Coinbase Global, Inc. 10-K

ITEM 1. BUSINESS Coinbase Overview Our mission is to increase ec onomic 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. We also provide critical infrastructure for the onchain economy and support builders who share our vision of bringing the world onchain. Onchain activities are interactions with the blockchain that take place in a broad category of blockchain-powered technologies, including self-custody wallets, decentralized apps and services, and open community engagement platforms. Together with the crypto community, we advocate for responsible rules to make the benefits of crypto available around the world. We differentiate ourselves from our competition with: • Trust : We are deeply invested in building the most secure and compliant platform. We hold customer assets one-to-one at all times. We do not act on customer assets, including staking, lending, rehypothecating, or engaging in fractional reserve banking, without customer consent. • Ease of use : We strive to build products that are easy to use and that our customers love. We obsess over quality and craft in our products. We strive to make buying, storing, and using crypto easy. Our Business We offer products and services to three customer groups: • Consumers : Retail customers seeking to invest in or trade crypto assets and engage onchain. • Institutions : Businesses that include market makers, asset managers, hedge funds, banks, wealth platforms, registered investment advisors, payment platforms, and public and private corporations. • Developers : Entrepreneurs, creators, merchants, crypto asset issuers, organizations and financial institutions, and other groups building decentralized protocols, applications, products, or other services onchain. Our platform serves as a trusted and compliant on-ramp to the onchain economy and enables our users to engage in a wide variety of activities with their crypto assets in both our own proprietary and third-party product experiences enabled by access to decentralized applications. Our business consists of 7 Table of Contents products that we monetize through transaction fees, such as our consumer trading product suite, as well as subscription products and services, such as our stablecoin products. 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. Transaction products 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: • Simple trade : Our simple trading experience offers customers the ability to buy, sell, and convert crypto assets using the basic interface of our platform, and includes value-added services such as fixed price quotes and recurring trades. Simple trading focuses on consumers of all experience levels who are prioritizing ease of use. • Advanced trade : Our advanced trading experience offers traders access to spot and derivatives order books, real-time market information through interactive charts, a live trade history on the advanced trade view, and other trading tools. Advanced trading focuses on sophisticated traders who are prioritizing a robust set of features to meet their more complex needs and higher volume. We generate fees from consumers trading on our platform, including through volume-based transaction fees and a spread depending on the type of trade. Simple trading and advanced trading fees differ due to both the typical nature of the transactions and unique benefits of each offering. Generally, simple trading fees are higher than those on advanced trading because advanced traders typically trade at higher volumes than simple traders. Prime Trading Coinbase Prime is our full-service prime brokerage platform, where our institutional customers can access deep pools of liquidity across a network of 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. Base Protocol Base is an L2 Ethereum blockchain offering fast, cheap, global onchain transactions. In 2024, Base reduced median transaction fees by more than 90% to enable sub-one cent median transactions. Base’s goal is to bring one million developers and one billion users onchain to build a global economy. Base aspires to be the best place to build applications, create content, and earn money onchain. Coinbase generates revenue from sequencer fees paid each time a transaction is processed on the Base blockchain. Coinbase Wallet Coinbase Wallet is a self-custodial wallet software product, which we offer globally. Coinbase Wallet enables users to engage and transact with the full universe of Dapps and actively engage in the onchain economy without the need for a centralized intermediary. Customers can also link their Coinbase account to their Coinbase Wallet to more easily transfer assets between the two. In 2024, Coinbase launched “smart wallet,” which is an improved self-custody technology that enables instant onboarding with no separate app or extension, and no need to memorize a seed phrase. Coinbase Wallet now includes smart 8 Table of Contents wallet compatibility. A benefit of Coinbase Wallet is that consumers have sole control over their private keys and/or seed phrase, which are stored directly on their mobile devices or personal storage accounts and not with a centralized entity. Because the private key is unilaterally controlled by the user, Coinbase is unable to assist in recovery in the event a user loses their key or seed phrase. Subscription products and other services Stablecoins Stablecoins play a key role in updating the financial system and advancing economic freedom by combining the benefits of crypto rails, which are global, cheap, and fast, with an asset that is stable relative to fiat currencies. We offer a variety of stablecoins denominated in multiple fiat currencies on our platform, and we continue to explore partnerships with a number of stablecoin issuers to expand our offerings. In 2018, we partnered with Circle Internet Financial, LLC (“Circle”) to launch USDC, with the goal of driving global, mainstream adoption of stablecoins. Circle and its affiliate, Circle Internet Financial Europe SAS, are the issuers of USDC, a stablecoin redeemable on a one-to-one basis for U.S. dollars, and Circle Internet Financial Europe SAS is the issuer of EURC, a stablecoin redeemable on a one-to-one basis for Euros. In August 2023, we entered into an updated arrangement with Circle to (i) support USDC; (ii) help drive long-term success of the stablecoin ecosystem; and (iii) share in the economics of the reserves backing stablecoins in circulation both on and off our platform (the “Circle Agreement”). Pursuant to the Circle Agreement, Circle pays us for our role in the growth of USDC: the greater the proportion of USDC in circulation generally and on our platform, the greater our revenue generated under the Circle Agreement. The Circle Agreement has an initial three-year term. Upon completion of the initial term, we and Circle will discuss in good faith whether any modifications to the Circle Agreement are warranted. If such modifications are not agreed upon, the Circle Agreement will automatically renew for additional three-year terms unless we or Circle fail to meet ongoing obligations under the Circle Agreement. We and Circle may, from time to time, enter into arrangements with third parties approved by both us and Circle (such third parties, “approved participants”) that provide for fees to be paid to such approved participants to increase the circulation of stablecoins subject to the Circle Agreement. In anticipation of such arrangements, in November 2024, we and Circle entered into a supplement to the Circle Agreement, pursuant to which we and Circle will agree upon the fees that such third parties are eligible to receive and the undertakings to be required of them upon becoming an approved participant. We have filed a copy of the Circle Agreement and its 2024 supplement as exhibits to this Annual Report on Form 10-K in order to provide investors with additional information about this partnership. Historically, we have observed that customers holding USDC on our platform are more likely to use other products such as trading. Therefore, where permitted, we pay rewards to both consumer and institutional customers who hold USDC to incentivize on-platform balances and deeper engagement with our product suite. In 2024, we began paying rewards onchain to customers holding USDC balances in Coinbase Wallet. Staking Staking is one of our most popular services. Certain blockchain protocols, such as Ethereum and Solana, rely on staking to validate blockchain transactions, an essential operation to these protocols’ operations and an alternative consensus mechanism to mining. Network participants can designate a certain amount of their crypto assets on the network to validate transactions and earn rewards. Today, many users choose to outsource the technical processes involved in staking by staking through a service provider. We provide an onchain staking service, which allows our customers to stake their assets with a few clicks. Our customers maintain full ownership of their crypto assets while earning staking rewards. Customers who stake their assets receive compensation, paid out by applicable blockchain protocols, in 9 Table of Contents the form of the network’s crypto asset. The rewards rates, expressed as an annual percentage yield, vary by asset. In return for the services we provide, we earn a fixed percentage commission on all staking rewards received. 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. We only facilitate staking of a consumer’s crypto assets in response to a direct instruction from that consumer, and the staked crypto assets remain the property of the consumer and in our custody while staked. According to certain protocol rules, staked crypto assets cannot be sold or transferred while they remain staked, and we do not use or allocate consumers’ staked crypto assets for any other purpose. Subject to jurisdiction, we support eight staking assets through our platform for consumers as of December 31, 2024: Cardano (ADA), Avalanche (AVAX), Cosmos (ATOM), Polkadot (DOT), Ethereum (ETH), MATIC (POL), Solana (SOL), and Tezos (XTZ). As of December 31, 2024, approximately $15.2 billion worth of these assets were held on behalf of individual consumers staked through our platform, as adjusted to USD. For our institutional customers, our staking process varies by customer. 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. Institutional customers receive rewards directly from the protocol as we do not stake on behalf of these customers. The fees we charge to institutional customers depend on the customer agreement and the selected service. As of December 31, 2024, over $8.1 billion worth of assets were staked by institutional customers through Coinbase Prime, as adjusted to USD. We also operate a cbETH token wrapping service. cbETH is an Ethereum-based “wrapped staking token” that represents ownership of ETH staked through our platform. Eligible customers can obtain cbETH tokens by wrapping their staked ETH or by purchasing cbETH tokens on our exchange or on third-party exchanges. A cbETH holder can sell or transfer their cbETH within the Coinbase app or send cbETH to a self-custody wallet or to other addresses on the Ethereum blockchain. Selling or otherwise transferring cbETH automatically transfers ownership of the underlying staked ETH, along with any rewards earned. There are risks associated with our staking services, which are described in the risk factor in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K: “ We may suffer losses due to staking, delegating, and other related services provided to our customers. ” Custody We offer an institutional-grade custody platform with a highly secure cold storage