Coinbase Global, Inc 2023

3 UNITED STATES

4 SECURITIES AND EXCHANGE COMMISSION

5 Washington, D.C. 20549

6 FORM 10-K

8 (Mark One)

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

10 Commission file number 001-40289

11 Coinbase Global, Inc.

12 (Exact name of registrant as specified in its charter)

Delaware 46-4707224

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

Not Applicable

(1)

Not Applicable

(1)

(Address of principal executive offices) (Zip Code)

14 Not Applicable

(1)

15 Registrant's telephone number, including area code

17 Not Applicable

18 (Former name, former address and former fiscal year, if changed since last report)

19 Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Class A common stock, $0.00001 par value per share COIN The Nasdaq Stock Market LLC

21 Securities registered pursuant to Section 12(g) of the Act: None

22 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

23 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

24 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

25 preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the

26 past 90 days. Yes ☒ No ☐

27 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

28 S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

29 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging

30 growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of

31 the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

33 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised

34 financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

35 Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over

36 financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7 262(b)) by the registered public accounting firm that prepared or issued its audit

37 report. ☒

38 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect

39 the correction of an error to previously issued financial statements. ☐

(1)

We are a remote-first company. Accordingly, we do not maintain a headquarters. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended,

and the Securities Exchange Act of 1934, as amended, stockholder communications required to be sent to our principal executive offices may be directed to the email address:

[email protected], or to our agent for service of process at Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808.

40 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any

41 of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

42 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

43 The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant on June 30, 2023, the last business day of the registrant’s

44 most recently completed second fiscal quarter, was $12.0 billion based on the closing sales price of the registrant’s Class A common stock as reported on Nasdaq

45 Global Select Market on that date.

46 As of February 8, 2024, the number of shares of the registrant's Class A common stock outstanding was 195,531,120 and the number of shares of the registrant's

47 Class B common stock outstanding was 46,744,055.

49 DOCUMENTS INCORPORATED BY REFERENCE

50 Portions of the registrant’s definitive proxy statement for its 2024 Annual Meeting of Stockholders, or Proxy Statement, to be filed within 120 days after the end of

51 the fiscal year covered by this Annual Report on Form 10-K, are incorporated by reference in Part III. Except with respect to information specifically incorporated by

52 reference in this Annual Report, the Proxy Statement shall not be deemed to be filed as part hereof.

TABLE OF CONTENTS

Part I

Item 1. Business ......................................................................................................................................................

Item 1A. Risk Factors .............................................................................................................................................

Item 1B. Unresolved Staff Comments ..................................................................................................................

Item 1C. Cybersecurity ...........................................................................................................................................

Item 2. Properties ....................................................................................................................................................

Item 3. Legal Proceedings .....................................................................................................................................

Item 4. Mine Safety Disclosures ...........................................................................................................................

Part II ..............................................................................................................................................................................

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities ......................................................................................................................................................

Item 6. [Reserved] ...................................................................................................................................................

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .........

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 117

Item 8. Financial Statements and Supplementary Data ....................................................................................

120

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures ......

185

Item 9A. Controls and Procedures .......................................................................................................................

186

Item 9B. Other Information ....................................................................................................................................

187

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ...........................................

187

Part III .............................................................................................................................................................................

Item 10. Directors, Executive Officers and Corporate Governance ................................................................

188

Item 11. Executive Compensation ........................................................................................................................

188

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters ......................................................................................................................................................................

188

Item 13. Certain Relationships and Related Transactions, and Director Independence .............................

188

Item 14. Principal Accountant Fees and Services ..............................................................................................

188

Part IV .............................................................................................................................................................................

Item 15. Exhibit and Financial Statement Schedules ........................................................................................

188

Item 16. Form 10-K Summary ...............................................................................................................................

191

Signatures ................................................................................................................................................................

191

Page

Table of Contents

Glossary to the Cryptoeconomy

Throughout this Annual Report on Form 10-K, we use a number of industry terms and concepts which

are defined as follows:

• Address: An alphanumeric reference to where crypto assets can be sent or stored.

• Bitcoin: The first peer-to-peer electronic cash system of global, decentralized, scarce, digital

money as initially introduced in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash

System by Satoshi Nakamoto.

• Block: Synonymous with digital pages in a ledger. Blocks are added to an existing blockchain as

transactions occur on the network. Miners are rewarded for “mining” a new block.

• Blockchain: A cryptographically secure digital ledger that maintains a record of all transactions

that occur on the network and follows a consensus protocol for confirming new blocks to be

added to the blockchain.

• Cold storage: The storage of private keys in any fashion that is disconnected from the internet.

Common cold storage examples include offline computers, USB drives, or paper records.

• Crypto: A broad term for any cryptography-based market, system, application, or decentralized

network.

• Crypto asset or token: Any digital asset built using blockchain technology, including

cryptocurrencies, stablecoins, and security tokens.

• Cryptocurrency: Bitcoin and alternative coins, or “altcoins,” launched after the success of

Bitcoin. This category of crypto asset is designed to work as a medium of exchange, store of

value, or to power applications and excludes security tokens.

• Cryptoeconomy: A new open financial system built upon crypto.

• Dapps: Decentralized applications, or Dapps, are applications that run on a decentralized

network, typically using blockchain technology.

• DeFi: Short for Decentralized Finance. Peer-to-peer software-based network of protocols that can

be used to facilitate traditional financial services like borrowing, lending, trading derivatives,

insurance, and more through smart contracts.

• Ethereum: A decentralized global computing platform that supports smart contract transactions

and peer-to-peer applications, or “Ether,” the native crypto assets on the Ethereum network.

• Fork: A fundamental change to the software underlying a blockchain which results in two different

blockchains, the original, and the new version. In some instances, the fork results in the creation

of a new token.

• Hot wallet: A wallet that is connected to the internet, enabling it to broadcast transactions.

• Layer 1 (L1) Blockchain: The foundational blockchain that provides essential services like

recording transactions and ensuring security.

• Layer 2 (L2) Blockchain: This refers to network protocols layered on top of a L1 Blockchain. L2

Blockchains utilize the infrastructure of L1 Blockchains but offer greater flexibility in scaling,

transaction processing and improving overall network throughput.

• Miner: Individuals or entities who operate a computer or group of computers that add new

transactions to blocks, and verify blocks created by other miners. Miners collect transaction fees

and are rewarded with new tokens for their services.

• Mining: The process by which new blocks are created, and thus new transactions are added to

the blockchain.

• Network: The collection of all nodes that use computing power to maintain the ledger and add

new blocks to the blockchain. Most networks are decentralized, reducing the risk of a single point

of failure.

• Node: A computer or group of computers that supports the operations of a blockchain network, by

validating blocks, executing smart contracts, or storing copies of the blockchain available for other

nodes in the network to establish consensus.

• Non-fungible token or NFT: A crypto asset that is unique - as opposed to “fungible” assets like

Bitcoin and dollar bills.

• Onchain: Onchain typically refers to activities or processes that occur directly on a blockchain. It

involves transactions, smart contracts, or any other operations that are recorded and executed

within the blockchain network itself, as opposed to offchain activities that might occur outside the

blockchain system.

• Protocol: A type of algorithm or software that governs how a blockchain operates.

• Public key or private key: Each public address has a corresponding public key and private key

that are cryptographically generated. A private key allows the recipient to access any funds

belonging to the address, similar to a bank account password. A public key helps validate

transactions that are broadcasted to and from the address. Addresses are shortened versions of

public keys, which are derived from private keys.

• Security token: A crypto asset that is a security under the U.S. federal securities laws. This

includes digital forms of traditional equity or fixed income securities, or may be assets deemed to

be a security based on their characterization as an investment contract or note.

• Self-custodied Wallet: A self-custodied wallet, also known as a self-hosted wallet, is a type of

cryptocurrency wallet where the user holds the private keys, instead of a third-party.

• Smart contract: Software that digitally facilitates or enforces a rules-based agreement or terms

between transacting parties.

• Stablecoin: Crypto assets designed to minimize price volatility. A stablecoin is designed to track

the price of an underlying asset such as fiat money or an exchange-traded commodity (such as

precious metals or industrial metals), while other stablecoins utilize algorithms that are designed

to maintain a relative stable price of the asset. Stablecoins can be backed by fiat money, physical

commodities or other crypto assets.

• Staking: An energy efficient equivalent of mining. Stakers use their tokens to validate

transactions and create blocks. In exchange for this service, stakers earn a reward.

• Supported crypto assets: The crypto assets we support for trading and custody on our platform,

which include crypto assets for trading and crypto assets under custody.

For additional information regarding our key business metrics, which include Monthly Transacting

Users and Trading Volume as well as our use of Adjusted EBITDA, a non-GAAP financial measure, see

the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of

Operations—Key Business Metrics” and “Management’s Discussion and Analysis of Financial Condition

and Results of Operations—Non-GAAP Financial Measure” in Part II, Item 7 of this Annual Report on

Form 10-K.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. All statements contained in

this Annual Report on Form 10-K other than statements of historical fact, including statements regarding

our future operating results and financial position, our business strategy and plans, market growth, and

our objectives for future operations, are forward-looking statements. In some cases, forward-looking

statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “potential,” “continue,”

“anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” or the negative of these terms or

other similar expressions.

Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited

to, statements about:

• our future financial performance, including our expectations regarding our net revenue, operating

expenses, and our ability to achieve and maintain future profitability;

• our business plan and our ability to effectively manage any growth;

• anticipated trends, growth rates, and challenges in our business, the cryptoeconomy, the price

and market capitalization of crypto assets and in the markets in which we operate;

• market acceptance of our products and services;

• beliefs and objectives for future operations;

• our ability to maintain, expand, and further penetrate our existing customer base;

• our ability to develop new products and services and grow our business in response to changing

technologies, customer demand, and competitive pressures;

• our expectations concerning relationships with third parties;

• our ability to maintain, protect, and enhance our intellectual property;

• our ability to continue to expand internationally;

• the effects of increased competition in our markets and our ability to compete effectively;

• future acquisitions of or investments in complementary companies, products, services, or

technologies and our ability to successfully integrate such companies or assets;

• our ability to stay in compliance with laws and regulations that currently apply or become

applicable to our business both in the United States and internationally given the highly evolving

and uncertain regulatory landscape;

• general macroeconomic conditions, including interest rates, inflation, instability in the global

banking system, economic downturns, and other global events, including regional wars and

conflicts and government shutdowns;

• economic and industry trends, projected growth, or trend analysis;

• trends in revenue;

• trends in operating expenses, including technology and development expenses, sales and

marketing expenses, and general and administrative expenses, and expectations regarding these

expenses as a percentage of revenue;

• our key business metrics used to evaluate our business, measure our performance, identify

trends affecting our business, and make strategic decisions; and

• other statements regarding our future operations, financial condition, and prospects and business

strategies.

We caution you that the foregoing list may not contain all of the forward-looking statements made in

this Annual Report on Form 10-K.

