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Binance: From QUANT to TRUMP, Unveiling the Human Nature and Cultural Logic Behind the Meme
Original Article Title: QUANT, TRUMP and DOGE: Memecoins as Humanity in Action
Original Source: Binance
Original Translation: TechFlow
Key Points
· Like the recently launched presidential $TRUMP token, a Memecoin is a cryptocurrency born out of internet culture, highly reliant on community engagement, and typically garners attention through humor and viral spread.
· This article will delve into the recent QUANT Memecoin event and, in conjunction with some other well-known cases, analyze the human and cultural logic behind the Memecoin phenomenon.
· The peculiar and high volatility of Memecoins actually reflects the wondrous irrationality in human behavior.
If there's anything that seems like it's straight out of satirical news, it's the fact that former President Donald Trump has launched his own Memecoin—$TRUMP. This token went live just three days after his inauguration, promising "huge" returns and a "bright" future—after all, in his dictionary, everything he touches is the "best." Leveraging a series of patriotic-themed memes, his iconic facial expressions in NFT form, and the slogan of being the "most stable token in history," $TRUMP has ignited a frenzy in the cryptocurrency community. Currently, the token's price has surged over 10,000%, with a fully diluted valuation reaching $710 billion, a stunning achievement that even left Binance co-founder CZ bewildered. Just two days later, Trump's wife Melania also launched her own $MELANIA Memecoin.
Whether these tokens will become the next financial phenomenon or merely end up as a joke is still up for debate. However, one thing is certain: When the first couple of a superpower country is involved, Memecoin is no longer a niche curiosity but a fully-fledged cultural eruption.
Source of the 45th U.S. President's Memecoin: X
Today is the perfect time to dive deep into the world of Memecoins. This article will take QUANT Memecoin as an example to explore its underlying success logic and cultural significance.
QUANT: How a 13-Year-Old Online Sensation Sparked a Mini Financial Revolution
The beginning of the story, like most Memecoins, started as a joke.
On an ordinary night in November 2024, a 13-year-old Gen Z streamer sat at his desk, live streaming to a small but loyal audience. His "weapons" included: a sense of ironic humor, acute insight into crypto trends, and a strong interest in memes. His "grand plan"? To launch a Memecoin called QUANT using the Pump.fun platform, which is based on Solana. On this platform, creating a cryptocurrency is almost as easy as registering for an Instagram account.
In a matter of minutes, QUANT was officially launched. The young creator showcased his full potential as a savvy crypto prankster. As a group of token holders rushed to buy QUANT enticed by the hype of the "next Memecoin hot project," he swiftly executed the classic move in the crypto world— a "Rug Pull." He sold 51 million tokens for $30,000 worth of SOL. He then smirked proudly in front of his audience, closed his laptop stylishly, resembling a villain in a low-budget heist movie.
Source: Chaincatcher.com
This little guy even flipped the middle finger provocatively before the Rug Pull
Source: Chaincatcher.com
In the world of Memecoins, a Rug Pull is nothing new. However, what happened next turned QUANT from a brief joke into an unprecedented mini financial and cultural revolution.
This Rug Pull did not go unnoticed as the teenager might have expected. Instead, it sparked community outrage. Angry traders decided to seek "revenge" in typical Memecoin fashion: they joined forces to drive the token's value to new heights.
Through collective action, the QUANT community managed to increase the token's market cap to $22.6 million in just 15 hours. The token that the teenager sold for $30,000 quickly surged to a value close to $4 million. Ironically, the teenager behind the Rug Pull could only watch as his token became the hottest Memecoin of the moment, unable to profit from it.
Meanwhile, the cryptocurrency social media scene—Twitter, Reddit, and Telegram—was flooded with all sorts of jokes, memes, and conspiracy theories. On that day, #QUANT became a trending hashtag, perfectly showcasing all the traits of the Memecoin market: absurdity, community-driven initiatives, and extreme unpredictability.
