Bullish Annual Report: A Deep Dive for Investors

Bullish's latest 20-F filing reveals a company making significant strides. This summary offers an in-depth look at Bullish's performance and strategic direction, exploring key financial results, operational developments, and significant risks. Our goal is to help you understand the company's path in the fast-evolving digital asset market.

Business Overview

Bullish operates an institutional-grade digital asset exchange and market maker. The company's main goal is to provide extensive liquidity and advanced trading features for sophisticated institutional clients. Bullish facilitates direct, peer-to-peer trading of various digital assets, including cryptocurrencies, wrapped tokens (digital assets representing another asset on a different blockchain), and stablecoins. It also acts as a market maker to boost liquidity on its platform. Bullish aims to be a trusted, compliant venue for institutions participating in the growing digital asset ecosystem.

Financial Performance

Bullish significantly reduced its net loss to $25.7 million in 2025, a marked improvement from a $108.9 million net loss in 2024 and $164.5 million in 2023. This reduction signals progress toward profitability, primarily because the company increased revenue and controlled operating expenses more effectively.

Revenue Growth

Bullish saw strong growth across its main revenue streams:

• Trading Fees: Revenue from direct trading fees rose by 12.5% to $1.8 million in 2025, up from $1.6 million in 2024. This represents substantial growth from just $0.1 million in 2023, reflecting increased platform activity and market reach.
• Interest Income: Total interest income reached $14.8 million in 2025, a 20.3% increase from $12.3 million in 2024, and up from $12.0 million in 2023. Bullish primarily generates this income by lending digital assets and managing its cash and digital asset reserves, demonstrating effective capital deployment.

Operating Expenses

Total operating expenses dropped to $40.5 million in 2025 from $122.8 million in 2024. This substantial reduction mainly resulted from lower share-based compensation expenses and more efficient operational management, which significantly contributed to the improved net loss.

Financial Health

As of December 31, 2025, Bullish reported a robust financial position:

• Total Assets: $1.6 billion, up from $0.9 billion in 2024.
• Cash and Cash Equivalents: $105.2 million, providing strong liquidity.
• Total Liabilities: $0.9 billion, primarily comprising customer deposits and digital asset obligations.

Strategic Digital Asset Holdings

Bullish significantly expanded its digital asset holdings, reflecting both increased customer deposits and strategic management of its reserves. These assets are vital for providing liquidity on its exchange and supporting its market-making activities.

• Wrapped Bitcoin (cbBTC): A major new holding in 2025, reaching $552.9 million. cbBTC is a tokenized version of Bitcoin on a different blockchain (likely a private or consortium chain for institutional use), enabling faster transactions and integration with specific decentralized finance (DeFi) protocols. This demonstrates Bullish's commitment to offering diverse institutional-grade digital asset products.
• Other Wrapped Tokens: While wBTC (wrapped Bitcoin on Ethereum) holdings slightly decreased from $23.4 million in 2024 to $20.1 million in 2025, weETH (wrapped Ethereum) holdings grew from $0.2 million to $0.5 million. These wrapped tokens allow assets to move across different blockchain networks.
• Stablecoins: Bullish substantially increased its stablecoin reserves, which are crucial for maintaining liquidity and facilitating trading.
  • USDC holdings surged from $127.9 million in 2024 to $613.9 million in 2025.
  • New significant holdings include USDG at $204.3 million and PYUSD at $161.1 million in 2025. USDG is likely a proprietary or specific stablecoin used within their ecosystem, while PYUSD is PayPal's stablecoin. This diversification and growth in stablecoin holdings underscore Bullish's role as a liquidity provider and custodian for customer funds.

Risk Factors

Investors should understand the various risks inherent in the digital asset industry and specific to Bullish's operations:

