U.S.-facing digital asset exchanges are frantically diversifying their revenue streams as the crypto market slumps, but even greater challenges lie ahead as a competitor once thought vanquished rises from the dead.
Payward, the parent company of the Kraken exchange, released its Q1 ‘financial highlights’ last week, a limited set of figures the company releases ahead of a planned initial public offering (IPO) that will ultimately impose far more detailed reporting requirements.
Kraken reported adjusted revenue of $507 million in the first three months of 2026, up slightly from Q125’s $493 million but a significant tumble from Q4’s $628 million. The company’s adjusted earnings took an even greater hit, falling 90% year-on-year (and down 79% from Q4) to $18 million.
Kraken’s transaction volume was also down, the $357 billion total representing declines from both Q125 ($422 billion) and Q425 ($444 billion). Kraken rival Coinbase (NASDAQ: COIN) reported similar volume declines at both the retail and institutional levels in Q1.
These volume declines were sector-wide, according to CoinGecko’s Q1 Crypto Industry Report, with spot trading volume on centralized exchanges down 39% year-on-year. The March figure marked a new low of $800 billion, less than half the figure reported last October, when tokens like BTC hit all-time price highs.
And yet, Kraken reported its number of funded accounts hitting 6.1 million in Q1, up from 4.2 million in Q125 and 5.7 million in Q425. Kraken also claimed that its share of sector-wide spot volume hit 5.2% in March, up from 3.5% in mid-2025, while Kraken’s retained spot volume was more than twice that of its publicly traded “largest competitors.”
Kraken blamed some of its earnings hit on its decision to continue investing “in the things that drive our business forward,” including “AI tooling to automate core operations.” Right on cue, Bloomberg reported that Payward had laid off around 150 staff whose tasks are now being handled by artificial intelligence (AI).
The cuts represent a smaller percentage (~5%) of Payward’s global workforce than the 14% of staff recently turfed by Coinbase due to its AI deployment. The Crypto.com exchange eliminated 12% of positions using AI in March, while rival Gemini (NASDAQ: GEMI) cut 30% of its staff in February.
Payward is also not slowing its acquisition spree, which is giving the company “a more resilient revenue mix” that doesn’t “move in lockstep with crypto asset prices.” This includes tokenized equities platform Backed, token management platform Magna, crypto derivatives platform Bitnomial, and stablecoin card-issuing/payments infrastructure firm Reap.
Payward filed its IPO paperwork confidentially with the Securities and Exchange Commission (SEC) last November, but the company may be delaying its NASDAQ debut until the digital asset market demonstrates some sustained recovery. Bloomberg suggested Payward’s IPO now might not occur until 2027.
The market slump appears to have done some damage to Kraken’s expected valuation. At the time of that November IPO filing, the company put its value at around $20 billion. However, last month, German stock exchange operator Deutsche Börse announced plans to invest $200 million in Payward, representing a ~1.5% stake in the company, which would give Payward a valuation closer to $13.3 billion.
Bullish drowning in red ink, clings to tokenization life preserver
The Bullish Global (NASDAQ: BLSH) exchange also released its Q1 report card last week, and the results were in the same vein as Kraken’s, but with much less upside. Bullish reported its ‘digital asset sales’ hitting $51.8 billion in the first three months of 2026, down from $80.2 billion in the same period last year.
‘Adjusted’ revenue rose by nearly one-half year-on-year to $92.8 million despite ‘adjusted’ transaction revenue falling nearly 10% to $38 million. Things were far rosier on the subscription & services segment—including the CoinDesk media outlet and the Consensus conference series—which saw revenue nearly triple to $54.8 million. But both segments were effectively flat from Q425.
‘Adjusted’ earnings nearly tripled to $35.1 million, and ‘adjusted’ net income shot up nearly tenfold to $20.3 million. But in the ‘unadjusted’ real world, Bullish posted a net loss of $604.9 million, nearly three-quarters worse than the loss it suffered in Q125.
Q2 has also started on a downer note, with April’s spot trading volume totaling $38 billion, down 28% from March. Perpetual futures volume fell 22.7% to $3.4 billion, but options trading improved 75% to $5.6 billion, limiting the overall trading volume decline to 22%.
Bullish is boldly sticking with its earlier FY26 guidance across all ‘adjusted’ categories, and hopefully, the market adjusts to maintain this optimism.
On a separate note, the company recently announced plans to acquire global transfer agent Equiniti. The $4.2 billion deal is being financed with a mix of $2.35 billion in Bullish stock and the assumption of around $1.85 billion in Equiniti’s debt.
Bullish said the combination of its own offering with Equiniti’s status as an SEC-registered transfer agent for “nearly 3,000 blue-chip public companies” will create “the global transfer agent for tokenized securities and aims to position Bullish to lead the shift toward blockchain-native capital markets infrastructure.”
On the analyst call, CEO Tom Farley was asked about the challenges of convincing public companies of the benefits to be had from tokenizing their shares. Farley said, “all the potential fears or insecurities we have around that have been blown to smithereens” in recent days.
Farley claimed to have received “inbounds” from “dozens and dozens” of large companies that “want to get on the path of tokenizing their stock, and they wanna do it pronto.” (And this interest came even before Bloomberg broke the news that the SEC is preparing steps to make it far easier for issuers to go the tokenization route.)
Farley believes tokenization will give issuers “a lot more visibility into who owns their shares” and “the promise of more information is very compelling.” On the other side, investors will get “much more opportunity to trade,” including “more options in terms of lending and borrowing their shares and pledging their shares as collateral. If you’re making investors happy, you’re also making the issuers happy.”
