SecProbe.io

United States securities and exchange commission logo
April 17, 2024
Brian Armstrong
Chief Executive Officer
Coinbase Global, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
Re:Coinbase Global, Inc.
Form 10-K for the year ended December 31, 2022
Form 10-K for the year ended December 31, 2023
File No. 001-40289
Dear Brian Armstrong:
            We have reviewed your October 20, 2023 response to our comment letter and have the
following comments.
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments. Unless
we note otherwise, any references to prior comments are to comments in our September 22,
2023 letter.
Form 10-K for the year ended December 31, 2023
Cover Page
1.We note your response to prior comment 2 and reissue. Please revise disclosure in future
filings to provide the address of your principal executive offices. While we note that you
are a remote-first company and you have provided the address of your agent for service of
process, identification of a principal executive office is a requirement of Form 10-K.
Part I
Item 1. Business, page 8
2.We note your response to prior comment 3 and reissue in part. In future filings please
summarize the information provided in your response letter regarding your various digital
engagement practices, investment education tools, optimization functions, and data

 FirstName LastNameBrian Armstrong
 Comapany NameCoinbase Global, Inc.
 April 17, 2024 Page 2
 FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
April 17, 2024
Page 2
collection practices. Please also revise to add a risk factor discussing potential conflicts of
interest that may result from the use of optimization functions.
Ecosystem Products
Staking, page 9
3.We note your response to prior comment 7. Given the growth of your staking business, in
future filings please expand disclosure in this section regarding your staking program,
discussing how the staking process operates, how you provide services and generate
revenue from that process, your custodial practices for staked crypto assets, a brief
description of your cbETH product, and how your arrangements with customers are
structured.
Trusted Crypto Platform
Custodial Practices, page 12
4.We note that your Coinbase Asset Management offering utilizes both Coinbase and third
parties as custodians. In future filings please revise to identify such third party custodians
and describe the material terms of any agreements you have with them. Additionally
please clarify your disclosure on page 12 that you "do not use sub-custodians in
connection with the storage of digital assets" to explain what you mean by this in light of
your disclosure regarding the use of third party custodians.
Item 1A. Risk Factors
The Most Material Risks Related to Our Business and Financial Position
A particular crypto asset, product or service's status as a "security", page 38
5.We note your response to prior comments 41 and 42. In particular, we note your
disclosure on pages 17 and 38 that “[t]here is currently no certainty under the SEC’s
application of the applicable legal test as to whether particular crypto assets, products or
services” are securities. In future filings please revise your disclosure to clarify that the
Commission and courts have identified numerous crypto assets, products and services as
securities. Please also remove the statement on page 38 that “the SEC’s views in this area
have evolved over time,” consistent with other revisions you made in response to our prior
comments. In addition, refer to your statement that "[t]he legal test for determining
whether any given crypto asset, product or service is a security was set forth in the 1946
Supreme Court case SEC v. W. J. Howey Co.” We note that crypto assets, products and
services can be securities other than investment contracts, such as notes. In future filings
please revise your disclosure accordingly.
The theft, loss, or destruction of private keys required to access any crypto assets, page 45
6.We note your response to prior comment 44 and your disclosure that the total value of
crypto assets in your possession and control is “significantly greater” than the total value
of insurance coverage that would compensate you in the event of theft or other loss of