You should not rely upon forward-looking statements as predictions of future events. We have based

the forward-looking statements contained in this Annual Report on Form 10-K on our current expectations

and projections about future events and trends that we believe may affect our business, financial

condition, results of operations, and prospects. The outcome of the events described in these forward-

looking statements is subject to risks, uncertainties, and other factors, including those described in the

section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and elsewhere in this

Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing

environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict

all risks and uncertainties that could have an impact on any forward-looking statements contained in this

Annual Report on Form 10-K. We cannot assure you that the results, events, and circumstances reflected

in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances

could differ materially from those described in such forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of

these forward-looking statements. Moreover, the forward-looking statements made in this Annual Report

on Form 10-K relate only to events as of the date on which the statements are made. We undertake no

obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect

events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or

the occurrence of unanticipated events, except as required by law. We may not actually achieve the

plans, intentions or expectations disclosed in our forward-looking statements and you should not place

undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the

potential impact of any future acquisitions, mergers, dispositions, restructurings, joint ventures,

partnerships, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the

relevant subject. These statements are based upon information available to us as of the date of this

Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such

statements, such information may be limited or incomplete, and our statements should not be read to

indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant

information. These statements are inherently uncertain and investors are cautioned not to unduly rely

upon these statements.

RISK FACTORS SUMMARY

Consistent with the foregoing, our business is subject to a number of risks and uncertainties, including

those risks discussed at length below. These risks include, among others, the following, which we

consider our most material risks:

• Our operating results have and will significantly fluctuate, including due to the highly volatile

nature of crypto;

• Our total revenue is substantially dependent on the prices of crypto assets and volume of

transactions conducted on our platform. If such price or volume declines, our business, operating

results, and financial condition would be adversely affected and the price of our Class A common

stock could decline;

• Our net revenue may be concentrated in a limited number of areas. Within transaction revenue

and subscription and services revenue, a meaningful concentration is from transactions in Bitcoin

and Ethereum and stablecoin revenue in connection with USDC, respectively. If revenue from

these areas declines and is not replaced by new demand for crypto assets or other products and

services, our business, operating results, and financial condition could be adversely affected;

• We have in the past, and may in the future, enter into partnerships, collaborations, joint ventures,

or strategic alliances with third parties. If we are unsuccessful in establishing or maintaining

strategic relationships with these third parties or if these third parties fail to deliver certain

operational services, our business, operating results, and financial condition could be adversely

affected;

• Interest rate fluctuations could negatively impact us;

• The future development and growth of crypto is subject to a variety of factors that are difficult to

predict and evaluate. If crypto does not grow as we expect, our business, operating results, and

financial condition could be adversely affected;

• Cyberattacks and security breaches of our platform, or those impacting our customers or third

parties, could adversely impact our brand and reputation and our business, operating results, and

financial condition;

• We are subject to an extensive, highly-evolving and uncertain regulatory landscape and any

adverse changes to, or our failure to comply with, any laws and regulations could adversely affect

our brand, reputation, business, operating results, and financial condition;

• We operate in a highly competitive industry and we compete against unregulated or less

regulated companies and companies with greater financial and other resources, and our

business, operating results, and financial condition may be adversely affected if we are unable to

respond to our competitors effectively;

• We compete against a growing number of decentralized and noncustodial platforms and our

business may be adversely affected if we fail to compete effectively against them;

• As we continue to expand and localize our international activities, our obligations to comply with

the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be

subject to inquiries, investigations, and enforcement actions by U.S. and non-U.S. regulators and

governmental authorities, including those related to sanctions, export control, and anti-money

laundering;

• We are, and may continue to be, subject to material litigation, including individual and class action

lawsuits, as well as investigations and enforcement actions by regulators and governmental

authorities. These matters are often expensive and time consuming, and, if resolved adversely,

could harm our business, financial condition, and operating results;

• If we cannot keep pace with rapid industry changes to provide new and innovative products and

services, the use of our products and services, and consequently our net revenue, could decline,

which could adversely impact our business, operating results, and financial condition;

• A particular crypto asset, product or service’s status as a “security” in any relevant jurisdiction is

subject to a high degree of uncertainty and if we are unable to properly characterize a crypto

asset or product offering, we may be subject to regulatory scrutiny, inquiries, investigations, fines,

and other penalties, which may adversely affect our business, operating results, and financial

condition;

• We currently rely on third-party service providers for certain aspects of our operations, and any

interruptions in services provided by these third parties may impair our ability to support our

customers;

• Loss of a critical banking or insurance relationship could adversely impact our business,

operating results, and financial condition;

• Any significant disruption in our products and services, in our information technology systems, or

in any of the blockchain networks we support, could result in a loss of customers or funds and

adversely impact our brand and reputation and our business, operating results, and financial

condition;

• Our failure to safeguard and manage our and our customers’ fiat currencies and crypto assets

could adversely impact our business, operating results, and financial condition; and

• The theft, loss, or destruction of private keys required to access any crypto assets held in custody

for our own account or for our customers may be irreversible. If we are unable to access our

private keys or if we experience a hack or other data loss relating to our ability to access any

crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.

PART I

Item 1. Business

Coinbase Overview

Our mission is to increase economic freedom in the world.

We are working to update the century-old financial system by providing a trusted platform that makes

it easy for our customers to engage with crypto assets, including trading, staking, safekeeping, spending,

and fast, free global transfers. We also provide critical infrastructure for onchain activities. Onchain

activities are interactions with the blockchain that usually take place in a broad category of blockchain-

powered technologies, including self-custody wallets, decentralized apps and services, and open

community engagement platforms.

Our Business

We offer a suite of products and services that are designed to meet the distinct needs of our three

customer groups:

• Consumers - individual retail user customers seeking to discover or trade crypto assets and

engage in onchain activities.

• Institutions - businesses that include market makers, asset managers, hedge funds, banks,

wealth platforms, registered investment advisors, payment platforms, and public and private

corporations.

• Developers - developers, creators, merchants, crypto asset issuers, organizations and financial

institutions, and other groups building decentralized protocols, applications, products, or other

services onchain.

When signing up for an account on our platform, among other requirements, consumer and

institutional customers must certify that they are at least eighteen (18) years of age (if a natural person),

agree to a user agreement, satisfy the requirements of our robust know-your-customer (“KYC”) program,

and have read our privacy policy.

Our platform serves as a trusted and compliant gateway to the onchain economy and enables our

users to engage in a wide variety of activities, including discovering, trading, staking, storing, spending,

earning, and using their crypto assets in both our own proprietary and third-party product experiences

enabled by access to decentralized applications. Our product offerings primarily include trading products

that generate transaction revenue as well as a variety of ecosystem products, many of which generate

subscription and services revenue. We describe these products below. Throughout this Annual Report on

Form 10-K, we will refer to our full suite of products and offerings as our platform or platforms.

Trading Products

Trading is the primary source of our transaction revenue, and is driven by consumer and institutional

customers.

Consumer Trading

Our platform is designed to serve a wide variety of consumers, whether they are buying their first

crypto asset or are advanced traders. We offer two trading experiences: (i) a simple trading experience for

consumers of any experience level seeking ease of use and (ii) an advanced trading experience for more

sophisticated traders. Simple trading refers to buying and selling crypto assets using the basic interface of

our platform, and includes value-added services such as fixed price quotes and recurring trades. Our

advanced trading experience offers traders access to real-time market information through interactive

charts, order books, a live trade history on the advanced trade view, and other trading tools.

We generate fees from consumers trading on our platform, including through volume-based

transaction fees and a spread depending on the type of trade. We also offer a subscription product for

consumers trading on our platform, which is described in more detail below.

Coinbase Prime

Through Coinbase Prime, our full-service prime brokerage platform, institutional customers can

access deep pools of liquidity across trading venues and best price execution due to our ability to route

trades through a network of connected trading venues. We offer volume-based pricing and charge a

transaction fee for executed trades.

Markets

We provide market infrastructure in the form of trading venues for customers to trade spot and

derivatives. We currently provide access to three trading venues: the Coinbase Exchange, the Coinbase

International Exchange, and the Coinbase Derivatives Exchange. These markets generate revenue by

charging a transaction fee for executed trades.

Coinbase continues to gain traction in regulated derivatives as we continue to expand our offerings.

For example, in September 2023, we secured regulatory approval from the Bermuda Monetary Authority

(the “BMA”) to enable perpetual futures for eligible non-U.S. customers through the Coinbase

International Exchange.

Ecosystem Products

We also offer a suite of products and other services that are key parts of the crypto ecosystem.

Stablecoins

As part of our effort to update the financial system, we are focused on growing the stablecoin

ecosystem. In August 2023, we entered into an updated arrangement with the issuer of USDC to (i)

support USDC, a stablecoin redeemable on a one-to-one basis for U.S. dollars; (ii) help drive long-term

success of the stablecoin ecosystem; and (iii) continue to generate revenue through means other than

transaction fees.

Staking

One of the most popular services customers often engage with is earning rewards on their crypto

assets. Certain blockchain protocols, such as Ethereum, rely on staking to validate blockchain

transactions. Network participants can designate a certain amount of their crypto assets on the network to

validate transactions and get rewarded in kind from the network. Today, staking crypto assets is a

technical challenge for most customers. Staking independently requires a participant to run their own

hardware and software and maintain close to 100% up-time.

We provide a true, onchain proof-of-stake service, which reduces the complexities of staking and

allows our customers to maintain full ownership of their crypto assets while earning staking rewards. In

return, we earn a commission on all staking rewards received. Subject to jurisdiction, we support seven

staking assets through our platform for consumers as of December 31, 2023: Cardano (ADA), Cosmos

(ATOM), Polkadot (DOT), Ethereum (ETH), MATIC (POL), Solana (SOL), and Tezos (XTZ). As of

December 31, 2023, approximately $9.4 billion worth of these assets were held on behalf of individual

consumers staked through our platform, as adjusted to USD. We also support staking of additional assets

for our institutional customers. As of December 31, 2023, over $7.4 billion worth of assets were staked by

institutional customers through Coinbase Prime, as adjusted to USD. In addition to operating our own

validator nodes to provide staking services, we utilize third-party service providers to operate validator

nodes on our customers’ behalf.

Because staking rewards depend on the relevant protocol and network conditions, the estimated

rewards rate for each asset made available for staking is displayed on our website and through our

platform, and is calculated by periodically consulting onchain data to determine the total amount earned

by our stakers. We only facilitate staking of a user’s crypto assets in response to a direct instruction from

that user, and they remain the property of the user while staked, and a user’s staked crypto assets remain

in our custody. According to certain protocol rules, staked crypto assets cannot be sold or transferred

while they remain staked, and we do not use or allocate users’ staked crypto assets for any other

purpose.

Custody

We offer consumer and institutional customers a variety of custodial solutions underpinning our

product offerings. For example, underpinning our Coinbase Prime product is an institutional-grade

custody platform with a highly secure cold storage solution made available both within the United States

and globally. We charge institutions a separate fee based on the total assets stored in custody on our

platform. For example, we serve as a custodian for several Bitcoin ETF issuers. In January 2024, the

Securities and Exchange Commission (the “SEC”) approved 11 spot Bitcoin ETF applications, eight of

which are partnered with Coinbase. We do not charge our consumers a separate fee to safely store their

crypto assets on our platform. We discuss our custodial practices for both institutions and consumers in

further detail below.

Coinbase One

Consumers can transact on our platform through a subscription product, Coinbase One. Consumers

pay a monthly fee in lieu of a transaction fee under a certain trading threshold and access a variety of

benefits, including priority support.

