TLDR:

• Coinbase reported $667 million net loss in Q4, reversing $1.3 billion profit from year earlier
  
• Revenue declined 20% to $1.8 billion as falling crypto prices reduced trading activity broadly
  
• Diversification through derivatives, stock trading aims to reduce reliance on spot trading fees
  
• Pending stablecoin legislation threatens revenue-sharing arrangement with Circle’s USD Coin

Coinbase Global Inc. reported a substantial fourth-quarter net loss of $667 million, marking a sharp reversal from the $1.3 billion profit recorded during the same period last year.

The cryptocurrency exchange faced mounting pressure as declining digital asset prices reduced trading activity across the platform.

Quarterly revenue dropped 20% to $1.8 billion, falling short of analyst expectations. The loss stemmed primarily from unrealized write-downs on the company’s crypto holdings and investments.

Trading Volume Weakens Across Customer Segments

The exchange experienced decreased activity from both retail and institutional traders during the quarter. “Soft revenue with strong institutional and weak consumer,” said Dan Dolev, an analyst at Mizuho Securities.

Bitcoin’s nearly 50% decline from October highs pushed many retail investors to the sidelines. Transaction fees, traditionally a major revenue source, suffered as overall market participation waned. However, derivatives trading showed relative strength compared to spot markets.

Chief Financial Officer Alesia Haas addressed market conditions in an interview. “We definitely saw softer quarter-over-quarter market conditions,” Haas said.

“However, we outperformed the market on total trading volume.” That performance came primarily from derivatives activity.

Meanwhile, Dolev noted that “the 1Q run-rate fell below consensus expectations” and “EBITDA missed, which needs further investigation.”

Competitor platforms faced similar challenges during the same period. Gemini Space Station announced workforce reductions of up to 25% alongside international operation cutbacks.

Kraken experienced declining quarterly revenue and saw its CFO depart. Meanwhile, Robinhood Markets reported a 38% decrease in crypto trading revenue.

The widespread industry pullback mirrors previous market cycles that forced exchanges to implement cost-cutting measures rapidly.

Analysts remain divided on whether current conditions represent a temporary correction or a prolonged downturn. “Absent renewed euphoria and new volume highs, current conditions appear more consistent with a mid-cycle pullback than a full crypto winter,” Owen Lau of Clear Street wrote.

Conversely, research firm Kaiko labeled this period the “halfway point of the bear market.” The distinction matters for Coinbase’s strategic positioning and revenue stability.

Diversification Strategy Faces Test

The exchange has pursued multiple revenue streams beyond traditional spot trading in recent years. Management acquired Deribit, a crypto options platform, to expand derivatives offerings.

Additionally, the company launched stock trading services and prediction markets to attract different user bases. These initiatives aim to create more consistent income during volatile market periods.

“An overdependence on retail trading is not a future you want to have,” said Mark Palmer, an analyst at Benchmark Co.

Palmer explained the rationale behind diversification efforts. “Especially if the fees associated with trading begin to go in the direction of traditional brokerages, which is to say move towards zero over time,” he added.

The analyst maintains a buy rating on the stock. Stablecoin revenue sharing emerged as a crucial component of the diversification plan. Coinbase generates income through partnerships with Circle Internet Group, issuer of USD Coin.

Analysts view this revenue stream as higher margin and less dependent on trading volumes. The arrangement provides steadier cash flow compared to transaction-based fees.

However, potential regulatory changes threaten this revenue source. Draft legislation under consideration in Washington could restrict rewards tied to stablecoin balances. Such regulations would directly affect Coinbase’s Circle partnership.

CEO Brian Armstrong withdrew support for the proposed bill in January, though discussions continue between the company and policymakers. “We are sitting at the table, and we’ll stay at the table until we get a deal done,” Haas said.

The company participated in two White House meetings alongside the banking industry to negotiate a compromise. The outcome of these discussions could reshape a major revenue component for the exchange.

Market Position Remains Under Scrutiny

The current downturn tests whether Coinbase’s diversification efforts can truly buffer against crypto market volatility. Management maintains confidence that new business lines will protect during weaker trading periods.

“Retail is buying the dip,” Haas said. “I think what’s important is that retail investors are healthy.” The CFO’s comments suggest underlying strength despite broader market weakness.

The company’s stock declined nearly 37% year-to-date before edging higher in after-hours trading following the earnings announcement.

Mizuho Securities analyst Dan Dolev maintained a neutral rating on the shares. The results suggest Coinbase remains substantially exposed to cryptocurrency market cycles.