 FirstName LastNameBrian Armstrong
 Comapany NameCoinbase Global, Inc.
 April 17, 2024 Page 3
 FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
April 17, 2024
Page 3
funds.  Please revise this risk factor in future filings to describe your limited coverage in
greater detail, including, to the extent accurate, that you may be liable for the full amount
of losses suffered, which could be greater than all of your remaining assets.  Additionally,
please disclose in future filings the term of your insurance policy or policies and any
renewal options.
Other Risks Related to Our Business and Financial Position
Because our long-term success depends, page 48
7.We note your response to prior comment 46. Please describe for us in greater detail the
current functionality of the NFT marketplace and your plans for future phases or
development of the marketplace.
We provide secured loans to our customers, page 52
8.We note your response to prior comment 47. In future filings please provide summary-
level disclosure in your business section of your lending and borrowing activities.
General Risk Factors
We might require additional capital, page 79
9.We note your response to prior comment 50 and reissue in part. In future filings please
update your disclosure to reflect your response to this comment relating to blockchain
tokens.
Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations, page 90
10.We note your response to prior comment 4 and your disclosure of revenue disaggregated
by geography in Note 5 on page 154 to your financial statements. Please address the
following:
•Tell us whether revenue derived from outside the United States is concentrated in any
revenue source, and if so, please discuss that fact in your MD&A. We also note that
revenues from customers not domiciled in the United States decreased 66% and 25%
for each of the years ended December 31, 2022 and 2023.
•Please also revise future filings to disclose whether these decreases are a known trend
and your expectations of this trend continuing or changing in future financial
periods.  Refer to Item 303(b)(2)(ii) of Regulation S-K.
11.We note that you attribute the decline in transaction revenue from $2.4 billion in 2022 to
$1.5 billion in 2023 to a $1.2 billion reduction in consumer transaction volume offset in
part by an increase of $418.8 million attributable to changes in customer mix towards
higher fee trades. Considering the offsetting impact of approximately 35% and $418.8
million on the $1.2 billion reduction in year-over-year consumer transaction revenue of
55% from higher fee trades, please tell us how your existing disclosures capture the

 FirstName LastNameBrian Armstrong
 Comapany NameCoinbase Global, Inc.
 April 17, 2024 Page 4
 FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
April 17, 2024
Page 4
change in underlying trends and your consideration of disaggregating trading volume
between fee levels.  Refer to Item 303(b)(2)(ii) of Regulation S-K.
12.We note the statement in your Fourth Quarter and Full-Year 2023 Shareholder letter that
on a year-over-year basis asset under custody inflows were approximately $7 billion.
Given the ongoing growth in your custody business, please tell us your consideration
of disclosing your assets under custody as of each period presented.
Key Business Metrics, page 91
13.We note your response to prior comment 13 and your enhanced disclosures on page 92.
Please revise future filings to enhance your overall market disclosure to elaborate on how
specific items impact the overall market. For example, in your disclosure you indicate the
temporary de-pegging of USDC contributed to the decline in market volatility, and you
also note that de-pegging events drove increases in USDT trading volume.  However, it is
unclear from your disclosure why de-pegging would contribute to the market trends you
discuss.
Non-GAAP Financial Measure, page 105
14.We note your response to prior comment 15. Please address the following with respect to
your response and revised disclosure:
•Please expand on why you believe Adjusted EBITDA is useful in evaluating your
operating performance.  In your response, please explain why your adjustment to
exclude impairment charges on crypto assets results in a measure that is useful in
evaluating your performance despite how integral crypto assets are to your business.
•In your response you indicate that you exclude certain non-cash charges from
Adjusted EBITDA to provide investors with supplemental information with respect
to the Company’s liquidity. If Adjusted EBITDA is meant to provide investors with
supplemental information with respect to your liquidity, tell us how you have
determined that adjustments that directly impact the liquidation value of crypto assets
still held, derivatives, net, investments, net and other adjustments, net comply with
Item 10(e)(1)(ii)(A) of Regulation S-K.  See also Question 102.09 of the Non-GAAP
Financial Measures Compliance and Disclosure Interpretations.
•In your response you state that while crypto asset impairment, net is a recurring
charge, it is appropriately excluded from the Company’s Adjusted EBITDA because
it is a non-cash expense.  Please tell us why crypto assets received as revenue and
crypto asset payments for expenses, which appear to also be recurring non-cash
items, are not similarly excluded from your calculation of Adjusted EBITDA.
•Please tell us the nature of the items included in your “other adjustments, net”
adjustment.  In your response, please provide us with a schedule of the individual
items included in this adjustment for each period presented.
•Please tell us how your (gain)loss on investments, net adjustment reconciles to the
similarly titled line item in your Consolidated Statements of Cash Flows.
•Tell us how you determined that non-recurring accrued legal contingencies,

 FirstName LastNameBrian Armstrong
 Comapany NameCoinbase Global, Inc.
 April 17, 2024 Page 5
 FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
April 17, 2024
Page 5
settlements and related costs are not recurring when you have recognized such
adjustments for each of the three years presented. In your response, please clarify
how such amounts reconcile to the amounts recognized in the consolidated statements
of operations and why you have only adjusted for select items. Please refer to Item
10(e)(1)(ii) of Regulation S-K and Question 100.01 of the Non-GAAP Financial
Measures Compliance and Disclosure Interpretations.
•Tell us what the Adjusted EBITDA measure reflects compared to GAAP cash flows
provided by (used in) operating activities and net income and how this measure is
useful to investors in evaluating your on-going operations, considering also that the
measure does not exclusively include or exclude cash and/or non-cash activity.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk, page 117
15.Please address the following with respect to your response to prior comment 19 and your
revised disclosure.
•We note your derivative notional balances changed materially from December 31,
2022 to December 31, 2023 and the year-over-year income statement impact was
$107 million. Please revise future filings to address your general derivative strategies
including any changes thereto and quantify the financial statement impact resulting
from your derivative financial instruments.  Refer to Item 305(b) of Regulation S-K.
•In the proposed disclosure in your response, you state you recognized impairment
charges related to strategic investments of $329.2 million in 2021.  Please tell us how
this amount reconciles to the impairment charge of $19.6 million reflected in your
table on page 104.
Note 5. Revenue, page 154
16.We note your adjustment of crypto assets received as revenue in your consolidated
statements of cash flows for the periods presented. In future filings, please enhance your
revenue accounting policy to specify for which revenue types you receive and recognize
non-cash consideration.
17.We note your response to prior comment 27 and your stablecoin revenue recognition
policy on page 139. Please address the following with respect to your relationship with the
issuer of USDC under your original distribution agreement and/or your August 2023
Collaboration Agreement:
•Tell us what you determined your performance obligation was under your original
distribution agreement and collaboration agreement and how that performance
obligation is satisfied. Please revise your accounting policy in future filings to include
this information. Refer to ASC Topic 606-10-50-12.
•Please provide us with a summary of the rights and obligations between you and the
issuer of USDC with respect to the original distribution agreement and the
collaboration agreement.
•Tell us the term of the collaboration agreement and clarify for us whether the
agreement can be terminated or modified at any time by either party with or without

 FirstName LastNameBrian Armstrong
 Comapany NameCoinbase Global, Inc.
 April 17, 2024 Page 6
 FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
April 17, 2024
Page 6
penalty.
•Clarify for us how income is calculated under the original distribution agreement and
under the collaboration agreement and tell us how you considered the need to
disclose more detail with respect to the calculation.  Refer to ASC Topic 606-10-50-
20 through 606-10-50-21.
•Tell us and enhance future filings to define “total market capitalization” which you
identify as a factor in the amount of revenue you earn.
•Explain to us how revenue received from your arrangement with the issuer of USDC
was impacted by the termination of the original distribution agreement and entry into
a new collaboration agreement.  In your response, tell us how you considered the
need to provide MD&A disclosure about the impact of the new agreement in order
for investors to understand expected trends in your stablecoin revenue.
Note 6. Accounts and Loans Receivable, Net of Allowance, page 155
18.We note from your accounting policy disclosure on page 137 that your crypto asset loan
receivables are initially and subsequently measured at the fair value of the underlying
crypto asset lent and adjusted for expected credit losses. We also note from your
disclosure on page 118 that you have embedded derivatives associated with your crypto
asset loans receivable. Please address the following, referencing where appropriate, the
authoritative guidance you rely upon to support your position:
•Tell us the basic terms of your crypto asset lending transactions, including the
following:oWhether the length of the loans is for a defined period of time or is open-ended.
oWhether the borrower can pre-pay the loan or you can call the loan before
maturity.
oWhether the borrower has any restrictions on what they can do with the crypto
asset lent.
oWhether the borrower is obligated to return the same type of crypto asset as
lent.
oWhether there are any provisions where the borrower can settle the loan in cash
or in a different crypto asset.
oWhether the borrower must pay the interest component in the same crypto asset
as lent.
oWhether the interest component is indexed to the crypto asset lent.
•Tell us how you account for your crypto asset loans receivable. In your response,
explain:oWhether you derecognize the crypto asset lent.
oWhether you record