• Market Volatility and Liquidity Risk: Digital asset prices are highly volatile and can fluctuate rapidly. This impacts the value of Bullish's own holdings, customer assets, and trading volumes. Liquidity for certain digital assets can also be unpredictable, affecting the company's ability to make markets and execute large trades.
• Regulatory and Legal Risks: The digital asset industry operates within an evolving and often uncertain regulatory environment across many countries. Changes in laws, new regulations, enforcement actions, or legal challenges could significantly impact Bullish's operations, product offerings, compliance costs, and overall profitability.
• Operational and Technology Risks: Bullish relies on complex technology to run its exchange and protect assets. Risks include potential system outages, software bugs, data breaches, or cyberattacks, which could disrupt services, lead to financial losses, and damage the company's reputation.
• Custody and Security of Digital Assets: Despite robust security measures, the risk of theft, loss, or unauthorized access to customer and company digital assets held in custody remains.
• Competition Risk: The digital asset exchange market is highly competitive, with many established and emerging players. Bullish competes on factors such as fees, liquidity, product offerings, security, and institutional client services.
• Related Party Transactions:
  • Loan to a Related Party: Bullish maintains a loan with a related party (formerly its parent company, block.one, now restructured). This loan carries a 7% interest rate and Bullish can demand repayment "on demand." While it generates interest income for Bullish, its "on demand" nature and related party status warrant scrutiny regarding potential liquidity impacts or preferential terms.
  • Office Lease Assignment: In 2025, Bullish transferred an office lease to an entity controlled by a major shareholder/director for no payment. This transaction, where an asset or obligation moves without clear financial benefit to Bullish, raises governance questions about fairness to all shareholders and potential value leakage.

Management Discussion

The financial performance and strategic decisions highlighted in this summary reflect key aspects of management's discussion and analysis. Management attributes the reduced net loss to its focus on controlling operating expenses, especially share-based compensation, and growing core revenue streams like trading fees and interest income. The strategic expansion of digital asset holdings, including cbBTC and stablecoins, demonstrates management's intent to enhance liquidity, support market-making, and diversify product offerings for institutional clients. Furthermore, a structured approach to cybersecurity governance, with oversight from the Audit Committee and an experienced Chief Information Security Officer (CISO), highlights management's commitment to mitigating operational risks and protecting customer assets. Management's strategic outlook, detailed below, further elaborates on their plans for future growth and market positioning.

Future Outlook and Strategy

Bullish's strategy centers on strengthening its position as a leading institutional-grade digital asset exchange and market maker. Its future outlook includes:

• Expanding Product Offerings: The significant increase in cbBTC and stablecoin holdings suggests a continued focus on providing diverse, high-liquidity assets and innovative products tailored for institutional clients. This involves exploring new digital asset listings and advanced trading functionalities.
• Technological Innovation: Bullish plans continued investment in platform security, scalability, and infrastructure. This will support high-volume trading, introduce new features, and maintain a robust, reliable trading environment.
• Market Penetration: Bullish aims to further grow its trading fee revenue by attracting more institutional participants and increasing their activity on the platform, thereby expanding its market share in the institutional digital asset space.
• Regulatory Engagement: Bullish intends to continue proactively engaging with regulators to ensure compliance and contribute to developing clear regulatory frameworks for digital assets, which is crucial for institutional adoption.

Competitive Position

The digital asset exchange market features intense competition from both centralized and decentralized platforms, serving a wide range of retail and institutional clients globally. Bullish primarily competes on several key factors:

• Liquidity: Bullish strives to offer deep liquidity across its supported trading pairs, a critical factor for institutional traders seeking efficient execution of large orders.
• Security and Trust: Robust cybersecurity measures, transparent operations, and a commitment to regulatory compliance are central to Bullish's competitive strategy, aiming to build trust with institutional clients.
• Product and Service Offerings: The company differentiates itself through its focus on institutional-grade tools, a curated selection of digital assets, and services designed to meet the specific needs of sophisticated market participants.
• Fee Structure: Bullish competes on the competitiveness of its trading and other service fees, balancing revenue generation with attracting and retaining high-volume institutional clients.
• Technology and Performance: The stability, speed, and reliability of its trading platform, capable of handling high transaction volumes, are key competitive advantages.

Bullish aims to carve out a distinct competitive niche by focusing on the institutional segment, leveraging its technology and deep liquidity to attract and serve sophisticated market participants who prioritize security, compliance, and efficient execution.

Investor Takeaways

Bullish's 2025 annual report reveals a company making strides toward financial stability, significantly reducing its net loss while growing key revenue streams. The substantial increase in digital asset holdings, particularly stablecoins and wrapped Bitcoin, highlights its strategic positioning as a major liquidity provider and institutional platform in the digital asset space.

However, investors should closely monitor the implications of related party transactions, such as the interest-bearing loan and the lease assignment. These require careful oversight to ensure they align with shareholder interests. While cybersecurity measures appear robust, the inherent volatility, evolving regulatory landscape, and intense competition of the digital asset market remain overarching risks.

Overall, Bullish demonstrates operational improvements and strategic growth in its asset base. However, continued scrutiny of its governance and risk management practices, especially concerning related parties, offers a more comprehensive investment perspective.