Financing

Increasingly important to institutions is the ability to have access to financing products. We offer

integrated financing products and services to select institutions that meet our credit criteria to access

liquidity for their hedging, trading, and working capital needs. Customers typically need to pre-fund their

account and maintain fiat or crypto assets on our platform in order to participate in the 24/7/365 instant

settlement crypto market. We offer trade financing whereby we lend funds to credit-eligible customers,

removing a key point of friction by allowing customers to instantly trade on credit and settle within a few

days. We also earn interest income on loans outstanding.

Coinbase Wallet

We offer a self-custody software product to consumers globally, Coinbase Wallet, which allows them

to engage and transact with the full universe of Dapps and crypto use cases without the need for a

centralized intermediary such as Coinbase. Customers can link their Coinbase account to their Coinbase

Wallet to transfer assets between the two. A benefit of Coinbase Wallet is that consumers have sole

control over their private keys and seed phrase, which are stored directly on their mobile devices or

personal storage accounts and not with a centralized exchange. If a Coinbase Wallet user loses their key

or seed phrase, then we are unable to assist in recovery.

Easier Onchain Access

We also offer certain features to facilitate onchain activities. For example, our consumer and

institutional customers can access third-party products and interact with certain Dapps using a “web3

wallet” feature that is integrated into our platform. A benefit of this feature is that the user does not need to

navigate the complexities associated with private key management on their own, and in the case of our

consumers, there is no need to download a separate wallet application. Additionally, this feature utilizes

multi-party computation technology, which means that the customer benefits from two-layered security

and Coinbase is able to assist with recovery in cases where a user loses their portion of the private key.

However, despite those safeguards, the user can still become permanently locked out, and the user’s

control of the feature can still be compromised, such as if the user does not secure their Coinbase

account credentials or loses their recovery passphrase.

Developer Suite

Our developer product suite includes some of our most nascent products, including Base, Coinbase

Cloud, and Coinbase Pay. Base, an Ethereum Layer 2 chain, optimizes speed and efficiency while

granting developers access to the Coinbase ecosystem. Coinbase Cloud offers crypto payment or trading

APIs, data access, and staking infrastructure, which allow developers to build crypto products faster and

to simplify how they interact with blockchains. Coinbase Pay and Coinbase Commerce allow developers

and merchants to more easily integrate crypto transactions into their products and businesses.

Trusted Crypto Platform

The failure of several prominent crypto trading venues and lending platforms, such as FTX, Celsius

Networks, Voyager, and Three Arrows Capital, in 2022 (the “2022 Events”) has impacted and may

continue to impact the broader cryptoeconomy. While the cryptoeconomy has shown signs of recovery

more recently, the full extent of the 2022 Events may not yet be known. Impacts include, but are not

limited to, the consequent and ongoing financial distress and bankruptcy of certain crypto market

participants, loss of confidence in the broader cryptoeconomy, reputational harm to crypto asset platforms

generally, increased negative publicity of the broader cryptoeconomy, heightened scrutiny by regulators

and lawmakers, and calls for increased regulation of crypto assets and crypto asset platforms. We have

had no material direct impact to our business, financial condition, customers, or counterparties from the

2022 Events; however, the 2022 Events caused a change to crypto market prices, crypto market volatility,

and customer sentiment, and each of these drivers indirectly impacted our business and our revenue

potential. We do not have any known material financial exposure to other cryptoeconomy participants that

faced insolvency and liquidity issues, experienced excessive redemptions or suspended redemptions or

withdrawals of crypto assets, allegedly mishandled customer funds, or experienced significant corporate

compliance failures in connection with the 2022 Events.

Following the 2022 Events, one of our highest priorities continues to be restoring confidence and

interest in the cryptoeconomy and increasing engagement on our platform.

We place great importance on safeguarding crypto assets, and we have policies and procedures to

help ensure the proper safeguarding of the crypto assets we hold on behalf of our customers and for our

own investment and operating purposes. When customers use our platform, their assets remain their

assets. We hold our customer assets 1:1 at all times, which means we do not lend or rehypothecate

customer assets, and do not act on customer assets or engage in fractional reserve banking with respect

to customer assets without customer consent. We safeguard crypto assets using proprietary technology

and operational processes. Crypto assets are not insured or guaranteed by any government or

government agency, however we have worked hard to safeguard our customers’ crypto assets and our

own crypto assets for investment and operational purposes with legal and operational protections.

Similarly, for customers who participate in our staking program, their staked assets remain their

assets. Staking does not affect ownership of staked assets, and customers have the same custody

relationship with us whether or not they stake. Also, when users stake their assets through Coinbase, the

rewards they earn for helping to secure the network are directly tied to the rewards returned by onchain

network protocols and marketplaces, which Coinbase passes through minus a disclosed fee. Coinbase

does not unilaterally determine what reward to pay or whether to pay a reward.

Further, we appropriately ledger, properly segregate, and maintain separate accounts for our

corporate crypto assets and customers’ crypto assets. Additionally, with respect to Coinbase entities that

provide cold storage custody services, such as Coinbase Custody Trust Company, LLC, crypto assets are

held separately in dedicated addresses and ledgered using a proprietary combination of hardware

security modules. For Coinbase entities that provide crypto trading services, such as Coinbase, Inc.,

crypto assets are held in an omnibus manner on the blockchain and separately recorded using a ledger

system. Additionally, as a U.S. public company, we are required to undergo annual audits and quarterly

reviews, which, among other things, require that our independent registered public accounting firm

reviews and audits our crypto reserves, internal controls, and reconciliation processes. Moreover, our

various user, custody, and client agreements clarify the applicability of Uniform Commercial Code (“UCC”)

Article 8 to custodied crypto assets. UCC Article 8 provides that financial assets held by Coinbase for its

customers are not property of Coinbase and not subject to claims of our general creditors.

Custodial Practices

We utilize both hot wallets and cold wallets in our custodial solutions. We actively manage wallet

balances and generally seek to hold no more than 2% of custodied assets in hot wallets at any given

time. Cold wallet private key materials are stored and secured at facilities within the United States and

Europe. We store the substantial majority of our own crypto asset holdings utilizing the same storage

solutions that we provide to our customers. In limited cases, we use storage solutions not offered to our

customers to store immaterial amounts of crypto held for corporate purposes outside of our core custodial

product offerings. Additionally, our Coinbase Asset Management offering utilizes both Coinbase and third

parties as custodians.

As part of our risk mitigation efforts, wallet private keys are not stored in plaintext format in any

location and the cryptographic consensus of multiple human operators is required to decrypt a private key

for both hot and cold wallets. No single individual has control of Coinbase’s wallet private keys. To the

extent a customer withdrawal requires movement of assets from a cold wallet, authority to release

proceeds from such wallet resides with a geographically distributed team of professionals, all of whom are

subject to background checks as part of the onboarding process.

We perform internal audits of the private key management process and reconciliations between

Coinbase wallets and third-party blockchain data. Coinbase, Inc. and Coinbase Custody Trust Company,

the two subsidiaries that custody the majority of crypto assets on platform, are also periodically examined

by a variety of regulators, including the New York State Department of Financial Services (“NYDFS”) and

various states in which such entities hold money transmission licenses. In the event of an insurable loss

of assets for which we file a claim, we may be expected to allow our insurance providers to inspect

custodied assets in the course of their investigation of such claim.

We do not use sub-custodians in connection with the storage of digital assets. In accordance with

applicable state money transmitter laws, we hold U.S. customers’ cash at FDIC-insured depository

institutions and in money market funds in accounts explicitly named to further demonstrate that we are

holding the funds as custodian. We believe the terms of the relevant account agreements to be

comparable to those offered to similar companies.

Other Policies and Procedures

We also have policies in place to help us govern accounting controls, including customer account

initiations and reconciliations, and to help prevent improper self-dealing and other conflicts of interest

between us and our customers on our platform. When we make investments in crypto assets, we execute

investment trades away from our platform to avoid any conflict of interest with our customers. Additionally,

Coinbase is committed to providing a fair, transparent, and equitable experience across our suite of

trading products. Crypto assets and use cases are rapidly expanding and Coinbase seeks to offer our

customers access to all assets and use cases where it is safe and legal to do so. For example, we take a

number of steps to mitigate conflicts in our digital asset listing process. We have a digital asset support

committee that is composed of senior leaders from our product, legal, compliance, finance, and

accounting departments. The digital asset support committee reviews the relevant aspects of any asset

escalated to it in connection with a listing on our platform in accordance with our digital asset support

policies and procedures that are designed to mitigate conflicts. Only the digital asset support committee

decides which of these escalated assets we can and cannot list on our platform, and it does not

coordinate such decisions with anyone outside of the committee. We also have policies and procedures

that require committee members to recuse themselves from asset listing decisions where a committee

member may have a conflict of interest.

Further, we carefully handle and keep customer data confidential through security and encryption as

well as policies, training, and monitoring. Moreover, we invest heavily in compliance tools. For example, in

addition to robust know-your-customer and anti-money laundering programs, we employ an industry

leading third-party trade surveillance software platform that helps us monitor and detect problematic

trading activities on our platform, as further discussed below. We have also invested in a range of

technologies that are designed to help identify and prevent harmful activity on our platform, including

fraud or account takeovers.

As we maintain, grow, and expand our product and services offerings we also must scale and

strengthen our internal controls and processes, and monitor our third-party partners’ and vendors’ ability

to similarly scale and strengthen in order for us to remain an industry leader and a trusted platform.

Additionally, we have procedures to process redemptions and withdrawals expeditiously, subject to the

terms of applicable user agreements. For additional information, see Note 10. Customer Assets and

Liabilities, of the Notes to our consolidated financial statements included in Part II, Item 8 of this Annual

Report on Form 10-K and Risk Factors—Our failure to safeguard and manage our and our customers’ fiat

currencies and crypto assets could adversely impact our business, operating results, and financial

condition and Risk Factors—Depositing and withdrawing crypto assets into and from our platform involve

risks, which could result in loss of customer assets, customer disputes and other liabilities, which could

adversely impact our business included in Part I, Item 1A of this Annual Report on Form 10-K.

Competition

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition,

experimentation, changing customer needs, frequent introductions of new products and services, and is

subject to uncertain and evolving industry and regulatory requirements. We face significant competition

from a variety of companies around the world – ranging from crypto-native companies, including

decentralized exchanges, to large traditional financial services incumbents and financial technology

providers.

Our main competition falls into the following categories:

• traditional financial technology and brokerage firms that have entered the crypto asset market in

recent years and offer overlapping features targeted at our customers;

• companies focused on the crypto asset market, some of whom adhere to local regulations and

directly compete with our platform, and others who choose to operate outside of local rules and

regulations or in jurisdictions with less stringent local rules and regulations and are potentially

able to more quickly adapt to trends, support a greater number of crypto assets, and develop new

crypto-based products and services due to a different standard of regulatory scrutiny;

• crypto-focused companies and traditional financial incumbents that offer point or siloed solutions

specifically targeted at institutional customers; and

• stablecoins, other than USDC, and fiat currencies globally.

The competitive landscape varies significantly by geography. For example, the traditional financial

services and financial technology companies we compete against are largely U.S. and European based

and operate under the same evolving regulatory landscape that we do. However, we also face

competition from companies, in particular those located outside the United States, who are subject to

significantly less stringent regulatory and compliance requirements in their local jurisdictions. Their

business models rely on being unregulated or only regulated in a small number of lower compliance

jurisdictions, while also offering their products in highly regulated jurisdictions, including the United States,

without necessarily complying with the relevant regulatory requirements in such jurisdictions.