Nevertheless, the exchange maintains advantages over previous downturns through expanded product offerings and institutional relationships.

Whether these improvements prove sufficient to weather extended market weakness remains uncertain. The coming quarters will determine if diversification can genuinely smooth revenue volatility or merely soften the impact.

A short downturn would support management’s case that new revenue streams can buffer crypto’s inherent volatility. A longer freeze would expose the difficulty of fully separating exchange earnings from boom-and-bust cycles.

Federal Reserve researchers have proposed treating cryptocurrencies as a separate asset class for derivatives margin rules, citing their unique risks and high volatility.

U.S. central bank researchers are calling for cryptocurrencies to be treated as a separate asset class in derivatives markets, arguing that digital assets carry risks that do not fit neatly into existing financial categories.

In a paper updated on Feb. 12, analysts examined how crypto-related risks are handled in over-the-counter derivatives. The study, titled “Initial Margin for Crypto Currencies Risks in Uncleared Markets,” focuses on how margin requirements are calculated under the framework used by the International Swaps and Derivatives Association.

Why crypto needs its own category

The researchers argue that the behavior of cryptocurrencies differs greatly from that of traditional assets like stocks, commodities, and foreign exchange. Market stress tends to show up more abruptly, prices move more quickly, and swings are bigger. These features make it harder to measure risk using existing models.

Because of this, the paper suggests creating a separate crypto risk class within the current margin system. The proposal suggests sorting digital assets into two broad categories.

The first would include pegged cryptocurrencies, such as stablecoins designed to mirror the value of traditional currencies. The second would cover floating cryptocurrencies, whose prices are determined entirely by market supply and demand.

This distinction is intended to acknowledge the different levels of risk involved. Stablecoins tend to fluctuate less, while unpegged tokens can swing sharply and without warning. According to the authors, applying the same margin framework to both groups can result in misjudged risk and poorly calibrated requirements.

The study also advises relying on long-term market data, including periods of severe financial stress, when assigning risk weights. While this mirrors established industry methods, it tailors them more closely to the specific behavior of crypto markets.

What this could mean for markets

If market participants adopt the proposal, margin requirements for crypto derivatives could become both stricter and more accurately aligned with underlying risk. In practical terms, traders and institutions might have to commit additional collateral, particularly for contracts linked to highly volatile assets.

Backers argue that this approach would lower the chances of under-collateralization, a situation in which trading losses exceed the margin posted. In stressed markets, that problem can spread quickly and threaten financial stability. A clearer framework could help limit those risks.

At the same time, the paper stresses that it is not a formal regulation. It represents research and analysis by Fed staff, not an official rule or policy decision. Any real changes would need to come through industry adoption or future regulatory action.

Still, the timing is notable. As crypto markets grow and become more connected to traditional finance, regulators and institutions are paying closer attention to risk management. More banks, funds, and trading firms are now involved in digital assets, making standardized rules more important.

By recognizing crypto as its own category, the researchers signal that digital assets have reached a level of maturity that demands tailored oversight. While the proposal does not change the rules today, it adds momentum to ongoing efforts to bring a clearer structure to crypto derivatives markets.

TLDR:

• Zcash secured backing from Vitalik Buterin and Winklevoss twins who deployed $50M and lab donations.

• Project Tachyon uses recursive zero-knowledge proofs to enable thousands of shielded transactions per second.

• The shielded pool reached 5,030,093 ZEC representing 30% of total supply at all-time high adoption levels.

• ZEC trades at $220-250 after 69% correction from $758 peak as community debates critical governance proposals.

Zcash continues to attract institutional attention as privacy becomes a focal narrative in cryptocurrency markets. The digital asset recently received backing from Vitalik Buterin and the Winklevoss twins.

ZEC trades between $220-250 after a 69% correction from its November 2025 peak of $758. The shielded pool reached an all-time high of 5,030,093 ZEC, representing 30% of total supply.

Community governance proposals including Project Tachyon are under consideration as the network evaluates technical upgrades.

Institutional Validation and Strategic Backing

Vitalik Buterin made his second donation to Shielded Labs on February 6, 2026, specifically supporting the Crosslink upgrade.

The Ethereum co-founder stated that Zcash remains one of the most honorable crypto projects with a steadfast focus on privacy.

Shielded Labs’ Crosslink work aims to enhance security while reducing the security budget for long-term sustainability.

