Major crypto exchange Coinbase reported fourth quarter earnings ahead of Wall Street’s estimates.

In its quarterly earnings report after Tuesday’s closing bell, Coinbase posted net revenue of $605 million, coming in ahead of the $589 million expected by analysts.

While net revenue was up 5% from the previous quarter, $322 million came from transaction revenue, which fell 12% over the quarter. Essentially, the 34% increase in Coinbase’s subscription revenue was what drove the bulk of the exchange’s income generation in Q4. 

In particular, interest income from USDC grew 79% quarter over quarter to $182 million. Coinbase said its agreement with Circle, the issuer of USDC, to share revenue on a pro rata basis generated from USDC reserves was a primary driver of this growth in a rising interest rate environment.

Coinbase also saw an increase in staked balances on its platform in Q4 but said the decline in revenue came from lower average crypto prices. Its largest staked balance was ETH2 staking, which amounted to around $3 billion at the end of last year. However, staking has been a topic of controversy of late, with regulators clamping down on staking services offered by some crypto exchanges like Kraken.

After the U.S. Securities and Exchange Commission ordered Kraken to discontinue crypto staking and pay a $30 million fine, Coinbase said it would “happily defend” the fact that its own staking services are not securities in court, if needed. 

The company expects that more regulation for the crypto industry is imminent, with a growing conversation around crypto policy.

“FTX’s collapse in November 2022 was undeniably a catalyst for this increased attention,” said Coinbase, while noting that some of the regulatory response has been more punitive than reactive.

In Coinbase’s view, the U.S. has taken a more “disjointed” approach to regulating crypto, which may be pushing the industry overseas.