As QUANT's popularity continued to soar, cryptocurrency enthusiasts swiftly did what the internet does best: they exposed the teenager's real identity. His personal information, including details about his family, was leaked online. What started as a seemingly harmless financial prank eventually turned into a cautionary tale about the dark side of Memecoin reputation.
However, in the face of such a strong backlash, the 13-year-old teenager showed no fear. Instead of backing down, he doubled down and launched additional tokens, such as $Lucy named after his dog, and a token called $Sorry, continuing to profit from the Memecoin speculation frenzy. By the end of 2024, this teenager had become a classic anti-hero in the Memecoin world: both clever and daring, adored and loathed by people.
During that brief period in November 2024, QUANT seemed unstoppable. But like all Memecoins, its value fluctuations and community enthusiasm were just as unpredictable. After a brief moment of glory, QUANT's price began to plummet sharply. From its all-time high of $0.0633 to its current value of $0.00075, its worth has plummeted by a staggering 98.8%.
Ultimately, the rise and fall of a Memecoin depend entirely on community attention. Once the anger and buzz surrounding the Rug Pull started to fade, the market's interest cooled off as well. Those who cashed out during the QUANT craze made a fortune, while latecomers had to bear the brunt of the crash. Today, QUANT has become a part of digital history—showcasing both the potential and risks of Memecoins.
Journey Through the Psychedelic Jungle of Memecoin
In this chaotic and meme-filled world of the internet, Memecoin has become one of the most fascinating social phenomena. Unlike traditional currency symbolizing economy, stability, and rules, Memecoin thrives on humor, viral dissemination, and community-driven chaos.
Memecoin is a unique cryptocurrency that, rather than being a product of technological innovation, can be better described as a crystallization of internet culture. Unlike Bitcoin, hailed as "digital gold," or Ethereum, supporting decentralized applications, Memecoin is fundamentally a digital joke but has transformed into a financial meme through the power of the community. Its value does not stem from practical use or scarcity but rather from the community's shared sense of humor and trust in this joke.
The story of QUANT is just a microcosm of this phenomenon. In this phenomenon, Tokens were initially created just for laughs, but with the magical power of the community, they often metamorphose into popular tools for speculative trading.
At the core of every Memecoin is its community. From obscurity to price "mooning" (more commonly plummeting to the "dumpster"), a Memecoin's fate is entirely dependent on the collective enthusiasm of its believers. Platforms like Pump.fun further lower the barrier to entry. Through its user-friendly interface, anyone can create a Token, customize its branding, and share it within their social circles.
Meanwhile, the greatest frenzy is happening on Twitter and Discord. On these platforms, Memecoin enthusiasts gather to exchange humorous memes, plan the next "moonshot" operation, and unabashedly promote their new favorite. It is these platforms and their chaotic communities that have turned Memecoin into a force that is both absurd and undeniable: it is both a joke, an economic experiment, and a true reflection of internet culture.
The launch of $TRUMP Memecoin is a textbook example of cultural brand building, perfectly showcasing how Donald Trump has crafted himself into a symbol and phenomenon. He leveraged his global influence as a politician, celebrity, and businessman, demonstrating a unique ability to maintain relevance in the era of internet viral propagation. This Memecoin may further solidify his status as a cultural disruptor, adding a vibrant touch to his legend in an era where influence is treated as currency.
Next, let's take a look at another 2024 Memecoin sensation: FARTCOIN. Originally conceived as a playful jab at crypto culture, this token unexpectedly became a serious player in the market. With a hilarious name, FARTCOIN attracted a loyal following, transforming the token into a cultural symbol. Its success once again proves the allure of Memecoins: they don't need logic, just the ability to make people laugh out loud.
Another shining star of 2024 is MOODENG, whose rise was fueled by a significant donation from Ethereum co-founder Vitalik Buterin to wildlife conservation. Named after a pygmy hippo that went viral in Thailand, this token cleverly rode the wave of internet trends and influencer philanthropy. This powerful alliance deeply touched the crypto community.