Across our product portfolio, we differentiate ourselves through our cohesive ecosystem of products

and services that address the distinct needs of our customers, our full-stack technology platform purpose-

built for the cryptoeconomy, significant investments in regulatory compliance and licensure, advanced

cryptography and security expertise, and our emphasis on accessibility, trust, and ease of use. We invest

in user research, design, and experience to continuously improve the ability of our products to address

our users’ needs.

Additionally, we have continued to invest in the trust foundations of our business. We have built and

expanded the use of advanced cryptographic techniques such as multi-party computation, an innovative

approach to securing user funds, within the business. In parallel, we remain highly engaged with global

regulatory bodies and governmental agencies.

Our ability to quickly and continuously innovate to support additional blockchains, provide products

and services to our customers that are native to the cryptoeconomy, such as staking and governance,

and launch additional products and services further separates us from our competition. See the section

titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for a more comprehensive

description of risks related to competition.

Human Capital

Powering the cryptoeconomy is no small task, and requires hiring, developing, and retaining the

most talented individuals who are deeply passionate about our mission to increase economic freedom

and who are excited to build new products and services.

We work incredibly hard in pursuit of ambitious goals. We signal who will thrive at Coinbase by being

transparent about our culture on our website. Our culture has and will continue to evolve but, at our core,

we prioritize the following principles:

• Clear communication

• Efficient execution

• Act like an owner

• Top talent

• Championship team

• Continuous learning

• Customer focus

• Repeatable innovation

• Positive energy

• Mission first

We are a remote-first company. We believe that allowing our employees to work in the location that

best suits them provides us access to a large talent pool and a sustained advantage in hiring and

retaining employees in the United States and worldwide.

We offer competitive, transparent compensation and unique learning. We conduct an annual market

review to ensure our compensation continues to be consistent with our competitive compensation

philosophy. We have single, transparent pay targets for the vast majority of our roles – eliminating most

compensation negotiations – and provide one-year equity grants for the vast majority of employees. We

have also made meaningful investments in learning and development, including offering an annual

learning stipend and in-house crypto learning curriculum.

We continuously improve our people programs and practices. We regularly monitor engagement

through quarterly pulse surveys to continuously optimize our culture, employee engagement, risk

management, and productivity. We invest in these surveys and associated action planning at the

executive level, as we believe our people and culture are key drivers of business success.

As of December 31, 2023, we had 3,416 employees.

Government Regulation

We operate globally in a complex and rapidly evolving regulatory environment and are subject to a

wide range of laws and regulations enacted by U.S. federal, state, and local and foreign governments and

regulatory authorities. The breadth of laws, rules, and regulations we are subject to include financial

services and banking, consumer protection, money transmission, stored value and prepaid access,

electronic payments, payment services, securities, commodities, derivatives, and unclaimed property, as

well as bespoke digital asset and cryptocurrency laws that have been promulgated in some jurisdictions.

These laws, rules, and regulations evolve frequently and may be modified, interpreted, and applied in an

inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the

complexity and evolving nature of our business and the significant uncertainty surrounding the regulation

of the cryptoeconomy, require us to exercise our judgment as to whether certain laws, rules, and

regulations apply to us, and it is possible that regulators may disagree with our conclusions. We are not

supervised by any federal banking agency, such as the Office of the Comptroller of the Currency, the

Federal Deposit Insurance Corporation, or the Federal Reserve Board. In addition, our trading platform is

not an SEC-regulated national securities exchange or alternative trading system.

Globally, we are subject to strict legal and regulatory requirements relating to the detection and

prevention of countering terrorist financing, anti-money laundering, fraud, tax evasion, and other illicit

activity, the regulation of competition, economic and trade sanctions, privacy, cybersecurity, information

security, and data protection. These descriptions are not exhaustive, and these laws, regulations, and

rules (and the interpretations thereof) frequently change and are increasing in number.

The laws and regulations to which we are subject, including those pertaining to digital assets and

crypto assets, are rapidly evolving and increasing in scope. Therefore, we monitor these areas closely

and invest significant resources in our legal, compliance, product, and engineering teams to ensure our

business practices evolve to help us comply with the current laws, regulations, and legal standards to

which we are subject, as well as to plan and prepare for changes in interpretations thereof, as well as

additional laws, regulations, and legal standards that are introduced in the future.

Anti-money laundering and counter-terrorist financing

We are subject to various anti-money laundering and counter-terrorist financing laws, including the

Bank Secrecy Act (the “BSA”) in the United States, and similar laws and regulations abroad. In the United

States, as a money services business registered with the Financial Crimes Enforcement Network

(“FinCEN”), the BSA requires us to among other things, develop, implement, and maintain a risk-based

anti-money laundering program, provide an anti-money laundering-related training program, report

suspicious activities and transactions to FinCEN, comply with certain reporting and recordkeeping

requirements, and collect and maintain information about our customers. In addition, the BSA requires us

to comply with certain customer due diligence requirements as part of our anti-money laundering

obligations, including developing risk-based policies, procedures, and internal controls reasonably

designed to verify a customer’s identity. Many states and other countries impose similar and, in some

cases, more stringent requirements related to anti-money laundering and counter-terrorist financing. Our

compliance program is designed to prevent and detect instances of money laundering, terrorist financing,

and other illicit activity on our platform. It is also designed to prohibit the use of Coinbase in sanctioned

jurisdictions, or by sanctioned persons or entities, as determined by the Office of Foreign Assets Control

(“OFAC”), and equivalent foreign authorities. It includes policies, procedures, reporting protocols, and

internal controls, and is designed to address legal and regulatory requirements as well as to assist us in

managing risks associated with money laundering and terrorist financing. As part of our compliance

program, we limit the use of our products and services to jurisdictions where we are legally able to offer

our products and services, and customers can only use our products and services in the specific

jurisdictions we have approved. We enforce such geographic restrictions though various onboarding and

permissions. Additionally, we have a robust KYC program, which is a central part of our anti-money

laundering program. Our KYC program is governed by our Global KYC Policy that covers customer

onboarding, and includes customer due diligence; calculation and assessment of customer risk rating;

application of enhanced due diligence on high risk customers; and screening customers against global

sanctions lists. Following the customer onboarding process, we perform ongoing monitoring of customers

and transaction activity to ensure that potentially suspicious activity is appropriately detected, and when

appropriate, reported. Anti-money laundering regulations are constantly evolving and vary from

jurisdiction-to-jurisdiction. We continuously monitor our compliance with anti-money laundering and

counter-terrorist financing regulations and industry standards and implement policies, procedures, and

controls in light of the most current legal requirements.

For a description of the risks we may face from (i) unauthorized or impermissible customer access to

our products and services outside of jurisdictions where we have determined to make such products and

services available or (ii) an assertion of jurisdiction over our operations or the crypto assets we offer by

U.S. and foreign regulators and other government entities, see the following risk factors in the section

titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K: (i) “We are subject to an

extensive, highly-evolving and uncertain regulatory landscape and any adverse changes to, or our failure

to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating

results, and financial condition”; (ii) “As we continue to expand and localize our international activities, our

obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will

increase and we may be subject to inquiries, investigations, and enforcement actions by U.S. and non-

U.S. regulators and governmental authorities, including those related to sanctions, export control, and

anti-money laundering”; and (iii) “A particular crypto asset, product or service’s status as a “security” in

any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly

characterize a crypto asset or product offering, we may be subject to regulatory scrutiny, inquiries,

investigations, fines, and other penalties, which may adversely affect our business, operating results, and

financial condition.”

Money transmission, stored value, and virtual currency business activity

In the United States, we have obtained licenses to operate as a money transmitter or the equivalent in

the states where such licenses or equivalent are required to conduct our business, as well as in the

District of Columbia and Puerto Rico. In addition, we have obtained a BitLicense from NYDFS. As a

licensed money transmitter and an entity subject to the BitLicense regulatory regime, we are subject to,

among other things, the BSA, restrictions and requirements with respect to the investment of customer

funds and use and safeguarding of customer funds and crypto assets, and bonding, minimum capital and

net worth requirements, prudential compliance obligations associated with customer notice and

disclosure, reporting and recordkeeping requirements applicable to the company, as well as requirements

relating to the screening of control persons and inspection and examination by state regulatory agencies.

These state licensing laws also cover matters such as regulatory approval of controlling stockholders,

directors, and senior management of the licensed entity.

Outside the United States, we have obtained licenses to provide crypto-asset custody and trading

from the German Federal Financial Supervisory Authority (BaFin). In Singapore, we hold a major payment

institution license issued by the Monetary Authority of Singapore. In Australia, we are registered as a

digital currency exchange provider with the Australian Transaction Reports and Analysis Centre. We are

also registered as a Money Services Business with the Financial Transactions and Reports Analysis

Centre of Canada. In Bermuda, we have obtained a ‘Class ‘F’ (Full) Digital Asset Business License from

the BMA enabling us to service consumer trading in numerous approved jurisdictions. In addition, we

have obtained Virtual Asset Service Provider (VASP) registrations in Ireland, Spain, France, Italy and the

Netherlands, through which we offer crypto custody and trading services in these countries. Under these

licenses and registrations, we are subject to a broad range of rules and regulations including in respect of

anti-money laundering, safeguarding of customer assets and funds, regulatory capital requirements, fit

and proper management, operational controls, corporate governance, customer disclosures, reporting,

and record keeping.

New York State trust company

Our subsidiary, Coinbase Custody Trust Company, LLC, operates as a New York State-chartered

limited purpose trust company, which is subject to regulation, examination, and supervision by the

NYDFS. NYDFS regulations impose various compliance requirements including, without limitation,

operational limitations related to the nature of crypto assets we can hold under custody, capital

requirements, BSA and anti-money laundering program requirements, affiliate transaction limitations, and

notice and reporting requirements.

Electronic money and payment institution

We serve our customers through Electronic Money Institutions authorized by the U.K. Financial

Conduct Authority and the Central Bank of Ireland. We comply with rules and regulations applicable to the

European e-money industry, including those related to funds safeguarding, corporate governance, anti-

money laundering, disclosure, reporting, and inspection. We are, or may be, subject to banking-related

regulations in other countries now or in the future related to our role in the financial industry.

Economic and trade sanctions

We are required to comply with economic and trade sanctions administered by the United States, the

European Union (“E.U.”), relevant E.U. member states, and other jurisdictions in which we operate.

Economic and trade sanctions programs administered by OFAC and by certain foreign jurisdictions

prohibit or restrict transactions to or from (or dealings with or involving) certain countries, regions,

governments, and in certain circumstances, specified individuals and entities such as narcotics traffickers,

terrorists, and terrorist organizations, as well as certain digital currency addresses.

Securities

In recent years, the SEC and U.S. state securities regulators have stated that certain digital assets or

digital asset products may be classified as securities under U.S. federal and state securities laws, and in

the case of the SEC, has made public statements on this topic – however, these statements are not

binding or definitive guidance, and there is currently no certainty under the SEC’s application of the

applicable legal test as to whether particular crypto assets, products, or services would be deemed

securities. Though the SEC’s Strategic Hub for Innovation and Financial Technology published a

framework for analyzing whether any given crypto asset is a security in April 2019, this framework is also

not a rule, regulation, or statement of the SEC and is not binding on the SEC. A number of enforcement

actions and regulatory proceedings have since been initiated against digital assets and digital asset

products and their developers and proponents, as well as against trading platforms that support digital

assets. Several foreign governments have also issued similar warnings cautioning that digital assets may

be deemed to be securities under the laws of their jurisdictions.

