seeing new clients come on to our platform to trade ETFs. We are seeing existing clients trade more frequently. And we are seeing our market share grow in the spot market. So we are really excited abo

ll right. Thanks, Alesia. Operator, can we go to the first question from the line?

we're excited to see more of them come to market. We do not break out revenue by specific asset or product. However, I can share that we do expect custody and funds of the ETFs to be a meaningful driver of subscription and services revenue in the second half of the year. We are also excited about the launch of Base. It's early days, but we are seeing encouraging metrics. We had over 300% quarter-over-quarter growth in the number of transactions on Base, driven largely by our efforts to reduce base fees. We expect Base to generate transaction revenue over time as it scales. However, it will take time for Base to become a material contributor to our total revenue.

Operator: Thank you. Our first question will come from the line of Ken Sena with Wolfe Research.

Analyst: Hi, good afternoon. Thanks for taking my question. I wanted to ask about the outlook for the third quarter. I think you mentioned some puts and takes there. Maybe you could just elaborate a little bit on the puts and takes and how you're thinking about the cadence of revenue throughout the quarter.

Alesia Haas: Sure. So as I mentioned in my prepared remarks, we are baking in some modest headwinds into our Q3 outlook. This is primarily due to the July Ethereum price, which declined about 3% as compared to the Q2 average. We are also baking in our expectations of a September interest rate cut, some increases in expenses related to USDC as we work to drive global adoption of USDC as the most compliant stablecoin, and the onetime $8 million blockchain reward benefit I mentioned earlier. We are going to work hard to grow native units to try and offset these headwinds. However, our range has been updated to capture this market environment. We are baking in some puts and takes into our outlook. We expect subscription and services revenue to be in the range of $500 million to $600 million and total transaction revenue to be in the range of $600 million to $800 million. We expect total revenue to be in the range of $1.3 billion to $1.6 billion. We are also expecting adjusted EBITDA to be in the range of $400 million to $600 million. We expect net income to be impacted by crypto asset losses associated with our investment portfolio. We expect total operating expenses to be in the range of $1.1 billion to $1.2 billion. We expect net income to be in the range of a loss of $100 million to income of $200 million. And finally, we expect adjusted net income to be in the range of a loss of $50 million to income of $250 million.

Analyst: Okay. Thank you for that. And then maybe just a follow-up on the regulatory front. I think you mentioned some encouraging signs there. Maybe you could just talk about the outlook for the SEC investigations and how you're thinking about the potential timing of any resolution there.

Brian Armstrong: Sure. I'll take that. So we're encouraged by the recent developments on the regulatory front. As you mentioned, the SEC dropped multiple investigations against the industry and also formally approved the Ethereum ETFs, which began trading last week. We're also increasingly optimistic that the next administration, whether Democrat or Republican, will be constructive on crypto. The rhetoric has shifted. We continue to advance progress on crypto policy and capitalize on this momentum. We contributed an additional $25 million to Fairshake in Q2 to help elect pro-crypto candidates. I think it's important to note that since we went public, we have highlighted the need for regulatory clarity. Why does it matter? Clear rules would be a major unlock for innovation in our financial system and would ensure that this industry is built here in America. However, many entrepreneurs and companies that want to build in the crypto space are sitting on the sidelines or going overseas until there is this clarity, given the regulation by enforcement environment. Also, 90% of institutional investors say regulatory clarity would boost their confidence in investing more in crypto. For these reasons, Coinbase will continue to push for clear rules in the courts, in Congress and in the November elections.

Operator: Thank you. Our next question will come from the line of Michael Cyprys with Morgan Stanley.

Analyst: Hi, good afternoon. Thanks for taking my question. I wanted to ask about the outlook for transaction revenue. I think you mentioned that you expect it to be driven by derivatives and coin-based wallet trading fees. Maybe you could just talk about the puts and takes there and how you're thinking about the cadence of transaction revenue throughout the quarter.

Alesia Haas: Sure. So as I mentioned in my prepared remarks, we are baking in some puts and takes into our Q3 outlook. We expect total transaction revenue to be in the range of $600 million to $800 million.

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