The Winklevoss twins restructured Cypherpunk Technologies, formerly Leap Therapeutics, into the first Digital Asset Treasury focused exclusively on Zcash.

They deployed $50 million to acquire ZEC and donated 3,221 ZEC valued at $1.2 million to Shielded Labs. Tyler Winklevoss emphasized that privacy remains crucial for a free and open society.

Grayscale maintains its Zcash Trust (ZCSH) as the only institutional product offering pure ZEC exposure. The trust has operated through multiple market cycles.

These institutional moves validate Zcash’s position in the privacy sector as regulatory scrutiny on transparent blockchains intensifies.

Technical Upgrades and Project Tachyon

Project Tachyon represents a complete architectural redesign of how privacy scales on the network. Sean Bowe, the cryptographer behind Halo and Sapling, leads this effort to solve fundamental bottlenecks in privacy coin adoption. Current systems require wallets to scan every transaction on the blockchain to identify relevant ones.

Tachyon uses Proof-Carrying Data and recursive zero-knowledge proofs to flip this model entirely. Wallets maintain their own cryptographic proof of solvency instead of scanning all network transactions.

The system enables oblivious synchronization where wallets sync in seconds rather than hours. This approach allows Zcash to scale to thousands of shielded transactions per second.

The upgrade targets mainnet deployment within a year. Benchmarks demonstrate the cryptographic primitives work as designed. Community funding supports the development effort.

The technology aims to enable planetary-scale encrypted money that works for billions of users with mobile-first accessibility.

Governance Decisions and Community Sentiment

The Zcash Coinholder Protocol Feature Sentiment Poll addresses 11 questions shaping the network’s future direction.

Key proposals include Project Tachyon, Network Sustainability Mechanism fee removal, Zcash Shielded Assets, and Consensus Accounts. The community actively debates each proposal through established governance channels.

The Network Sustainability Mechanism proposes burning 60% of transaction fees to address long-term security funding.

ZIP 233, ZIP 234, and ZIP 235 introduce infrastructure to remove funds from circulation and smooth issuance curves. The mechanism extends the security budget timeline while maintaining the 21 million ZEC cap.

Zcash Shielded Assets would enable custom token issuance within the Orchard shielded pool. QEDIT developed ZIP 226 and ZIP 227 for the technical implementation.

However, some community members express concerns about protocol complexity and regulatory exposure. The governance process ensures thorough community review before implementation.

Market Conditions and Price Outlook

ZEC currently trades at $220-250 after declining from $758. The recent drop swept the October 17, 2025 low of $187, creating a potential liquidity grab.

Support zones exist at $220-250, $180-200, and $120. Resistance levels appear at $300-310, $380-420, and $540-560.

The Electric Coin Company development team resigned in January 2026 due to commercialization disagreements. The Zcash Foundation, Shielded Labs, and community contributors continue development work. This transition reduces reliance on a single organization for protocol advancement.

Dubai’s Financial Services Authority banned privacy coins from DIFC-regulated venues in January 2026. However, the SEC closed its investigation into the Zcash Foundation in late 2025 without action.

Zcash’s optional transparency through view keys and transparent addresses provides regulatory flexibility compared to fully anonymous alternatives.

Israeli authorities have arrested and indicted two people for allegedly using secret information to place bets on the predictions market Polymarket related to Israel striking Iran.

In a joint statement on Thursday, Israel’s Defense Ministry, its internal security service Shin Bet, and police said a military reservist and a civilian were arrested after an investigation found that the reservist obtained classified information to place the bets.

The prosecutor’s office will pursue criminal charges for security-related offenses, bribery, and obstruction of justice. Authorities said the reservist was working for Shin Bet.

Prediction markets have seen major insider trading scandals this year after a Polymarket user won a bet that Nicolás Maduro would be ousted as Venezuelan president hours before he was captured by US forces, profiting around $400,000.

The Israeli state-owned news outlet Kan reported last month that the Polymarket user “ricosuave666” placed several bets related to Israel’s military operations in Iran in June 2025, but it’s unknown if those arrested are behind the account.

The account had reportedly wagered tens of thousands of dollars and had profited over $152,300, betting on markets such as “Israel strike on Iran on June 24” and “Israel military action against Iran by Friday,” with the latter of the two bets winning them over $128,700.

Related: Crypto PACs secure massive war chests ahead of US midterms 

Prediction markets lead to real security risks when misused

Lawmakers worldwide have raised concerns that insider knowledge could be exploited in prediction markets, undermining market integrity and eroding public trust.