exchange in June. A key client, BlackRock, is also awaiting approval from the SEC to list a spot bitcoin exchange-traded fund.

Fees earned from customers trading crypto on the Coinbase platform dropped 13 per cent from last quarter and 50 per cent from a year ago to $327 million, the lowest since the end of 2022.

That led to a $97 million net loss, marginally higher than the first quarter. It was still better than expected and much less than the billion-dollar hit the exchange took during a rough second quarter in 2022. Its revenues were also better than expected.

The firm said it has reduced expenses by 50 per cent since last year, including letting go 30 per cent of staff over the past year.

These last few quarters have been challenging and invigorating alike, the exchange told shareholders in a letter it released Thursday.

But by strengthening our financial health we are well placed to generate the resources we require to keep investing as we build the future of crypto and help drive regulatory clarity to update the financial system.

Coinbase’s stock was over 2 per cent higher in after-hours trading as of 5:15 p.m. ET after the release of its results. Bitcoin stays above $29,200, slightly higher for the last 24 hours.

The drop in Coinbase’s trading came during a three-month period of reduced activity and increased US regulatory uncertainty. That legal action from the agency has not to date hurt Coinbase’s stock performance, though.

The Securities and Exchange Commission is accusing the firm of operating an unregistered exchange, broker dealer, and clearing agency by offering specific crypto tokens the agency has claimed are securities. Coinbase disagrees.

It is actually not really a regulatory issue. It is a political one. It is a battle of political will and political power amongst the federal regulators, which is not doing anybody in the US any good, Chief Executive Officer Brian Armstrong stated Wednesday during a regulation discussion over Twitter.

We will not permit American leadership here to be destroyed by a few outliers in our government painting outside the bounds of the law, he stated during Thursday’s earnings call.

CLO Paul Grewal said during the call that Coinbase lawyers plan to introduce an order Friday to dismiss its case with the Securities and Exchange Commission completely. He added Coinbase expects the order to be “fully submitted and taken under consideration” by the end of October.