Gemini predicts great things for Gemini
While Kraken and Bullish are embracing tokenization big time, Gemini appears increasingly eager to distance itself from blockchain technology. Instead, the company is doubling down on its plan to recast itself as a prediction market, even if the transition period could prove fugly.
Gemini said its Q1 revenue rose 42% year-on-year to $50.3 million despite exchange revenue falling 27% to $17.2 million. Trading volume was $6.5 billion, less than half the sum traded in Q125, thanks to steep declines in both retail ($1.3 billion, -19%) and institutional ($5 billion, -50%) activity.
A brighter spot came from Gemini’s OTC revenue, which nearly tripled from Q4 to $6.3 million thanks to “higher institutional client activity, including several larger trades during the quarter, and continued expansion of our electronic OTC (eOTC) platform.”
Gemini also saw the first modest fruits of its prediction market pivot, booking revenue of $444,000 in its first full quarter of operations. Gemini said 20,000 of its customers have used the prediction offering to date, a fraction of its 589,000 monthly transacting users during the quarter. But Gemini says April’s prediction volume was up 78% from March to $30 million in notional volume.
Total services revenue was up significantly year-on-year but fell nearly 18% sequentially to $21.8 million. Apart from $2.7 million in advisory fees (unchanged), all the service sub-categories were down from Q4. Gemini’s branded credit card revenue slipped 8% to $14.7 million, while staking revenue tumbled 48% to $2.1 million, and custodial fee revenue dipped 14% to just under $1.9 million.
If there’s a bright spot here, it’s that Gemini booked a net loss of $109 million for the quarter, which is actually the lowest loss it’s reported in over a year. Much of the savings came from reduced stock-based compensation following the company’s aforementioned staffing cull.
All in all, not much to be happy about, and yet Gemini’s Q1 release briefly sent its share price on an upward tear, rising from below $5 to nearly $7. However, the surge came courtesy of the company’s announcement that it had received a $100 million infusion (in BTC) from Winklevoss Capital Fund, which just so happens to be run by the twin brothers who run Gemini, Cameron and Tyler Winklevoss.
The twins participated in an analyst call that pre-screened the questions, which doesn’t scream confidence on the part of Gemini’s management. All the twins would say regarding their $100 million investment was that they believe Gemini shares are “undervalued” based on the company being increasingly “disconnected” from its pure crypto origins.
Regardless, gravity proved all too real, and Gemini shares quickly surrendered all their temporary gains. The shares closed Tuesday down 7.8% to $4.95, basically where they were pre-earnings. For the year-to-date, Gemini shares are down more than 50% and are down ~86% from the halcyon afterglow of their listing on the NASDAQ last September.
Binance to “revitalize” US-facing exchange
Gemini might be smart to pivot away from its crypto roots given the increasing likelihood that Binance.US, the U.S.-facing division of the globe’s dominant exchange Binance, will make a concerted push to restore its former glories.
Binance.US became a shell of its former self following its parent company being targeted by American law enforcement a few years back. But following Binance’s 2023 $4.3 billion legal settlement and President Trump’s 2025 pardon of Binance founder Changpeng ‘CZ’ Zhao, talk of a Binance.US ‘revival’ has been growing louder.
During an appearance at the Consensus Miami event earlier this month, CZ said the current U.S. administration’s far more favorable view of all things crypto was leading many “players” to return to the U.S. after fleeing to friendlier jurisdictions like Abu Dhabi, Hong Kong, and Singapore.
However, CZ maintained that “the best liquidity in crypto is outside the U.S.,” meaning U.S. crypto traders “don’t have access to the best prices.” CZ said, “Hopefully we can help to fix that… Binance has the best liquidity in this market and we would love to be able to provide that in some way, either bring back Binance, or revitalize Binance. or somehow provide U.S. the best liquidity in the world and the best prices for the consumers.”
The ‘bring back Binance’ line appears to have been a slip, as even under the current extremely laissez-faire approach of U.S. regulators, Binance the company likely doesn’t want to subject its mother ship exchange to U.S. oversight.
About a week after his Miami comments, CZ was on the Crypto in America podcast, where he recalled that Binance.US “lost all its bank channels” as well as “a number of state licenses” before the 2023 legal settlement.
However, Binance.US has restored its bank access and is actively trying to regain those state licenses. CZ said he’d had “fairly constructive talks with some of the new regulators in the U.S.,” singling out Michael Selig, the new chair of the Commodity Futures Trading Commission (CFTC), as “a fantastic guy.” All told, CZ said he thinks “things are moving in a very positive way” for ‘revitalizing’ Binance.US.
Asked about competing with the likes of Coinbase, Kraken, and other U.S. exchanges, CZ noted the relatively high fees that U.S. crypto customers pay compared with the rest of the world. CZ said Binance can “compete on fundamentals,” providing “the best service and the lowest cost and with the best liquidity.” CZ said he was “personally very confident” that Binance.US can compete with its local rivals, in part because “it has economies of scale” based on its ability to “leverage the international product suite.”
Around the same time, CZ told the Crypto Banter podcast that his presidential pardon request resulted in some “very strong … counter-lobbying from some of our perceived competitors in the U.S. … the other crypto exchanges in the U.S. don’t want me to get a pardon They’re worried about Binance coming back to the U.S.”
While CZ said he lacked “concrete evidence,” he was “pretty confident” this counter-lobbying “happened to some extent.” CZ said, “In an ideal world, you compete on business. You don’t do this kind of stuff … you don’t attack people personally.” Will CZ hold a grudge? Watch this space…
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