We have established policies and practices to evaluate each crypto asset we consider for listing or for

custody and are a founding member of the Crypto Rating Council, a member-owned and operated

organization whose purpose is to assess whether any given crypto assets, or whether the development,

issuance, and use of such assets, have characteristics that make them more or less likely to implicate

U.S. federal securities laws. We also evaluate all other products and services prior to launch under U.S.

federal and applicable international securities laws.

Commodities and derivatives

The Commodity Futures Trading Commission (“CFTC”) has stated, and CFTC enforcement actions

have confirmed, that at least some crypto assets, including Bitcoin, fall within the definition of a

“commodity” under the U.S. Commodities Exchange Act of 1936 (the “CEA”). Under the CEA, the CFTC

has broad enforcement authority to police market manipulation and fraud in spot commodity markets,

including the spot crypto markets. We are subject to such authority with respect to improper trading on

our platform. In addition, CFTC regulations and CFTC oversight and enforcement authority apply with

respect to futures, swaps, other derivative products, and certain retail leveraged commodity transactions

involving crypto assets, including the markets on which these products trade. Separately, security-based

swaps are subject to SEC regulation and oversight. In general, we seek to ensure that crypto asset

transactions on our crypto asset trading platform do not constitute futures, swaps, security-based swaps,

other derivative products, or retail leveraged commodity transactions. Given our novel business model

and uncertainty regarding the application of some of these laws and regulations, we may become subject

to regulatory scrutiny or legal challenge with respect to our compliance with these requirements. In August

2023, our subsidiary, Coinbase Financial Markets, Inc. secured regulatory approval from the National

Futures Association to operate as a futures commission merchant (“FCM”), in September 2023, Coinbase

International Exchange secured regulatory approval from the BMA to enable perpetual futures for eligible

non-U.S. customers, and in February 2022, we acquired LMX Labs, LLC, a designated contract market

(“DCM”) regulated by the CFTC which now operates as the Coinbase Derivatives Exchange, in

connection with our acquisition of FairXchange, Inc. FCMs and DCMs are subject to the rules of the

National Futures Association as well as numerous regulatory requirements, including strict capital

requirements.

Prohibitions on bribery and anti-corruption

We are subject to regulations imposed by the FCPA in the United States and similar laws in other

countries, such as the Bribery Act 2010 in the United Kingdom (the “Bribery Act”), which generally prohibit

companies and those acting on their behalf from making improper payments to foreign government

officials for the purpose of obtaining or retaining business. Some of these laws, such as the Bribery Act,

also prohibit improper payments between private entities and persons.

Privacy and protection of user data

We are subject to a number of laws, rules, directives, and regulations relating to the collection, use,

retention, security, processing, and transfer of personally identifiable information about our customers and

employees in the countries where we operate. Our business relies on the processing of personal data in

many jurisdictions and the movement of data across national borders. As a result, much of the personal

data that we process, which may include certain financial information associated with individuals, is

regulated by multiple privacy and data protection laws and, in some cases, the privacy and data

protection laws of multiple jurisdictions. In many cases, these laws apply not only to third-party

transactions, but also to transfers of information between or among us, our subsidiaries, and other parties

with which we have commercial relationships.

Consumer protection

The Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), and

other U.S. federal, state, and local and foreign regulatory agencies regulate financial products, including

money transfer services related to remittance or peer-to-peer transfers. These agencies, as well as

certain other governmental bodies, including state attorneys general, have broad consumer protection

mandates and discretion in enforcing consumer protection laws, including matters related to unfair or

deceptive, and, in the case of the CFPB, abusive acts or practices (“UDAAPs”), and they promulgate,

interpret, and enforce rules and regulations that affect our business. For example, all persons offering or

providing financial services or products to consumers in the United States, directly or indirectly, can be

subject to enforcement actions related to the prohibition of UDAAPs. The CFPB has enforcement

authority to prevent an entity that offers or provides consumer financial services or products or a service

provider in the United States from committing or engaging in UDAAPs or violating other federal consumer

financial laws, including the ability to engage in joint investigations with other agencies, issue subpoenas

and civil investigative demands, conduct hearings and adjudication proceedings, commence a civil action,

grant relief (e.g., limit activities or functions; rescission of contracts), and refer matters for criminal

proceedings. Recent market disruptions have led to numerous proposals among consumer protection

focused agencies including by the FTC and CFPB for changes in the regulation of the crypto industry, and

in November 2023, the CFPB proposed a rule to define a market for general-use digital consumer

payment applications, which would give the CFPB supervisory authority to examine the larger participants

of that market. New laws or regulations, or changes in enforcement of existing laws or regulations could

require us to change certain business practices related to consumer disclosures, marketing and

operational features related to payments and remittance regulations and other laws that may impact our

business.

Escheatment and unclaimed property regulations

We are subject to unclaimed property laws in the United States and in certain other jurisdictions

where we operate. These laws require us to turn over to certain government authorities the property of

others held by us that has been unclaimed for a specified period of time, including airdropped tokens and

forked crypto assets. These laws may also require us to liquidate that property prior to turning it over. We

hold property subject to unclaimed property laws; however, there is significant regulatory uncertainty with

how states and certain foreign jurisdictions treat crypto assets under unclaimed property rules.

Lending law

We originate secured commercial loans in certain states in the United States. As a result, our lending

activities are subject to various state lending laws and licensure requirements with respect to lending

activities within such state. These state lending laws may be enforced by state attorneys general, state

financial regulators, and private litigants, among others. Given our novel business model and uncertainty

regarding application of some of these laws and regulations, we may become subject to regulatory

scrutiny or legal challenge with respect to our compliance with these requirements.

Interchange fees

Interchange fees associated with four-party payments systems are being reviewed or challenged in

various jurisdictions. For example, in the E.U., the Multilateral Interchange Fee Regulation caps

interchange fees for credit and debit card payments and provides for business rules to be complied with

by any company dealing with card transactions, including us. As a result, the fees that we collect in

certain jurisdictions may become the subject of regulatory challenge.

Legal requirements for prepaid cards

Prepaid card programs are subject to various federal and state laws and regulations, including

consumer financial protection regulations such as the CFPB's Regulation E, which imposes requirements

on issuers of prepaid cards. The laws and regulations impose compliance obligations and costs on our

business, and failure to comply could result in litigation, enforcement actions, and penalties.

Card association and payment network rules

In addition to the federal and state laws and regulations governing prepaid cards, we, as well as the

bank that issues our Coinbase Card, are subject to and required to comply with card association and

payment network rules and guidelines which apply to prepaid cards. The card association and payment

network rules govern a variety of areas, including how consumers and merchants may use their cards

and data security, and may be changed periodically. Noncompliance with these rules could result in fines

or penalties levied by the card association or payment network for certain acts or omissions, or the

termination of our ability to offer prepaid cards.

Association and network rules

The bylaws and agreements between clearing house participants and bankcard companies impose

specific responsibilities and liabilities for issuers of debit cards. As the issuer of the Coinbase Card, we

are required to comply with the appropriate National Automated Clearing House Association (“ NACHA”),

bylaws, operating rules, and agreements, as well as card network rules and guidelines. Additional new

products and services that we offer may also impose additional obligations on us to comply with NACHA

and card network obligations related to preventing fraud, money laundering, and IT security breaches.

Intellectual Property

The protection of our technology and intellectual property is an important aspect of our business. We

rely upon a variety of protections, including a combination of patents, trademarks, trade secrets,

copyrights, confidentiality procedures, and contractual commitments. We co-founded the Crypto Open

Patent Alliance, and pledged to only use our crypto technology patents defensively. We may also in the

future agree to license our patents to third parties as part of various patent pools and open patent

projects.

Corporate Information

We were initially incorporated in May 2012 as Coinbase, Inc., a Delaware corporation. In January

2014, Coinbase Global, Inc. was incorporated as a Delaware corporation to act as the holding company

of Coinbase, Inc. and our other subsidiaries. In April 2014, we completed a corporate reorganization

whereby Coinbase, Inc. became a wholly-owned subsidiary of Coinbase Global, Inc. Coinbase Global,

Inc.’s principal assets are its interests in the equity of Coinbase, Inc. In addition to Coinbase, Inc.,

Coinbase Global, Inc. is the parent company of a number of other operating subsidiaries. We are a

remote-first company, meaning the majority of our employees work remotely. Due to this, we do not have

a principal executive office.

Coinbase, the Coinbase logo, and other registered or common law trade names, trademarks, or

service marks of Coinbase included in this Annual Report on Form 10-K are the property of Coinbase.

Other trademarks, service marks, or trade names included in this Annual Report on Form 10-K are the

property of their respective owners.

Available Information

We file our annual, periodic and current reports, and other required information, electronically with the

SEC and this information is available at www.sec.gov. We also make available on our website at

www.coinbase.com, free of charge, copies of these reports and other information as soon as reasonably

practicable after we electronically file such material with, or furnish it to, the SEC.

We use our website, blog, press releases, public conference calls, public webcasts, our X feed

(@coinbase), Facebook page, LinkedIn page, YouTube channel, and Brian Armstrong’s X feed

(@brian_armstrong) as means of disclosing material non-public information and for complying with our

disclosure obligations under Regulation FD. The information disclosed by the foregoing channels could be

deemed to be material information. As such, we encourage investors, the media, and others to follow the

channels listed above and to review the information disclosed through such channels. The contents of the

websites referred to above are not intended to be incorporated by reference into this Annual Report on

Form 10-K or in any other report or document we file with the SEC, and any references to websites are

intended to be inactive textual references only.

Item 1A. Risk Factors

Investing in our Class A common stock involves a high degree of risk. You should carefully consider

the risks and uncertainties described below, together with all of the other information in this Annual Report

on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” and the consolidated financial statements and related notes. The risks and

uncertainties described below are not the only ones we face. Additional risks and uncertainties that we

are unaware of or that we deem immaterial may also become important factors that adversely affect our

business. If any of the following risks occur, our business, operating results, financial condition, and future

prospects could be materially and adversely affected. Many risks affect more than one category, and the

risks are not in order of significance or probability of occurrence because they have been grouped by

categories. The market price of our Class A common stock could decline, and you could lose part or all of

your investment due to any of these risks.

Risk Factors

The Most Material Risks Related to Our Business and Financial Position

Our operating results have and will significantly fluctuate, including due to the highly volatile

nature of crypto.

