Casey Wagner

<div id="highlights-block_622bafc8ffb37" class="highlights">
 <ul>
 <li>Coinbase doubles down on its efforts to diversify revenue streams away from trading fees</li>
 <li>Those that qualify for the beta launch will be contacted by email</li>
 </ul>
 
</div>



As Coinbase looks to distance itself from transaction-based revenue, the exchange has begun recruiting the first customers for Coinbase One, a subscription service that comes with $0 trading fees.



Perks of the <a href="https://help.coinbase.com/en/coinbase/other-topics/coinbase-one/account" target="_blank" rel="noreferrer noopener">subscription</a> also include up to $1 million in account protection and 24/7 phone support. A spokesperson from Coinbase declined to reveal the price, which will be billed monthly.



Coinbase One is currently in its beta launch, the exchange said.



The exchange has <a href="https://cms.blockworks.co/coinbase-2-23b-q2-earnings-exceeds-estimates/" target="_blank" rel="noreferrer noopener">historically</a> reported trading fees as its main source of revenue, but it has been trying for months to diversify its profit streams. In May 2021, the revamped version of Coinbase Prime, the exchange’s prime brokerage service, launched.



In January 2022, Coinbase announced that it would be buying Commodity and Futures Trading Commission-regulated derivatives exchange FairX, offering another opportunity to diversify revenue.



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh3.googleusercontent.com/4BnppVXT5tqNn7ai0-KxSQujN5VYnL0m8IySgWkcAkLjEtfNRgDyLT5YuWb6-pKlQGG1YjYOQU8yclvDNp0prbwuvYyjqqaBRu7I3qHtWADVLnKHC6Rz064jPbCBQcLAbEt0F_Yi" alt=""/><figcaption>Source: Coinbase</figcaption></figure></div>



“The transaction revenue has historically may have the lion&#8217;s share of our revenue,” said Alesia Haas, chief financial officer of Coinbase, during the exchange’s 2021 <a href="https://cms.blockworks.co/coinbase-expects-softer-first-quarter-after-strong-q4/" target="_blank" rel="noreferrer noopener">fourth quarter earnings</a> call. “We&#8217;re taking steps to diversify this revenue and also grow our non-transaction revenue streams.”&nbsp;



Coinbase executives also braced shareholders for a quieter first quarter of 2022 on the earnings call, saying that they are expecting lower monthly transacting users and total trading volume in the first three months of the year.



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Coinbase Rolls Out Test of Fee-free Trading

<div id="highlights-block_61df578a01b44" class="highlights">
 <ul>
 <li>Coinbase is expected to acquire FairX this quarter </li>
 <li>The move shows a growing trend for exchanges to diversify their offerings</li>
 </ul>
 
</div>



Coinbase is buying Commodity and Futures Trading Commission-regulated derivatives exchange FairX for an undisclosed amount, the company announced Wednesday in a <a href="https://blog.coinbase.com/coinbases-path-to-creating-a-robust-and-regulated-crypto-derivatives-market-a1dc71577337" target="_blank" rel="noreferrer noopener">blog post</a>.



Coinbase will initially offer derivatives trading through FairX’s existing infrastructure, but plans to eventually “leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US,” the post read.



The acquisition is essential to building out Coinbase’s offerings and meeting client demand, the company said.



Coinbase has <a href="https://cms.blockworks.co/coinbase-2-23b-q2-earnings-exceeds-estimates/" target="_blank" rel="noreferrer noopener">historically</a> reported trading fees as its main source of revenue, but the exchange has been trying for months to diversify its profit streams. In May 2021, the revamped version of Coinbase Prime, the exchange’s prime brokerage service, was announced. 



Expanding into derivatives trading, which is increasingly becoming more popular than spot trading, by volume, offers another opportunity for revenue diversification.



“These products are in high demand from investors who seek to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets,” the blog post read.&nbsp;



The acquisition comes as other cryptocurrency exchanges look to expand into the same market. In August 2021, <a href="https://cms.blockworks.co/ftx-us-brings-crypto-derivatives-to-users-with-ledgerx-acquisition/" target="_blank" rel="noreferrer noopener">FTX announced</a> the purchase of futures and options platform LedgerX.&nbsp;



“It’s only natural to want to engage the largest capital market in the world inside the US with that same product through all of our existing institutional and retail customers who want to trade these products,” FTX.US president Brett Harrison told Blockworks at the time.&nbsp;



Coinbase’s acquisition is set to close in the first quarter of 2022. Terms of the agreement have not been disclosed.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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