solution 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 and Ethereum ETF issuers. In 2024, the Securities and Exchange Commission (the “SEC”) approved 11 spot Bitcoin ETF applications, nine of which partner with Coinbase, and nine Ethereum ETF applications, eight of which partner 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 Coinbase One is a consumer subscription product for which consumers pay a monthly or annual fee to unlock a variety of benefits, including limited reduced transaction fee trading, higher staking and USDC rewards than non-Coinbase One subscribers, priority customer service support, and offers from third-party partners. In 2024, we launched an additional subscription tier, Coinbase One Premium, offering consumers enhanced benefits, including unlimited zero trading fees on simple trading and concierge support for a higher subscription fee. 10 Table of Contents Institutional financing Financing is an increasingly important offering to our institutional customers. We offer integrated financing products and services to institutional customers that meet our credit criteria to access liquidity for their hedging, trading, and working capital needs. Our lending product set includes tools to allow clients to trade in real time, products that enable leverage and short access across our Prime and Markets offerings, and structured loans supporting client working capital and other needs. In addition to lending, we borrow fiat and crypto assets, including USDC, from third parties, including eligible institutional customers, to facilitate our financing products. We also offer a managed lending product for eligible institutional customers under our Agency Lending offering. The terms of our lending and borrowing arrangements may vary modestly from customer to customer. For additional information, see Note 4. Collateralized Arrangements and Financing , 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—We provide secured loans to our customers, which exposes us to credit risks and may cause us to incur financial or reputational harm included in Part I, Item 1A of this Annual Report on Form 10-K. Coinbase developer platform Our developer platform combines a suite of developer tools to enable crypto developers to build in the onchain ecosystem. We offer APIs to simplify a variety of key activities, including crypto payments and trading, data access, staking, and more. Coinbase Developer Platform enables developers to build crypto into their products faster and to simplify how they interact with blockchains. Trusted crypto platform Coinbase is the most trusted crypto platform. We place great importance on securely storing crypto assets, and we have policies and procedures to help ensure the proper storing 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 store 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 securely store our customers’ crypto assets and our own crypto assets for investment and operational purposes with legal and operational protections. 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 (“CCTC”) and Coinbase Custody International Limited, 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 internal controls and reconciliation processes. Moreover, our various user, custody, and client agreements outline 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. New customers must meet some minimum criteria to engage on our platforms. When signing up for an account on our platform, among other requirements, consumer, and institutional customers must 11 Table of Contents certify that they are at least eighteen (18) years of age (if a natural person), agree to a user agreement and privacy policy, and satisfy the requirements of our robust know-your-customer (“KYC”) program. Our products, services and educational offerings incorporate a holistic, customer-centric set of digital engagement practices, including educational content and notifications, which are designed, in part, to promote financial literacy and awareness and to provide customers with guidance and information to help them make better informed decisions about their crypto activity. Examples of these offerings include, among others: (i) educational materials, including but not limited to an online collection of how-to guides and tutorials, a crypto developments newsletter, Coinbase Bytes, and our learning rewards program, a video content-driven educational platform available on our Coinbase app and our website, through which customers can earn small rewards, paid out in cryptocurrency, upon successful completion of a video and a short quiz on a range of topics related to the cryptoeconomy, (ii) in-app engagement, including features designed to enable consumers to start small and build crypto asset holdings with confidence over time, including through rewards to customers in connection with the completion of certain milestones, (iii) sweepstakes, and (iv) differentiated marketing, including paid digital and social media marketing campaigns, as well as email campaigns, search engage optimization, in-app banners, push and pop-up notifications, paid search marketing, and affiliate marketing. For additional information, see Risk Factors—Laws and regulations regarding conflicts of interest associated with the use of predictive data analytics, digital engagement practices, and similar technologies, if adopted and found to be applicable to our business, may require us to modify, limit, or discontinue our use of certain technologies and features contained within our products and services and may impact the way that we interact with existing and prospective customers, which could adversely affect our business, operating results, and financial condition included in Part I, Item 1A of this Annual Report on Form 10-K. 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 internationally. 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 CCTC, 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 third-party sub-custodians, where one custodian holds assets on behalf of another custodian, 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, NCUSIF-insured credit unions, and in money market funds in accounts explicitly named to further demonstrate that we are 12 Table of Contents 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 group that is composed of senior leaders from our product, legal, compliance, and finance departments. The digital asset support group 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 group 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. We have seen an increase in the rate of assets created and increased demand for listings, and we continue to evaluate our processes to meet this increased demand. 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 KYC 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 Risk Factors—Our failure to securely store 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 platforms involve risks, which could result in loss of customer assets, customer disputes and other liabilities, which could adversely impact our business, operating results, and financial condition included in Part I, Item 1A of this Annual Report on Form 10-K. Competition The crypto industry 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; 13 Table of Contents • 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; • decentralized and non-custodial platforms; and • stablecoins, other than USDC, and fiat currencies globally. The competitive landscape varies significantly by geography, and many offerings are global in nature. 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. As regulations and compliance requirements in the United States become clearer, we may face increased competition from U.S.-based companies. 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 tenets: • Clear communication • Efficient execution • Act like an owner • Top talent • Championship team • Continuous learning • Customer focus • Repeatable innovation • Positive energy • Mission first 14 Table of Contents 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 semi-annual 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, 2024, we had 3,772 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 terrorist financing, 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”), we are required under the BSA 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 15 Table of Contents 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 login controls to limit a customer from accessing products or services outside of their jurisdiction-based 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 and a Virtual Currency Business License from Louisiana. 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 16 Table of Contents 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, and we have registered as a Restricted Dealer by the Canadian Securities Administrators, with the Ontario Securities Commission as its Principal Regulator. 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 registrations in Argentina, Ireland, Spain, France, Italy, the Netherlands, and the United Kingdom 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. 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. New York State trust company Our subsidiary, CCTC, 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. 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. A number of enforcement actions and regulatory proceedings have since been initiated against digital assets and digital asset products, as well as against trading platforms that support digital assets. The SEC has characterized a number of crypto assets, products, and services as securities in these regulatory proceedings and enforcement actions, including an enforcement action brought against us. The SEC has stated more recently that a crypto asset itself is not a security, but there is uncertainty and inconsistency in the courts that have grappled with the issue of whether or how certain 17 Table of Contents crypto asset transactions could be deemed securities. Several foreign governments have also issued similar warnings cautioning that digital assets may be deemed to be securities or other similarly regulated financial instruments under the laws of their jurisdictions. We have established policies and practices to evaluate each crypto asset we consider for listing, delisting, or for custody. 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 and Ethereum, 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. 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 18 Table of Contents 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. The CFPB has enforcement authority to prevent an entity that offers or provides consumer financial services or products 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. Market disruptions have led to certain attempts by consumer protection focused agencies, including the CFPB, to directly regulate the crypto industry. 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 may 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 certain states and 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. 19 Table of Contents 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. We, as well as the bank that issues our Coinbase Card, 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 maintain a headquarters. 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 Investor Relations website (investor.coinbase.com), our blog (blog.coinbase.com), press releases, public conference calls and webcasts, our X feed (@coinbase), Brian Armstrong’s X feed (@brian_armstrong), our LinkedIn page, and our YouTube channel 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.