Our operating results are dependent on crypto assets and the broader cryptoeconomy. Due to the

highly volatile nature of the cryptoeconomy and the prices of crypto assets, which have experienced and

continue to experience significant volatility, our operating results have, and will continue to, fluctuate

significantly from quarter to quarter in accordance with market sentiments and movements in the broader

cryptoeconomy. Our operating results will continue to fluctuate significantly as a result of a variety of

factors, many of which are unpredictable and in certain instances are outside of our control, including:

• our dependence on offerings that are dependent on crypto asset trading activity, including trading

volume and the prevailing trading prices for crypto assets, whose trading prices and volume can

be highly volatile;

• our ability to attract, maintain, and grow our customer base and engage our customers;

• changes in the legislative or regulatory environment, or actions by U.S. or foreign governments or

regulators, including fines, orders, or consent decrees;

• regulatory changes or scrutiny that impact our ability to offer certain products or services;

• our ability to continue to diversify and grow our subscription and services revenue;

• our mix of revenue between transaction and subscription and services;

• pricing for or temporary suspensions of our products and services;

• investments we make in the development of products and services as well as technology offered

to our developers, international expansion, and sales and marketing;

• adding crypto assets to, or removing from, our platform;

• our ability to establish and maintain partnerships, collaborations, joint ventures, or strategic

alliances with third parties;

• market conditions of, and overall sentiment towards, the cryptoeconomy;

• macroeconomic conditions, including interest rates, inflation and instability in the global banking

system;

• adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other

legal proceeding and enforcement-related costs;

• the development and introduction of existing and new products and services by us or our

competitors;

• our ability to control costs, including our operating expenses incurred to grow and expand our

operations and to remain competitive;

• system failure, outages or interruptions, including with respect to our crypto platform and third-

party crypto networks;

• our lack of control over decentralized or third-party blockchains and networks that may

experience downtime, cyber-attacks, critical failures, errors, bugs, corrupted files, data losses, or

other similar software failures, outages, breaches and losses;

• breaches of security or privacy;

• inaccessibility of our platform due to our or third-party actions;

• our ability to attract and retain talent; and

• our ability to compete with our competitors.

As a result of these factors, it is difficult for us to forecast growth trends accurately and our business

and future prospects are difficult to evaluate, particularly in the short term. In particular, our subscription

and services revenue has grown over time, with stablecoin revenue received in connection with USDC

becoming a more meaningful revenue contributor. Therefore, our operating results could fluctuate

significantly as a result of changes in the demand for our subscription and service offerings, in the

demand for USDC, in the balance of USDC on our platform, in interest rates, and to our ongoing

relationships with third parties, such as the issuer of USDC.

In view of the rapidly evolving nature of our business and the cryptoeconomy, period-to-period

comparisons of our operating results may not be meaningful, and you should not rely upon them as an

indication of future performance. Quarterly and annual expenses reflected in our financial statements may

be significantly different from historical or projected rates. Our operating results in one or more future

quarters may fall below the expectations of securities analysts and investors. As a result, the trading price

of our Class A common stock may increase or decrease significantly.

Our total revenue is substantially dependent on the prices of crypto assets and volume of

transactions conducted on our platform. If such price or volume declines, our business, operating

results, and financial condition would be adversely affected and the price of our Class A common

stock could decline.

We generate a large portion of our total revenue from transaction fees on our platform in connection

with the purchase, sale, and trading of crypto assets by our customers. Transaction revenue is based on

transaction fees that are either a flat fee or a percentage of the value of each transaction. For our

consumer trading product, we also charge a spread to ensure that we are able to settle purchases and

sales at the price we quote to customers. We also generate a large portion of total revenue from our

subscription and services, and such revenue has grown over time, primarily due to stablecoin revenue

growth in connection with USDC. Declines in the volume of crypto asset transactions, the price of crypto

assets, or market liquidity for crypto assets generally may result in lower total revenue to us.

The price of crypto assets and associated demand for buying, selling, and trading crypto assets have

historically been subject to significant volatility. For instance, in 2017, the value of certain crypto assets,

including Bitcoin, experienced steep increases in value, and our customer base expanded worldwide. The

increases in value of certain crypto assets, including Bitcoin, from 2016 to 2017, and then again in 2021,

were followed by a steep decline in 2018 and again in 2022, which adversely affected our net revenue

and operating results. While the value of crypto assets, including Bitcoin, increased towards the end of

2023, if the value of crypto assets and transaction volume do not continue to recover or decline in the

future, our ability to generate revenue may suffer and customer demand for our products and services

may decline, which could adversely affect our business, operating results and financial condition and

cause the price of our Class A common stock to decline. The price and trading volume of any crypto asset

is subject to significant uncertainty and volatility, depending on a number of factors, including:

• market conditions of, and overall sentiment towards, crypto assets and the cryptoeconomy,

including, but not limited to, as a result of actions taken by or developments of other companies in

the cryptoeconomy;

• changes in liquidity, market-making volume, and trading activities;

• trading activities on other crypto platforms worldwide, many of which may be unregulated, and

may include manipulative activities;

• investment and trading activities of highly active consumer and institutional users, speculators,

miners, and investors;

• the speed and rate at which crypto is able to gain adoption as a medium of exchange, utility, store

of value, consumptive asset, security instrument, or other financial assets worldwide, if at all;

• decreased user and investor confidence in crypto assets and crypto platforms;

• negative publicity and events relating to the cryptoeconomy;

• unpredictable social media coverage or “trending” of, or other rumors and market speculation

regarding, crypto assets;

• the ability for crypto assets to meet user and investor demands;

• the functionality and utility of crypto assets and their associated ecosystems and networks,

including crypto assets designed for use in various applications;

• consumer preferences and perceived value of crypto assets and crypto asset markets;

• increased competition from other payment services or other crypto assets that exhibit better

speed, security, scalability, or other characteristics;

• adverse legal proceedings or regulatory enforcement actions, judgments, or settlements

impacting cryptoeconomy participants;

• regulatory or legislative changes, scrutiny and updates affecting the cryptoeconomy;

• the characterization of crypto assets under the laws of various jurisdictions around the world;

• the adoption of unfavorable taxation policies on crypto asset investments by governmental

entities;

• the maintenance, troubleshooting, and development of the blockchain networks underlying crypto

assets, including by miners, validators, and developers worldwide;

• the ability for crypto networks to attract and retain miners or validators to secure and confirm

transactions accurately and efficiently;

• legal and regulatory changes affecting the operations of miners and validators of blockchain

networks, including limitations and prohibitions on mining activities, or new legislative or

regulatory requirements as a result of growing environmental concerns around the use of energy

in Bitcoin and other proof-of-work mining activities;

• ongoing technological viability and security of crypto assets and their associated smart contracts,

applications and networks, including vulnerabilities against hacks and scalability;

• fees and speed associated with processing crypto asset transactions, including on the underlying

blockchain networks and on crypto platforms;

• financial strength of market participants;

• the availability and cost of funding and capital;

• the liquidity and credit risk of other crypto platforms;

• interruptions or temporary suspensions or other compulsory restrictions in products or services

from or failures of major crypto platforms;

• availability of an active derivatives market for various crypto assets;

• availability of banking and payment services to support crypto-related projects;

• instability in the global banking system and the level of interest rates and inflation;

• monetary policies of governments, trade restrictions, and fiat currency devaluations; and

• national and international economic and political conditions.

There is no assurance that any supported crypto asset will maintain its value or that there will be

meaningful levels of trading activities. In the event that the price of crypto assets or the demand for

trading crypto assets decline, our business, operating results, and financial condition would be adversely

affected and the price of our Class A common stock could decline.

Our net revenue may be concentrated in a limited number of areas. Within transaction revenue

and subscription and services revenue, a meaningful concentration is from transactions in Bitcoin

and Ethereum and stablecoin revenue in connection with USDC, respectively. If revenue from

these areas declines and is not replaced by new demand for crypto assets or other products and

services, our business, operating results, and financial condition could be adversely affected.

While we support a diverse portfolio of crypto assets for trading, staking and custody, our net revenue

is concentrated in a limited number of areas, such as transactions in Bitcoin and Ethereum for transaction

revenue and stablecoin revenue in connection with USDC for subscription and services revenue. Since

2022, we have derived a more meaningful amount of our net revenue from subscription and services

revenue, primarily due to stablecoin revenue in connection with USDC, than we have historically. For the

years ended December 31, 2023 and 2022, we derived a meaningful amount of our net revenue from

transaction fees generated in connection with the purchase, sale, and trading of Bitcoin and Ethereum;

these trading pairs drove approximately 54% and 55% of total Trading Volume on our platform during

these periods, respectively. During 2022, the value of Bitcoin and Ethereum declined steeply. While the

value of Bitcoin and Ethereum moderately recovered in 2023, if the value of Bitcoin and Ethereum do not

continue to recover or decline in the future, our business and operating results could be adversely

affected. As such, in addition to the factors impacting the broader cryptoeconomy described in this

section, our revenue may be adversely affected if the markets for Bitcoin and Ethereum deteriorate or if

their prices decline, including as a result of the following factors:

• the reduction in mining rewards of Bitcoin, including block reward halving events, which are

events that occur after a specific period of time and reduces the block reward earned by miners;

• public sentiment related to the actual or perceived environmental impact of Bitcoin, Ethereum,

and related activities, including environmental concerns raised by private individuals and

governmental actors related to the energy resources consumed in the Bitcoin mining process;

• the migration of Ethereum to a proof-of-stake model;

• disruptions, hacks, splits in the underlying networks also known as “forks”, attacks by malicious

actors who control a significant portion of the networks’ hash rate such as double spend or 51%

attacks, or other similar incidents affecting the Bitcoin or Ethereum blockchain networks;

• hard “forks” resulting in the creation of and divergence into multiple separate networks, such as

Bitcoin Cash and Ethereum Classic;

• informal governance led by Bitcoin and Ethereum’s core developers that lead to revisions to the

underlying source code or inactions that prevent network scaling, and which evolve over time

largely based on self-determined participation, which may result in new changes or updates that

affect their speed, security, usability, or value;

• the ability for Bitcoin and Ethereum blockchain networks to resolve significant scaling challenges

and increase the volume and speed of transactions;

• the ability to attract and retain developers and customers to use Bitcoin and Ethereum for

payment, store of value, unit of accounting, and other intended uses and the absence of another

supported crypto asset to attract and retain developers and customers for the same;

• transaction congestion and fees associated with processing transactions on the Bitcoin and

Ethereum networks and the absence of another supported crypto asset to replace these

transactions;

• the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed

Bitcoin, or the transfer of Satoshi’s Bitcoins;

• negative perception of Bitcoin or Ethereum;

• development in mathematics, technology, including in digital computing, algebraic geometry, and

quantum computing that could result in the cryptography being used by Bitcoin and Ethereum

becoming insecure or ineffective;

• adverse legal proceedings or regulatory enforcement actions, judgments, or settlements

impacting cryptoeconomy participants;

• regulatory, legislative or other compulsory or informal restrictions or limitations on Bitcoin or

Ethereum lending, mining or staking activities;

• liquidity and credit risk issues experienced by other crypto platforms and other participants of the

cryptoeconomy; and

• laws and regulations affecting the Bitcoin and Ethereum networks or access to these networks,

including a determination that either Bitcoin or Ethereum constitutes a security or other regulated

financial instrument under the laws of any jurisdiction.

Moreover, our subscription and services revenue has grown over time, including stablecoin revenue

received in connection with USDC. Such revenue depends on a variety of factors, including demand for

our subscription and services offerings, demand for USDC, the balance of USDC on our platform, interest

rates, and ongoing relationships with third parties, such as the issuer of USDC. If such factors are

negatively impacted, our business, operating results and financial condition could be adversely affected.

We have in the past, and may in the future, enter into partnerships, collaborations, joint ventures,

or strategic alliances with third parties. If we are unsuccessful in establishing or maintaining

strategic relationships with these third parties or if these third parties fail to deliver certain

operational services, our business, operating results, and financial condition could be adversely

affected.