When discussing Memecoins, one cannot forget their "originator": Dogecoin. Initially a humorous homage to the Shiba Inu meme, it has now grown into a cryptocurrency empire. Dogecoin has traversed the path from an internet joke to mainstream currency, serving as the prime digital testament to the power of community faith.
Dogecoin's most prominent supporter, Elon Musk, has infused it with his signature flair. From declaring intentions to use Dogecoin on Mars as a circulating currency to proposing the establishment of a "Department of Government Efficiency (DOGE)" to manage the federal budget, Musk's backing has transformed Dogecoin from a simple internet joke to a cultural symbol of the contemporary digital age, embodying the dream of technology.
The Golden Rule of Memecoins
For the average user, engaging with Memecoins is more like a high-risk experiment in collective psychology. The first principle users must remember is that these tokens completely disrupt traditional investment logic. Their success does not rely on utility or intrinsic value but on viral spread and popularity. The success or failure of a Memecoin entirely hinges on its ability to capture the internet's imagination, riding the wave of jokes, trends, and defining moments of online culture.
The second principle is that a Memecoin's value is determined by its supporting community. An enthusiastic and loyal group of supporters can propel any Memecoin to stardom, whether it's a sincere project or a semi-jocular creation. Take QUANT, for example, its rapid rise was not due to technological innovation but because of the community's collective anger. After the founder's rug pull, the community's determination boosted the token's price, highlighting the essential role of the community in Memecoin valuation. However, as revealed in QUANT's story, this fervor is often fleeting. Once the excitement fades, so does the token's value.
Finally, this highly volatile ecosystem perfectly embodies the high-risk, high-reward nature of Memecoins. Memecoins are known for their intense price fluctuations, which can either result in small investments doubling overnight or investors suffering heavy losses in an instant. For example, PENGU, as the native token of the Pudgy Penguins NFT series, saw its price skyrocket by 581% within the first 24 hours of trading on a new exchange, largely due to community enthusiasm and a carefully orchestrated airdrop event. However, by mid-January 2025, PENGU's trading price was around $0.0316, representing a 54.8% drop from its all-time high of $0.06845 set on December 17, 2024.
The chaotic nature of the Memecoin market has inevitably raised some serious ethical questions. When a 13-year-old can easily create a token and profit from it, what does that mean for the crypto market as a whole? QUANT's story reveals that this field urgently needs clearer boundaries, whether discussing who is eligible to create and promote digital assets from a regulatory standpoint or an ethical perspective.
In the Memecoin market, every trader is like an observer, immersed in a world dominated by the unpredictable forces of viral spread, humor, and collective action. Here, finance intertwines with internet culture, and an asset's value is not determined by its actual function but entirely by how strongly the public believes in it.
Through the lens of Memecoins, we can glimpse the power of collective belief, the far-reaching impact of viral culture, and the democratization of financial participation. The essence of these tokens is a microcosm of human behavior—full of the unknown, spirit of collaboration, and endless creativity.
Binance Empowering Meme Investments
If you are intrigued by the Memecoin craze but wish to participate in a more secure environment, Binance offers a more reliable option. Binance's listing process undergoes rigorous review and can effectively filter out obvious meme projects and short-term rug pull scams.
However, it is essential to remember: even on the Binance platform, engaging in Memecoin investments is not a guaranteed path to wealth. The exhilaration of this market comes with inherent risks, so do not invest more than you can afford to lose. Whether you want to ride the wave of a cultural phenomenon or simply experience the heat of Memecoins, Binance provides you with a safer and more secure way to explore this field of uncertainty.
Disclaimer: The price of digital assets is highly volatile and may be subject to market risks. The value of your investment may fluctuate, and you may lose all or more than your initial investment. All investment decisions are your own responsibility, and Binance is not liable for any potential losses you may incur. Past performance is not a reliable indicator of future results. Please only invest in products that you are familiar with and understand their risks. Before making any investment decision, carefully assess your investment experience, financial situation, investment objectives, and risk tolerance, and consult an independent financial advisor. This material is for reference only and does not constitute any financial advice. For more information, please refer to our Terms of Use and Risk Disclosure.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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