We have in the past, and may in the future, enter into partnerships, collaborations, joint ventures, or

strategic alliances with third parties in connection with the development, operation and enhancements to

our platform and products and the provision of our services. For example, the issuer of USDC provides us

with creation and redemption services for USDC, including the operational capabilities required for our

USDC customer-facing services. If the issuer of USDC fails to provide certain operational services, our

ability to maintain our current level of offerings and customer experience for USDC could be harmed and

interest or confidence in USDC could be impacted. Identifying strategic relationships with third parties,

and negotiating and documenting relationships with them may be time-consuming and complex and may

distract management. Moreover, we may be delayed, or not be successful, in achieving the objectives

that we anticipate as a result of such strategic relationships. In evaluating counterparties in connection

with partnerships, collaborations, joint ventures or strategic alliances, we consider a wide range of

economic, legal and regulatory criteria depending on the nature of such relationship, including the

counterparties’ reputation, operating results and financial condition, operational ability to satisfy our and

our customers’ needs in a timely manner, efficiency and reliability of systems, certifications costs to us or

to our customers, and licensure and compliance status. Despite this evaluation, third parties may still not

meet our or our customers’ needs which may adversely affect our ability to deliver products and services

to customers, may adversely impact our business, operating results, and financial condition.

Counterparties to any strategic relationship may have economic or business interests or goals that are, or

that may become, inconsistent with our business interests or goals, and may subject us to additional risks

to the extent such third party becomes the subject of negative publicity, faces its own litigation or

regulatory challenges, or faces other adverse circumstances. Conflicts may arise with our strategic

partners, such as the interpretation of significant terms under any agreement, which may result in

litigation or arbitration which would increase our expenses and divert the attention of our management. If

we are unsuccessful in establishing or maintaining strategic relationships with third parties, our ability to

compete in the marketplace or to grow our revenue could be impaired and our business, operating

results, and financial condition could be adversely affected.

Interest rate fluctuations could negatively impact us.

The level of prevailing short-term interest rates affects our profitability because we derive a large

portion of our revenue from interest earned from funds deposited with us by our customers which we hold

on their behalf in custodial accounts at banks and from stablecoin revenue, which is derived from interest

earned on USDC reserve balances. Higher interest rates increase the amount of interest income and

stablecoin revenue earned from these activities. When short-term interest rates decline, our revenue

derived from interest correspondingly declines, which negatively impacts our profitability. Further, because

stablecoin revenue from USDC has become an increased portion of our subscription and services

revenue, if interest rates were to significantly decline from levels reached in the current interest rate

environment, our net revenue could decline. Conversely, when interest rates increase, investors may

choose to shift their asset allocations, which could negatively impact our stock price or the cryptoeconomy

more generally.

The future development and growth of crypto is subject to a variety of factors that are difficult to

predict and evaluate. If crypto does not grow as we expect, our business, operating results, and

financial condition could be adversely affected.

Crypto assets built on blockchain technology were only introduced in 2008 and remain in the early

stages of development. In addition, different crypto assets are designed for different purposes. Bitcoin, for

instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed

to be a smart contract and decentralized application platform. Many other crypto networks-ranging from

cloud computing to tokenized securities networks-have only recently been established. The further growth

and development of any crypto assets and their underlying networks and other cryptographic and

algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and

evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including:

• many crypto networks have limited operating histories, have not been validated in production, and

are still in the process of developing and making significant decisions that will affect the design,

supply, issuance, functionality, and governance of their respective crypto assets and underlying

blockchain networks, any of which could adversely affect their respective crypto assets;

• many crypto networks are in the process of implementing software upgrades and other changes

to their protocols, which could introduce bugs, security risks, or adversely affect the respective

crypto networks;

• several large networks, including Bitcoin and Ethereum, are developing new features to address

fundamental speed, scalability, and energy usage issues. If these issues are not successfully

addressed, or are unable to receive widespread adoption, it could adversely affect the underlying

crypto assets;

• security issues, bugs, and software errors have been identified with many crypto assets and their

underlying blockchain networks, some of which have been exploited by malicious actors. There

are also inherent security weaknesses in some crypto assets, such as when creators of certain

crypto networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses

identified with a crypto asset could adversely affect its price, security, liquidity, and adoption. If a

malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) obtains a majority of the compute or staking

power on a crypto network, as has happened in the past, it may be able to manipulate

transactions, which could cause financial losses to holders, damage the network’s reputation and

security, and adversely affect its value;

• the development of new technologies for mining, such as improved application-specific integrated

circuits (commonly referred to as ASICs), or changes in industry patterns, such as the

consolidation of mining power in a small number of large mining farms, could reduce the security

of blockchain networks, lead to increased liquid supply of crypto assets, and reduce a crypto’s

price and attractiveness;

• if rewards and transaction fees for miners or validators on any particular crypto network are not

sufficiently high to attract and retain miners, a crypto network’s security and speed may be

adversely affected, increasing the likelihood of a malicious attack;

• many crypto assets have concentrated ownership or an “admin key”, allowing a small group of

holders to have significant unilateral control and influence over key decisions related to their

crypto networks, such as governance decisions and protocol changes, as well as the market price

of such crypto assets;

• the governance of many decentralized blockchain networks is by voluntary consensus and open

competition, and many developers are not directly compensated for their contributions. As a

result, there may be a lack of consensus or clarity on the governance of any particular crypto

network, a lack of incentives for developers to maintain or develop the network, and other

unforeseen issues, any of which could result in unexpected or undesirable errors, bugs, or

changes, or stymie such network’s utility and ability to respond to challenges and grow; and

• many crypto networks are in the early stages of developing partnerships and collaborations, all of

which may not succeed and adversely affect the usability and adoption of the respective crypto

assets.

Various other technical issues have also been uncovered from time to time that resulted in disabled

functionalities, exposure of certain users’ personal information, theft of users’ assets, and other negative

consequences, and which required resolution with the attention and efforts of their global miner, user, and

development communities. If any such risks or other risks materialize, and in particular if they are not

resolved, the development and growth of crypto may be significantly affected and, as a result, our

business, operating results, and financial condition could be adversely affected.

Cyberattacks and security breaches of our platform, or those impacting our customers or third

parties, could adversely impact our brand and reputation and our business, operating results, and

financial condition.

Our business involves the collection, storage, processing, and transmission of confidential

information, customer, employee, service provider, and other personal data, as well as information

required to access customer assets. We have built our reputation on the premise that our platform offers

customers a secure way to purchase, store, and transact in crypto assets. As a result, any actual or

perceived security breach of us or our third-party partners may:

• harm our reputation and brand;

• result in our systems or services being unavailable and interrupt our operations;

• result in improper disclosure of data and violations of applicable privacy and data protection laws;

• result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory,

and financial exposure;

• cause us to incur significant remediation costs;

• lead to theft or irretrievable loss of our or our customers’ fiat currencies or crypto assets;

• reduce customer confidence in, or decreased use of, our products and services;

• divert the attention of management from the operation of our business;

• result in significant compensation or contractual penalties from us to our customers or third

parties as a result of losses to them or claims by them; and

• adversely affect our business and operating results.

For example, in 2021, third parties independently obtained login credentials and personal information

for at least 6,000 customers and used those credentials to exploit a vulnerability that previously existed in

the account recovery process. Coinbase reimbursed impacted customers approximately $25.1 million.

Further, any actual or perceived breach or cybersecurity attack directed at other financial institutions

or crypto companies, whether or not we are directly impacted, could lead to a general loss of customer

confidence in the cryptoeconomy or in the use of technology to conduct financial transactions, which

could negatively impact us, including the market perception of the effectiveness of our security measures

and technology infrastructure.

An increasing number of organizations, including large merchants, businesses, technology

companies, and financial institutions, as well as government institutions, have disclosed breaches of their

information security systems, some of which have involved sophisticated and highly targeted attacks,

including on their websites, mobile applications, and infrastructure.

Attacks upon systems across a variety of industries, including the crypto industry, are increasing in

their frequency, persistence, and sophistication, and, in many cases, are being conducted by

sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques

used to obtain unauthorized, improper, or illegal access to systems and information (including customers’

personal data and crypto assets), disable or degrade services, or sabotage systems are constantly

evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have

been launched against a target. These attacks may occur on our systems or those of our third-party

service providers or partners. Certain types of cyberattacks could harm us even if our systems are left

undisturbed. For example, attacks may be designed to deceive employees and service providers into

releasing control of our systems to a hacker, while others may aim to introduce computer viruses or

malware into our systems with a view to stealing confidential or proprietary data. Additionally, certain

threats are designed to remain dormant or undetectable until launched against a target and we may not

be able to implement adequate preventative measures.

Although we have developed systems and processes designed to protect the data we manage,

prevent data loss and other security breaches, effectively respond to known and potential risks, and

expect to continue to expend significant resources to bolster these protections, there can be no

assurance that these security measures will provide absolute security or prevent breaches or attacks. We

have experienced from time to time, and may experience in the future, breaches of our security measures

due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities.

Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to

our systems and facilities, as well as those of our customers, partners, and third-party service providers,

through various means, including hacking, social engineering, phishing, and attempting to fraudulently

induce individuals (including employees, service providers, and our customers) into disclosing

usernames, passwords, payment card information, or other sensitive information, which may in turn be

used to access our information technology systems and customers’ crypto assets. Threats can come from

a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial

espionage, and insiders. Certain threat actors may be supported by significant financial and technological

resources, making them even more sophisticated and difficult to detect. We may also acquire other

companies that expose us to unexpected security risks or increase costs to improve the security posture

of the acquired company. Further, there has been an increase in such threat actor activities as a result of

the increased prevalence of hybrid and remote working arrangements in recent years. As a result, our

costs and the resources we devote to protecting against these advanced threats and their consequences

may continue to increase over time.

Although we maintain insurance coverage, it may be insufficient to protect us against all losses and

costs stemming from security breaches, cyberattacks, and other types of unlawful activity, or any resulting

disruptions or data theft and loss from such events. Outages and disruptions of our platform, including

any caused by cyberattacks, may harm our reputation and our business, operating results, and financial

condition.

We are subject to an extensive, highly-evolving and uncertain regulatory landscape and any

adverse changes to, or our failure to comply with, any laws and regulations could adversely affect

our brand, reputation, business, operating results, and financial condition.

Our business is subject to extensive laws, rules, regulations, policies, orders, determinations,

directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we

operate, including those governing financial services and banking, federal government contractors, trust

companies, securities, derivative transactions and markets, broker-dealers and alternative trading

systems (“ATS”), commodities, credit, crypto asset custody, exchange, and transfer, cross-border and

domestic money and crypto asset transmission, commercial lending, usury, foreign currency exchange,

privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including

payment processing and settlement services), consumer protection, escheatment, antitrust and

competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and

counter-terrorist financing. Many of these legal and regulatory regimes were adopted prior to the advent

of the internet, mobile technologies, crypto assets, generative artificial intelligence (“AI”) and related

technologies. As a result, some applicable laws and regulations do not contemplate or address unique

issues associated with the cryptoeconomy, are subject to significant uncertainty, and vary widely across

U.S. federal, state, and local and international jurisdictions. These legal and regulatory regimes, including

the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and

applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another.

Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding

the regulation of the cryptoeconomy requires us to exercise our judgment as to whether certain laws,

rules, and regulations apply to us, and it is possible that governmental bodies and regulators may

disagree with our conclusions. To the extent we have not complied with such laws, rules, and regulations,

we could be subject to significant fines, revocation of licenses, limitations on or temporary or permanent

suspensions of our products and services, reputational harm, and other regulatory consequences, each of

which may be significant and could adversely affect our business, operating results, and financial

condition.

Additionally, various governmental and regulatory bodies, including legislative and executive bodies,

in the United States and in other countries may adopt new laws and regulations, the direction and timing

of which may be influenced by changes in the governing administrations and major events in the

cryptoeconomy. For example, following the failure of several prominent crypto trading venues and lending

platforms, such as FTX, Celsius Networks, Voyager and Three Arrows Capital in 2022 (the “2022

Events”), the U.S. Congress expressed the need for both greater federal oversight of the cryptoeconomy

and comprehensive cryptocurrency legislation.

Presently, and in the future, various governmental and regulatory bodies, including in the United

States, may introduce new policies, laws, and regulations relating to crypto assets and the

cryptoeconomy generally, and crypto asset platforms in particular. Other companies’ failures of risk

management and other control functions that played a role in the 2022 Events could accelerate an

existing regulatory trend toward stricter oversight of crypto asset platforms and the cryptoeconomy.

Furthermore, new interpretations of existing laws and regulations may be issued by such bodies or the

judiciary, which may adversely impact the development of the cryptoeconomy as a whole and our legal

and regulatory status in particular by changing how we operate our business, how our products and

services are regulated, and what products or services we and our competitors can offer, requiring

changes to our compliance and risk mitigation measures, imposing new licensing requirements, or

imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the

past. For example, in April 2023, the SEC reopened a comment period for amendments to Rule 3b-16

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that could subject several

cryptoeconomy participants and systems to registration or other operational compliance requirements

under the Exchange Act. If the SEC’s proposed amendment is adopted in its current form, we, along with

other cryptoeconomy participants, could face significant additional uncertainty and risk of increased

operational costs. In September 2023, the New York Department of Financial Services (“NYDFS”)

proposed new guidance regarding the policies and procedures required for virtual currency business

entities licensed in New York, such as Coinbase, Inc. This guidance and other applicable state law

guidance regarding virtual currency business activity could result in changes to our business in such

states as well as the risk of increased operational costs and the risk of enforcement actions. If we are

unable to comply with any new requirements, our ability to offer our products and services in their current

form may be adversely affected. Additionally, under recommendations from the Financial Crimes

Enforcement Network (“FinCEN”), and the Financial Action Task Force (“FATF”), the United States and

several foreign jurisdictions have or are likely to impose the Funds Travel Rule and the Funds Transfer

Rule (commonly referred to collectively as the Travel Rule) on financial service providers in the

cryptoeconomy. We may face substantial costs to operationalize and comply with the Travel Rule and

may be further subject to administrative sanctions for technical violations or customer attrition if the user

experience suffers as a result. In October 2023, FinCEN released a proposed rule that identifies virtual

currency “mixing” as a class of transactions of primary money laundering concern and imposes

heightened recordkeeping and reporting obligations for financial institutions with respect to those

transactions. There are substantial uncertainties regarding the scope of these requirements in practice,

and we may face substantial costs to operationalize and comply with these rules.

Moreover, we offer and may in the future offer products and services whose functionality or value

depends in part on our management of token transaction smart contracts, liquid staking, asset tracking, or

other applications that provide novel forms of customer engagement and interaction delivered via

blockchain protocols. We may also offer products and services whose functionality or value depends on

our ability to develop, integrate, or otherwise interact with such applications within the bounds of our legal

and compliance obligations. The legal and regulatory landscape for such products, including the law

governing the rights and obligations between and among smart contract developers and users and the

extent to which such relationships entail regulated activity is uncertain and rapidly evolving. Our

interaction with those applications, and the interaction of other blockchain users with any smart contracts

or assets we may generate or control, could present legal, operational, reputational, and regulatory risks

for our business.

We may be further subject to administrative sanctions for technical violations or customer attrition if

the user experience suffers as a result. As another example, the extension of anti-money laundering

requirements to certain crypto-related activities by the European Union’s Fifth Money Laundering

Directive, as updated by the European Union’s Sixth Money Laundering Directive, has increased the

regulatory compliance burden for our business in Europe and, as a result of the fragmented approach to

the implementation of its provisions, resulted in distinct and divergent national licensing and registration

regimes for us in different E.U. member states. Further E.U.-level legislation imposing additional

regulatory requirements in relation to crypto-related activities is also expected in the near term, such as

with the effectiveness of the Markets in Crypto-Assets Regulation (“MiCA”). Among other provisions,

MiCA introduces a comprehensive authorization and compliance regime for crypto asset service providers

and a disclosure regime for the issuers of certain crypto assets, which is expected to impact our

operations in the European Union. For example, the requirements of privacy and data protection laws in

the European Union, United States, and elsewhere are typically founded on the premise of centralized,

data-controller-based data processing, and require fulfilling, among other things, individual rights to

access or delete one’s data. This creates unique compliance challenges given the nature of blockchain’s

peer-to-peer network architecture, lack of centralized control, immutability, and perpetual data storage.

Because we have offered and will continue to offer a variety of innovative products and services to

our customers, many of our offerings are subject to significant regulatory uncertainty and we from time to

time face regulatory inquiries regarding our current and planned products. For instance, we are a reseller

of USDC, a stablecoin redeemable on a one-to-one basis for U.S. dollars. The regulatory treatment of fiat-

backed stablecoins is highly uncertain and has drawn significant attention from legislative and regulatory

bodies around the world. The issuance and resale of such stablecoins may implicate a variety of banking,

deposit, money transmission, prepaid access and stored value, anti-money laundering, commodities,

securities, sanctions, and other laws and regulations in the United States and in other jurisdictions.

Moreover, in October 2021, the President’s Working Group on Financial Markets, the Federal Deposit

Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency, issued a joint report

that recommended legislation that would subject stablecoin issuers and wallet providers to increased

federal oversight. There are substantial uncertainties on how these requirements would apply in practice,

and we may face substantial compliance costs to operationalize and comply with these rules. Moreover,

our products and services incorporate digital engagement, including recommendations, incentives,

notifications, educational content and relevant news. Legislators and regulators in jurisdictions in which

we operate have solicited comment from the public or proposed or adopted laws or regulations relating to

the use of gamification, predictive analytics or other digital engagement features or practices in various

products and services, including potential conflicts of interest that may arise as a result of such practices.

If such laws or regulations are adopted in jurisdictions in which we operate and deemed to apply to the

products and services we offer, we could be required to change the way we market our offerings and

interact with existing and prospective customers or modify certain features contained within our products

and services, any of which could adversely impact our business, operating results and financial condition.

Certain products and services offered by us that we believe are not subject to regulatory oversight, or are

only subject to certain regulatory regimes, such as Coinbase Wallet, a standalone mobile application that

allows customers to manage their own private keys and store their crypto assets directly on their mobile

devices, may cause us to be deemed to be engaged in a form of regulated activity for which licensure is

required or cause us to become subject to new and additional forms of regulatory oversight. We also offer

various staking, rewards, and lending products, all of which are subject to significant regulatory

uncertainty, and could implicate a variety of laws and regulations worldwide. For example, there is

regulatory uncertainty regarding the status of our staking, lending, rewards, and other yield-generating

activities under the U.S. federal and state securities laws. While we have implemented policies and

procedures, including geofencing for certain products and services, designed to help monitor for and

ensure compliance with existing and new laws and regulations, there can be no assurance that we and

our employees, contractors, and agents will not violate or otherwise fail to comply with such laws and

regulations. To the extent that we or our employees, contractors, or agents are deemed or alleged to have

violated or failed to comply with any laws or regulations, including related interpretations, orders,

determinations, directives, or guidance, we or they could be subject to a litany of civil, criminal, and

administrative fines, penalties, orders and actions, including being required to suspend or terminate the

offering of certain products and services. Moreover, to the extent our customers nevertheless access our

platform, products or services outside of jurisdictions where we have obtained required governmental

licenses and authorization, we could similarly be subject to a variety of civil, criminal, and administrative

fines, penalties, orders and actions as a result of such activity.

Due to our business activities, we are subject to ongoing examinations, oversight, and reviews and

currently are, and expect in the future, to be subject to investigations and inquiries, by U.S. federal and

state regulators and foreign financial service regulators, many of which have broad discretion to audit and

examine our business. We are periodically subject to audits and examinations by these regulatory

authorities. As a result of findings from these audits and examinations, regulators have, are, and may in

the future require us to take certain actions, including amending, updating, or revising our compliance

measures from time to time, limiting the kinds of customers that we provide services to, changing,

terminating, or delaying our licenses and the introduction of our existing or new product and services, and

undertaking further external audit or being subject to further regulatory scrutiny, including investigations

and inquiries. We have received, and may in the future receive, examination reports citing violations of

rules and regulations, inadequacies in existing compliance programs, and requiring us to enhance certain

practices with respect to our compliance program, including due diligence, monitoring, training, reporting,

and recordkeeping. Implementing appropriate measures to properly remediate these examination findings

may require us to incur significant costs, and if we fail to properly remediate any of these examination

findings, we could face civil litigation, significant fines, damage awards, forced removal of certain

employees including members of our executive team, barring of certain employees from participating in

our business in whole or in part, revocation of existing licenses, limitations on existing and new products

and services, reputational harm, negative impact to our existing relationships with regulators, exposure to

criminal liability, or other regulatory consequences. Further, we believe increasingly strict legal and

regulatory requirements and additional regulatory investigations and enforcement, any of which could

occur or intensify, may continue to result in changes to our business, as well as increased costs, and

supervision and examination for ourselves, our agents, and service providers. For example, in June 2023,

the SEC filed a complaint in the U.S. District Court for the Southern District of New York against us and

Coinbase, Inc. alleging that (i) Coinbase, Inc. has acted as an unregistered securities exchange, broker,

and clearing agency in violation of Sections 5, 15(a) and 17A(b) of the Exchange Act and that, through its

staking program, Coinbase, Inc. has offered and sold securities without registering its offers and sales in

violation of Sections 5(a) and 5(c) of the Securities Act of 1933, as amended (the “Securities Act”), and (ii)

we are liable for the alleged violations as an alleged control person of Coinbase, Inc. (the “June 2023

SEC Complaint”). Moreover, new laws, regulations, or interpretations may result in additional litigation,

regulatory investigations, and enforcement or other actions, including preventing or delaying us from

offering certain products or services offered by our competitors or could impact how we offer such

products and services. Adverse changes to, or our failure to comply with, any laws and regulations have

had, and may continue to have, an adverse effect on our reputation and brand and our business,

operating results, and financial condition.

We operate in a highly competitive industry and we compete against unregulated or less regulated

companies and companies with greater financial and other resources, and our business,

operating results, and financial condition may be adversely affected if we are unable to respond to

our competitors effectively.

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition,

experimentation, changing customer needs, frequent introductions of new products and services, and

subject to uncertain and evolving industry and regulatory requirements. We expect competition to further

intensify in the future as existing and new competitors introduce new products or enhance existing

products. We compete against a number of companies operating both within the United States and

abroad, and both those that focus on traditional financial services and those that focus on crypto-based

services. Our main competition falls into the following categories: