Coinbase Global, Inc. Aktie

Good afternoon, everyone. Thank you for joining our second Coinbase System Update. At Coinbase, we believe capitalism is a force for good in the world, and it rewards everyone, especially those who lean in and help build the future. It also creates an extraordinary sense of alignment when everyone has skin in the game. And there's a lot happening in the world today. The largest IPOs in history are coming to market. AI continues to drive unprecedented productivity gains and ongoing geopolitical conflicts are contributing to market volatility.

Coinbase is here to help. We're here to help you take control of this dynamic world and own a piece of the upside. Our mission at Coinbase is to increase economic freedom in the world, and we're here to empower everyone to take control of their financial future. We believe crypto is the most important technology updating the financial system today, and this enables us to create better financial services for everyone.

And it's crazy how far we've come. 14 years ago, we were a place to buy Bitcoin. Now we can power your entire financial life. You can trade everything from stocks to commodities to crypto and prediction markets. You can manage your finances with a best-in-class credit card, get a mortgage and use direct deposit. You can build your wealth and send money instantly anywhere in the world. This is the future of financial services in one unified app.

So today, we're going to share everything we've been working on over the past 6 months across 3 major areas: trading, payments and AI.

So first, the Everything Exchange. We're bringing every asset class onto one easy-to-use trading platform with unified global liquidity. Second, stablecoin payments. Payments are the next killer app in crypto because for the first time with crypto rails, you can send money instantly anywhere in the world for under $0.01. And lastly, AI on Coinbase. AI agents are becoming a major force in the global economy, and Coinbase offers a full stack solution that brings the power of AI to your financial life. This is the most intelligent version of Coinbase that we've ever shipped. And to share more about the Everything Exchange and kick us off, please welcome Max Branzburg to the stage.

Thanks, Brian. The Everything Exchange is becoming the most powerful platform for you to trade every asset in the world. And today, we're expanding this in a few important ways. First, we're expanding assets and markets, more stocks and commodities, predictions, crypto and derivatives. Second, we're unifying our global liquidity. Over the years, we've built a network of global exchanges to serve traders in different markets. Today, we're bringing it all together, enabling everyone to access the same global unified exchange to deepen liquidity and expand product offerings for you no matter where you live. And finally, I'll show you how the Everything Exchange becomes even more powerful for you with agentic trading. With the broadest asset selection available anywhere, AI can now help you identify opportunities and execute trades to give you a unique edge on Coinbase. So we've embedded a new layer of AI into all of our products, enabling real financial advice and sophisticated trading strategies.

So let's start with what's on all of our minds. It's a hot IPO summer. We are in a golden age of entrepreneurship and company formation, $0.5 trillion were spent in AI CapEx last year, and several of the most valuable privately held companies ever are going public. Now select institutions may get access to invest in these fast-growing companies, but retail investors have historically had to wait until an IPO and be subject to whatever happens on IPO day and beyond. That's why I'm excited to share that we've launched pre-IPO perps on Coinbase.

Pre-IPO perps get you exposure to companies before they go public. You can trade instantly without waiting for an allocation and go long or short 24/7 like any other perpetual future. SpaceX just launched last week, Anthropic and OpenAI are coming up. And you can now count on Coinbase for early exposure to all of the hottest IPOs before they're listed.

And for stocks that have already IPO-ed, we're launching 2 major upgrades. First, I'm excited to share that we're launching options trading on Coinbase. Options are a powerful piece for your equities trading portfolio, enabling you to manage risk and maximize upside. From calls and puts to spreads and straddles, options give you the total toolkit for hedging and directional exposure to any stock you can think of. Options will start rolling out to U.S. users on Coinbase in the coming weeks.

And we're taking a step beyond what you might see on traditional brokerage platforms. I'm excited to share that we're launching thematic indices right here in the U.S.

Thematic indices trade 24/5 and offer 20x leverage on the things you want to trade; AI, China, defense and the top 100 tech stocks. This gives you an easy way to trade the most important macro themes in the world without having to assemble individual equities one by one. And with thematic indices, we are bringing the best of crypto to upgrade the way that you can trade equities on Coinbase. But we're pushing stock trading one step further.

We've all seen launches for so-called tokenized equities that have been -- and have been disappointed that they don't offer real stock ownership. They tend to hold some amount of the underlying stock and then issue derivatives that represent it, meaning you don't actually own the stock itself or get the dividends or the shareholder rights that go with it. You own an IOU at best. And that's not the system update that we're looking for. So we've taken our deep tokenization experience, safe and trusted infrastructure and a bold commitment to bringing the world on chain, and we've built the real thing. Today, we're announcing Tokenized Stocks on Coinbase.

For the first time in crypto, you'll get the best of both worlds, true stock ownership fully on chain. Coinbase tokenized stocks are backed one for one. So you'll actually own the shares, get the dividends and have all the shareholder rights you would expect. But you can also trade them 24/7 on chain, lend them out to earn interest, use them as collateral for a loan or even send them to someone as a gift.

Welcome to the future of stock trading. Now in addition to equities, we're also seeing explosive growth in prediction markets on Coinbase. Traders are active across sports, politics, macroeconomic indicators, earnings and more. And everyone can pick the trade that makes the most sense for them. I'm taking Scottie Scheffler this week in the U.S. Open. You could take a position on GameStop's acquisition of eBay or you might take a long shot on Hunter Biden for President if you're digging his recent tweets.

Prediction markets are an incredibly powerful mechanism to discover what's happening in the world and express your view on it. But we're making them even better. First, we've redesigned the prediction experience to surface the data you care most about, like which events are live, in-game scores and plays and relevant macro news, all updating at the speed of the market. And today, we're announcing hundreds of new crypto binary markets to expand your crypto trading toolkit. You can now trade 15-minute markets or utilize longer duration markets to complement your spot strategy with one of the most engaging experiences we've ever built.

Every trade is a way for you to express your view on what's going to happen in the world. And alongside these crypto binaries, we offer thousands of markets for you to do that. But most outcomes don't happen completely independent of each other. Voter turnout can drop when it rains. Small-cap stocks may jump when the Fed cuts rates. You should be able to express a position on multiple events simultaneously in whatever permutation you choose. That's why I'm excited to share that we're launching combos the ability to roll up multiple predictions into a single, much more powerful position.

So let's take an example. We all know what happens in Seattle. No matter how sunny it is, it could rain at any second, way more than it rains in Australia. So when the Australian national team goes to Seattle to play the U.S. this Friday, even though the forecast is for sun, I can predict that it's going to rain. And I can predict that the U.S. is going to win with a combined position that it has more upside than either one independently.

Now prediction markets are the most powerful force democratizing information on real-world events that we've seen in years. And with combos, you can express even more powerful positions than ever before. Finally, we are continuing to push the boundaries of what the best crypto trading platform in the world looks like. We've seen that top trading opportunities are often in the early days of asset creation. But most wallets and exchanges don't have the ability to list assets and offer trading fast enough. By the time those assets show up for most people, you may have missed the opportunity. That's why I'm excited to share today our new Launches tab.

Now what's exciting about our new Launches tab is that you can see tens of millions of assets instantaneously as they launch on base and Solana. And in addition to providing the fastest new asset launch experience in the world, we've also dramatically accelerated the core trading flow across our products. With fewer taps and lower latency, you'll never miss a trading opportunity.

So let's recap. I told you the Everything Exchange means everything. Now on Coinbase, you can trade every stock in ETF, you can imagine, plus Options on those stocks and ETFs, commodities, indices with leverage, pre-IPO perp for the hottest IPOs of our generation and true one-for-one Tokenized Stocks. You can trade every global event with a world-class prediction markets experience. You can level up your crypto trading with binaries and express whatever thesis you have with combos. And we're continuing to push the frontier of crypto trading. We're enabling tens of millions of crypto assets as soon as they're created with a silky smooth subsecond execution on our new Launches tab. All on one trusted platform in a single unified account.

Are you seeing the power of the Everything Exchange? Coinbase has become an extremely powerful platform for trading every asset class all around the world. But we're taking it one step further. To tell you more about that, please welcome Liz Martin.

Thanks, Max. Launching new assets is just the start, but our job isn't finished until we build better ways to trade them too. What traders want is simple at the surface, fast execution, low-cost, better price discovery and more ways to capture upside. The biggest blocker to meeting their need has been fragmentation. Liquidity is spread across multiple venues like spot, perpetuals and options exchanges, and it's time to fix that. I'm excited to announce that we're combining our exchanges into a unified global liquidity pool.

And we're giving traders around the world access. The U.S. has been the bar setter for liquidity across almost every asset class except crypto, and why? A lack of legal clarity has made for slow development of compliant crypto derivatives. And these derivatives drive 80% of global crypto volume. We're trying to change that. So it started with us being the first to launch perpetual futures in the U.S. last year, but that's just the tip of the iceberg. The majority of volume remains offshore. I'm sure many of you have tried to use a VPN to trade, but you should not need to do that. Coinbase is bringing the volume back to Americans.

Two weeks ago, Coinbase became the first U.S. company to connect American customers to our global crypto derivatives markets. It's the world's deepest liquidity with custody by Coinbase, the world's largest and most trusted crypto custodian. And soon, those derivatives will also include options. I'm excited to share that Coinbase is going to be the first U.S. regulated platform to offer crypto options to all our customers, institutions and retail.

Now traders all over the world will be able to trade crypto options right here on Coinbase. We will make it easy for you to see the full chain understand live payoffs in real-time Greeks and executing just one click. You want volatility trading, downside protection, income generation, there's a way to make money in any market condition, an infinite amount of new strategies are at your disposal.

Now traditionally, institutions were the ones demanding access to these strategies, but they're not the only smart money around anymore. You don't know to work at a hedge fund to be a pro trader. There's a new generation of pros out there and they're watching this live stream. We want you to have the same tools and infrastructure as these big institutions. So we're taking our Pro retail trading platform, and we've up-leveled it to include the tools that institutional traders use. I'm excited to present the new fully customizable and modular Coinbase Advanced.

It now moves at your speed, making viewing and trading all of your strategies a breeze. You can design a custom trading layout or use prebuilt templates especially designed for products like Options. We know that you trade in multiple global markets across the asset classes. So we're also launching the market's overview page to quickly navigate to the newest or most active products on Coinbase, putting the data you need at your fingertips. It's like a modern day Bloomberg terminal.

Over the last 15 years, we've created a truly global platform with comprehensive breadth powered by unparalleled liquidity. You can trade almost any asset anywhere in the world faster and simpler with better price discovery. But with this kind of power at your fingertips, what you do with it is more important than ever.

Let me pass it back to Max to share one more way we're giving you more control over your money.

The Everything Exchange gives you more assets to trade and more ways to trade them than ever before. And with so many trading opportunities, we're also embedding Coinbase with the most intelligence to help you take advantage of it. I'm excited to share 2 new features we've built that reset the bar on what your financial platform should be able to do for you.

First, it starts with advice. Today, you can pay a financial adviser an arm and a leg for generic advice from 9 to 5, Monday through Friday or you can ask your AI for advice but they can't offer any real financial advice without knowledge of your portfolio or proper licensing. What if we could dramatically improve that experience with something more powerful. For that, I'm excited to introduce Coinbase Advisor. It's a fee-free always on SEC-regulated AI-powered investment adviser. And it works just like talking to a human adviser except that it's 24/7, it doesn't charge you fees, and it knows all the ins and outs of your portfolio. The days of closed door high-fee investment advice are over. Coinbase Advisor is rolling out now, starting with Coinbase One members.

And just like financial advice, sophisticated trading strategies have historically been limited to just institutions and the ultra wealthy. They've been able to harvest losses to reduce their tax bill, arrange options trades that generate outsized income and rebalance their assets based on certain triggers and macro events. They've been able to generate outsized returns while you have been stuck fighting with an arm tied behind your back. And that changes today. AI agents can now execute sophisticated trading strategies on your behalf, far outpacing what humans could historically achieve. And that's why I'm excited to share that we've launched Coinbase for agents, enabling you to bring your AI agent of choice to trade on your portfolio.

You can have your agents by Bitcoin whenever it drops by a certain percentage, trade dollars and euros based on CPI prints or develop any other thesis and let it run.

With the Everything Exchange enabling the broadest array of assets in markets, Coinbase for agents enables every individual to have access to trading strategies that previously were just not possible. We now offer all of the assets and intelligence for you to get the most out of your portfolio. And now Coinbase is the AI-powered financial account.

The Everything Exchange allows you to trade every asset in market. You can trade it all on one unified global exchange offering crypto perps and options made possible by over a decade of building world-class exchange and custody infrastructure. And with all of those trading opportunities, it's also the most intelligent financial platform in the world with AI-powered trading tools that enable you to get the most out of it. That's the Everything Exchange. And that is the future of trading.

But trading is just one thing you do with your money. Coinbase is also updating the financial services you rely on for your everyday life. To hear more about how, please welcome Roy Zhang.

Thanks, Max. The best place to trade is also becoming the best place to manage your entire financial life. You used to need a different app for everything, want to trade, want to spend, want to save and want to borrow, and used to have to choose. Money that earns and grows, but sits locked away where you can't use it, or money you can spend any time but earns you nothing. On Coinbase, you don't have to choose. Your money doesn't sit idle. It earns and grows until you use it. It earns Bitcoin when you spend it. It can be borrowed against for cash without selling. And when your paycheck lands, it's put to work automatically, just how you like it.

Today, we're going to cover 3 core components: more ways to earn Bitcoin Rewards, crypto-backed loans, and new protections to secure your money. First, let's talk about how you spend and how we can make it better. Last summer, we launched the Coinbase One card, turning every purchase into an actual investment in your future, Bitcoin, an asset you own that can grow over time. And our customers can't get enough of it. To date, Coinbase One members have earned nearly $60 million in Bitcoin rewards. But we want more people to have access to such a powerful passive reward. And traditional FICO credit models are keeping people out. Right now, over 100 million Americans struggle with so-called good or fair credit scores. That means 100 million people are systematically locked out of the best rewards. Think of the entrepreneur with high cash flow but a high debt-to-income ratio or the modern investor whose net worth is mostly in crypto or others who simply do not have access based on their credit score. We want everyone to be able to earn Bitcoin back on every purchase no matter what a legacy credit bureau says. Today, we're updating the system. You can now get the Coinbase One card secured by USDC.

A majority of customers who aren't approved for a traditional line of credit will now be able to get the same great Coinbase One card secured by USDC and start earning Bitcoin back on every purchase. And they can continue earning rewards on that USDC, paid out every single week. So it's 1 card, doing 3 things for your future. You're stacking Bitcoin with every purchase. You're earning USDC rewards every week, and you're building your credit score with every on-time payment.

But we're just getting started. Coinbase was founded to help the world buy more Bitcoin. And 14 years later, we're still looking for new ways for you to earn even more of it. So we're launching a new way for our cardholders to earn 5% Bitcoin back in our new travel portal, the first travel platform to offer Bitcoin Rewards.

For many, the most stressful part of travel is figuring out how to get the most value out of your rewards, chasing the right card, the right transfer, the right time to book, no more. With the new travel portal, every trip you book earns you Bitcoin. Your next $400 flight could earn $20. Your next $5,000 vacation could earn $250, all in Bitcoin, no rewards to chase, no miles to game, just 5% back in Bitcoin on every trip you book. And every booking you make has access to powerful travel protections and benefits through the American Express network. The travel portal is available today for all cardholders. And it's the first of many boosted rewards coming later this year.

But the best way to get the most of your Coinbase One card is to store more assets on the platform, the more you store, the more you earn, the more you save. It's a powerful thing. We're on a mission to make Coinbase the best place to spend, earn, store and save your money. And it's working. We recently launched direct deposit to make investing automatic, and here's what's exciting. These customers aren't just parking their paychecks. The majority are putting that money to work, the moment it lands, investing it right away. Because when you store your cash in the same place you invest in stocks, commodities and crypto, it all starts to work a lot harder. It can even serve as collateral, which takes us to our next update, borrowing.

We want Coinbase to be your primary financial account, which means we need to be the best place to borrow capital too. Customers have borrowed $2.5 billion on Base to date against over $2 billion in collateral. That means they have instant access to cash without selling the assets they believe in. But if you're staking, you're stuck. We're seeing over $6 billion in stake assets on our platform that can't be used as collateral. So today, we're turning on borrowing against stake assets, too, starting with Solana and Ethereum. That means you can get instant liquidity even while earnings taking rewards available now to all of our customers. This means 3 powerful things for our customers with positions near and dear. You can get instant liquidity while maintaining exposure to upside and earn passive income of up to 3.8% APY paid out every single week. But crypto is volatile, prices can swing overnight. And staying on top of your loan-to-value ratio can start to feel like a full-time job. We want to change that.

Now every loan comes with liquidation protection built in. If your collateral value drops in the middle of the night, Coinbase will automatically top up your collateral from your account balance instead of selling. Thanks to this. We've already been able to prevent over $24 million in collateral liquidations. When borrowing with Coinbase you keep your assets and you stay in the game. And that matters more than ever because people are now borrowing against crypto for the biggest decisions of their lives, like purchasing a home. For traditional mortgage, people invest for years just to afford a down payment and commonly have to sell those investments to make it work. That could mean missing out on those asset gains as the market grows over time. We think we can do better. I'm excited to announce we've partnered with Better to offer the first ever crypto back mortgages accepted by Fannie Mae for home purchases.

You keep your assets, own your asset gains and avoid a taxable sale, and we make it simple. Instead of a traditional cash down payment, you can pledge Bitcoin as collateral and get 40% of its value credited towards it. The Bitcoin sits in escrow for the remainder of the mortgage with the opportunity to continue gaining value that belongs to you, not your lender, plus Coinbase One members get 1% back on the entire amount of the mortgage up to $10,000.

And this house, it's no stock photo. We didn't AI generate it. It's a real house purchased by a real Coinbase customer and the first house in America purchased with a crypto-backed mortgage accepted by Fannie Mae. They closed earlier this month. We can't wait to make this product available to all Coinbase customers later this summer. One day we might see entire crypto-backed neighborhoods. I mentioned earlier that we're on a mission to make the Coinbase app the best place to spend, earn, store, save and borrow. We want our customers to feel comfortable storing their entire network on Coinbase.

To earn the right to do this, we are continuously taking new measures to improve our security. So we're introducing transfer protection, a new suite of tools to secure everything leaving your account. From time delay withdrawals, which gives you the opportunity to double check a given transfer to daily transfer thresholds preventing any outflows above your limit without permission. You can even set up multiuser approvals like 2-factor authentication for transfers. Your money is always under your control.

Coinbase isn't just the best place to trade everything. Everything you need to take control of your financial life is now in one place, where your spending becomes an investment, where your assets keep working even when you borrow against them, and where your money is protected with up to $250,000 in account protection for Coinbase One premium members.

Up next, we're going to hear from Alec about how we're helping companies move on chain.

Thanks, Roy. So all the incredible products you've heard about today exist because Coinbase is focused on increasing economic freedom in the world. That means making money move faster for less so you can put it to work. But our job isn't finished. To update the financial system, we want to make it simple for every company to participate in the onchain economy. Companies have the same problems consumers do. Moving money around the world is slow, expensive and complicated. But solving these problems is one of the things crypto is best at. We spent nearly 15 years building crypto infrastructure at scale, to serve millions of Coinbase customers. And we've taken that core infrastructure that powers our business and packaged it up for any company to build in crypto. We call this product Coinbase Developer Platform, or CDP. Today, we're announcing our all-new Coinbase Developer Platform.

This product delivers a single access point to build with our wallet infrastructure, payment capabilities, trading systems and stablecoin issuance. The entire product is unified by a simple approach to Webhooks billing and treasury management, and is now accessible to AI agents through our powerful CLI and MCP. We're proud that many of the world's best companies are already building on CDP, including BlackRock, PNC and Shopify.

Today, I'm going to 0 in on 1 use case in particular, stablecoin payments. The growth that we've seen in stablecoin payments is unlike anything else in crypto. On Coinbase products alone, we processed nearly $1 trillion of stablecoin volume in the last year.

It's because stablecoin solves some of the biggest frictions in global finance, slow, expensive and complex payments are a tax on companies that stablecoins can fix. The Genius Act has now provided clarity and innovative companies are ready to build. But to do so, they need deep crypto expertise, regulated custody and robust crypto-native compliance. Of course, we've already built this for ourselves at Coinbase. And today, I'm excited to announce Coinbase Payments.

Coinbase Payments is a complete stable coin payment solution within CDP that makes it easy for any company to embed stablecoins into their existing financial flows. Our payment solution is built on 4 components: USDC, the world's most trusted regulated stablecoin with $20 billion of liquidity right here on Coinbase; Base, our blockchain built for enterprise payments with over $19 trillion in stablecoin settlements this year; Wallets, our institutional-grade custody and payment rails in nearly 50 countries built on the exact same tech that powers coinbase.com. And finally, a powerful API layer that unlocks a full range of stablecoin payments use cases. This is the new standard for stablecoin payments.

Payments on CDP are the fast trusted path to building the stablecoins, and companies around the world are already putting this solution to work. Over the last few months, we kicked off partnerships with AWS, Intuit and Checkout.com, as well as other leading banks, payment companies and fintechs.

Now I want to take you a click deeper and show you how we're partnering to build the future of payments. Checkout.com is a leader in global payments. They handle billions for names like Spotify, eBay and Uber. They wanted a way to bypass fragmented and expensive payment methods. And collect payments directly from 150 million stablecoin wallets around the world. And so they built on CDP to launch one click stablecoin acceptance globally for their merchants. Legacy cross-border payouts are another problem that can frankly be a nightmare for businesses. So we've built the virtual accounts, the orchestration and fiat on and off ramps to vastly simplify these flows with stablecoins. And now companies like dLocal can build on CDP to upgrade their payouts and treasury management without the friction of legacy rails.

And the challenge I hear about probably most often is that companies want to offer stablecoins and crypto to their customers, but aren't able to deal with the regulation and licensing required to get it off the ground. So I'm excited to announce CDP's new fully custodial infrastructure solution.

This product enables our customers to create custodial wallets in nearly 50 countries, leverage our compliance infrastructure and tap into our network of 80 regulatory licenses around the world. We're launching with Intuit, Klarna and Webull and it will enable these partners to offer stablecoin payments in crypto trading to their customers in a seamless native experience, while Coinbase does the hard work of compliance, regulation and licensing fully behind the scenes.

And we're not stopping with crypto and stablecoins. We're also helping businesses navigate the biggest technology shift of our time, the shift to AI. So we built another layer into the stack, X402. X402 is an open source payment standard enshrined in a foundation in partnership with Google, CloudFlare, Shopify and many others. As of today, X402 has processed more than 185 million transactions over the past year. And this is just the beginning of what's possible.

Agents can now work on our behalf, researching markets, booking travel, accessing data, breathing through paywalls. And we're building the products to make this real at scale. I'm excited that our flagship launch partner for enterprise agentic commerce is AWS. AWS Agent Core and Cloud front have integrated our wallets and X402 to enable their agent network to spend and earn.

And that's not all. All Coinbase payments APIs are now agentic-enabled out of the box. This means companies like OpenRouter, the largest AI model exchange and a Coinbase payments customer, will be able to seamlessly accept payments from both humans and agents. When a human wants to pay, they get the best stablecoin checkout in the industry. And when an agent needs to buy compute, it uses the exact same infrastructure. Open router doesn't need an agentic payments team. They just need to enable stablecoin acceptance with Coinbase and with the click of a button, can accept payments from any stablecoin holder in the world, human or agent.

We're fired up about where we're building on CDP and how we're helping shape the future of payments. Let our hard work enable you to update the system. That's what CDP is all about.

Now I'm going to hand it over to Jesse to talk about what we're building on Base.

Thanks, Alec. We've talked about a lot of great products today. The tokenized stocks in Max's section, crypto-backed loans from Roy, Cross-border stablecoin and Agentic payments from Alec, all of these products run on Base. I'm Jesse Pollak, the creator of Base, the blockchain for global finance.

Base is built at Coinbase. It's trusted by thousands of enterprises, and it's open to everyone. We build Base to be the financial infrastructure for the global economy. It has sub-second speed, sub-cent fees, and is open 24/7, 365. You can execute any trade instantly, make payments faster and cheaper and use agents to do anything with money. And today, we've got exciting updates to share in all of those areas.

And let's start with trading. The world's traders are already here. Base is the largest on chain venue in the world for spot bitcoin and Ethereum trading, with 44% of all Bitcoin spot DEX volume, more than every other chain. And we're not building the best place to trade only crypto. Every asset in the world can trade on Base, equities, commodities, predictions, anything. And as we announced earlier today, we're bringing Tokenized Stocks from Coinbase to Base.

Once on Base, these stocks become globally available, 24/7 markets, that settle instantly and at a fraction of the cost of the legacy system. But one thing we've heard from issuers is that it's still too hard to tokenize things. Compliance, interoperability and security remain major blockers. And to solve that problem, I'm excited to announce the Base Native Token Standard, designed for the future of finance built directly into the chain. This is B20.

The B20 token standard comes with tools for token issuers like compliance, memos for payment reconciliation and custom metadata extensions. Anyone can deploy any kind of asset on B20. And we expect it to thrive with stablecoins, real-world assets and on chain native tokens. B20 tokens are going live this week as part of the base barrel upgrade and are already being adopted by issuers from Coinbase, to clinker, to some of the biggest stable coins launching soon.

And where do people actually go to trade all of this? Well, that's the base app. We've made a number of updates to the base app in Q2. We have native Apple Pay funding, candlestick charts, seamless search, better discovery, limit orders. And I'm excited to launch a few more things that make Base app the best place to trade. First, we're going multi-network. We've always said that Base is a bridge, not an island. And so the Base app now supports Solana and Bitcoin alongside Base Ethereum in dozens of other EVM chains.

Second, we're launching Base app on the web at Base.app, so you can bring your account portfolio and trading onto any screen, complemented by a newly updated homepage, so you can get everything in a cleaner view to see all the assets that you hold. And finally, the Base app is getting more with tokenized stocks, commodities, predictions and perpetuals. So you can trade everything all in one place.

And all of this, it's available in seconds. The powerful thing about the Base app is that because it's self custodial, you can sign up from almost any country in the world instantly with no complex forms and no sharing of personal information. The upgraded Base app gives you any asset on any screen at any time available to everyone.

Next, let's talk about agents. As Max and Alec outlined, the next generation of users on the Internet are going to be agents. And on Base, agents are already trading tokens, they're paying each other for services, and they're even spinning off their own businesses. Almost 90% of agentic transactions on X402 settle on base. And we're already seeing a thriving ecosystem of agents starting to grow an economy. Venice is a private AI that serves millions of users and they invented the world's first tokenized inference.

Virtuals has built an economy of 40,000 autonomous agents that are generating over $4 million in revenue. And Banker gives agents a business model enabling more than $30 million in agent earnings by letting agents fund themselves from their trading fees. And to make using agents on Base even easier, we just shipped the Base MCP. Any agent can now get connected to your wallet and get on chain instantly. And it works via simple promise in all of the tools that you're used to, Grok, Claude, Hermes, OpenChat, with Base MCP, your agent can execute transfers, trades, swaps and any other on chain action with simple permissions that you control. It's now possible to open a liquidity position on Aerodrome or Uniswap or take out a loan on Morpho, or book a flight, compile research or compile all of this stuff into one workflow that runs seamlessly on chain. The agentic economy is being built on Base, and the Base MCP gives your agent simple, secure access.

But it's not just agents that are benefiting from crypto as frictionless money. On Base, we're seeing explosion of payment use cases across the board. And the overall scale of the activity is pretty incredible. Alec said it but I'll say it again. So far this year, Base has settled more than $19 trillion in stablecoin. $19 trillion, but this goes beyond dollars. There are now over 25 local stablecoins on Base, covering major currencies from around the world, the euro, the yen, the Mexican peso, Nigerian naira, Singapore dollar, all live on Base.

In a future where every currency is connected to the same network, anyone, anywhere can use the currency they already live in to access to these incredible global financial services that we're building together. And it's happening. Stablecoin issuers like Wirex and Rain have done $600 million of stablecoins payments on Base in 2026 alone, enabling holders all around the world spend stablecoins for everyday purchases. Neobanks, like Tuo and Flex are using dollar stablecoins and bitcoin on Base to give their customers a global experience that has access to every single asset. And crypto exchanges like Bitso are using local stablecoins to enable easier onboarding and higher rewards for their customers. They recently launched MXNB, a Mexican peso stablecoin. And today, they're having even more utility by rolling out a vault that lets their customers earn on Mexican pesos in a simple experience.

And so the assets are here. The agents are here. The stablecoins are here. But we've been working for years to answer an important question. How do we move transactions on chain without broadcasting everything to the world? The Base ecosystem has already been working on this with protocols like [ Aave Horizon ] and Inco, enabling fully private sovereign balances and transactions. This is essential work, and the teams are leading our ecosystem in pushing privacy innovation. But as we're building the blockchain for global finance, we've learned that bringing enterprises on chain requires privacy, but with the same level of compliance and controls that they get with their existing rails. And so today, we're launching private transactions on Base.

Private transactions are powered by a new privacy architecture, we call ledgers, the perfect built for enterprise. Base ledgers let any enterprise execute private transactions, all while plugging directly into the global liquidity that Base provides. They give enterprises the best of all worlds, privacy for their customers, auditability and compliance tools for their regulators and the superpowers of the global economy that's being built on Base. Coinbase Developer Platform is live this week with the first private ledger, and Base and CDP executed the first private transactions with customers this week.

Now businesses can use stablecoins and more to transform their business without giving up their privacy. And it's live today with simple APIs that make it just work. And if you're an enterprise that wants full control and customization, you can run your own ledger, either bringing your existing ledger or starting a new one on Base to do anything on chain with complete privacy for you and your customers.

Now the answer to, can we do this on chain, is simply yes. Base is the place where everything is tokenized, where every payment cost a fraction of a cent, and where every agent can transact autonomously. This is what the future of finance looks like when the world moves on chain. But 99% of the world is still off chain. That's the opportunity in front of us.

And with that, I'll hand it back to Brian to take us home.

Thank you, Jesse. All right. We've covered a lot of ground today at our System Update, and I hope you can see how Coinbase is working to update every aspect of the financial system from trading to payments to AI. On trading, the Everything Exchange now includes pre-IPO perps, stock options and tokenized equities. We've redesigned Coinbase Advance and unified our global liquidity. Beyond trading, we're bringing Coinbase One card to more people, along with crypto-backed mortgages and direct deposit. Coinbase Developer Platform is bringing the benefits of stablecoin payments to businesses everywhere. Now with a fully custodial account running on our compliance stack. And we announced private transactions on Base and an upgraded Base app with new web app, new Fiat stablecoins and support for more assets.

And finally, Coinbase is also becoming the financial account for AI. Now for years, we've been thinking about how AI and finance will intersect. And our thesis is that AI creates programmable intelligence and labor. Crypto creates programmable money and markets, and the 2 complement each other perfectly to create a new agentic economy.

So what do we mean by that? Well, today, we typically talk to one agent at a time. But in the future, a lead agent that we're talking to will actually orchestrate hundreds or thousands of other agents, each one specialized to a certain type of task. So they're going to need to pay each other, breeze through paywalls to pay money to various vendors out there, and maybe even raise money someday to get work done all on our behalf.

So at our System Update today, you saw us announce 3 key components, which enabled this AI revolution. The first is Coinbase for agents. This helps you connect any AI agent to your existing Coinbase account. Second, we put AI directly in the Coinbase app with Coinbase Advisor. And third, we gave agents their own financial accounts with Base, MCP and X402. This complete set of tools makes Coinbase the financial account for the intelligence age.

The agentic economy is finally taking shape with the power of crypto. And in fact, one fun note, as you've been listening to this presentation, these dots on screen behind me, they're actually showing live transactions happening right now on chain, many of them powered by agents.

Now Coinbase, we're turning ideas into products faster than ever before. So before I end, please join me in a round of applause for our Coinbase employees, and there are many thousands of AI agents whose hard work and dedication made today's announcement possible.

All right. Thanks for tuning in, and we'll see you at our next System Update.

Hi. Good morning, everyone. Thank you so much for joining this year's JPMorgan TMC Conference in the fireside chat with Coinbase. I'm excited to host Emilie Choi, President and Chief Operating Officer; and Alesia Haas, Chief Financial Officer of Coinbase.

So Coinbase is a $60 billion crypto platform that facilitates trading, staking and custody of crypto tokens as well as other instances of broader engagement across borrowing, lending, development, infrastructure across the crypto ecosystem, and the list keeps growing.

Before we start, I wanted to read off Coinbase's safe harbor statement. During today's chat, Emilie and Alesia may make forward-looking statements. Actual results may vary materially from today's statements due to risks, uncertainty and other factors as described in their SEC filings. Our discussion today may include references to non-GAAP financial measures and a reconciliation of non-GAAP financial measures is available on the company's latest shareholder letter.

So thank you so much for joining today.

To kick things off, I'd be remiss if we didn't start with the big news of CLARITY advancing through the Senate Banking Committee in the Senate. Emilie, let's start there. How does the passage of CLARITY change the crypto ecosystem -- I'm sorry, the cryptocurrency landscape? And which of the many things that Coinbase aspires to achieve becomes easier with the proposed legislation? And maybe start out, like what is CLARITY in the first place?

So CLARITY is the market structure bill. Last week, we had some great developments there where it passed out of the Senate Banking Committee on a -- in a bipartisan manner, which is pretty huge, very, very unusual. So we're very excited. The next steps for that are it has to pass the Senate floor, then it has to be reconciled with the House bill, then it has to pass the House and Senate one more time and then the President signs it. And we think we're on a path where it will be signed this summer. So very, very positive development.

If you think back to last summer, the GENIUS stablecoin bill was signed, and that really unleashed a whole new wave of stablecoin transaction volume, innovation, investment, and that represents maybe like 10% of the current volume in the market. This is the other 90%. So this is all the other stuff that we do as it pertains to trading and digital assets and so on.

For us, when you think about the way the Coinbase operated for the past whatever years, especially under the Biden administration, we had regulation by enforcement and we didn't have clear rules of the road. So you can imagine that we're trying to build a product road map and ship things and don't really know for sure if something is going to be compliant or not based on the whims of the regulator and not actually based on clear rules of the road, it's a very, very challenging way to operate.

So to be able to have this new legislation that clarifies what the SEC and what the CFTC oversee, how we can add more digital assets to the ecosystem, what is the security, what is the commodity and things like tokenized assets, tokenized equities, how these can be added to the ecosystem in a compliant manner, we think it's just going to unleash a whole new wave of innovation in the space, much as GENIUS did for stablecoins.

Awesome. So with that covered, let's pivot to the rest of the agenda. So my agenda is, I want to start with trading since this is the biggest part of the P&L, move to stablecoins, which is really sort of the infrastructure and monetization or a monetization engine. Then agentic AI, which is potentially going to be this massive driver of growth and adoption and then tokenization, which I'm sort of calling the enabler. So let's start with trading.

Ken, I love that because you started with our 3 biggest priorities. We're growing our everyday exchange. We are building stablecoins and payments. And then we're moving things on-chains. So this is perfect. Let's go.

Yes. So the secret to being a good research analyst is to plagiarize and steal whenever we can. So trading. So trading is the biggest P&L driver. You're #1 in market share in spot, and global market share is at peak levels. Global market share is about 8.6% and rising. You're building out derivatives. You're adding predictive markets and equities. You're doing well in spot and doing well in the U.S. So it's a good place to start. Maybe, Emilie, can you talk a bit about the Everything Exchange strategy? What prompted the pivot to expand just beyond spot crypto trading?

Yes. So first of all, I think our competitive advantage is definitely the crypto economy empowering crypto. But we do also want to make sure we meet customers where they are, and our customers were definitely asking to be able to trade other assets. And so we did make a huge push over a very short period of time to be able to enable things like equities and prediction markets and so on. And it's been incredibly positive for us. When you think about just the volatility that we've historically had in our business, in many ways, this helps us diversify the offerings we have because there's a bull market somewhere at any given time, and it might not be in crypto.

So for example, in Q1, crypto wasn't the biggest thing in the world in terms of volumes and trading, but prediction markets were big and commodities were big. And so this enabled us to have that buffer. So I think customers are very happy about this new broader offering. Again, we're always going to be crypto first in the way we do things. But now that we have this broader offering, they can tap into these other opportunities to trade.

Got it. Alesia, how are you seeing the results so far? Is the engagement in these newer products coming from existing clients? Are these newer products bringing in newer clients to help drive growth? And to what extent are the new products and services sort of incremental to what you have been doing in the past versus potentially cannibalizing some of the existing business?

We're really pleased. I want to start with it is early days. As Emilie shared, we announced this strategy at our December product showcase. And so many of these products went live in the first quarter. But even over the first quarter, they started to make a dent in our overall P&L and started to demonstrate that our customers are really engaging in the broader product suite. It is both. It is monetizing largely through existing customers, but also bringing new customers to our platform. We saw prediction markets in its second month of operation, in the month of March, achieve $100 million of annualized revenue. We saw retail derivatives for the quarter drive to $200 million of annualized revenue. So we are seeing nice traction.

Emilie said it well, where there's a bull market somewhere. I don't think of these as cannibalizing. What I think that we saw in previous crypto cycles, when we saw periods of declining crypto spot prices and/or low volatility, our retail customers largely went into a HODLing mode, where they just didn't trade. They didn't move their assets from our platform. They just didn't trade in that period of time. So by diversifying the tradable assets, it gives them something to trade in all market conditions, and we definitely saw that in Q1.

So with lower volatility, with lower prices in Q1, what we did see pickups on were trading of commodity futures. Silver, gold, oil in response to the global macro environment became very largely traded contracts on our platform. Prediction markets, as we said, saw the growth. So this will diversify the tradable assets, and I think create more resiliency to our trading revenue over time as these products mature and we engage more and more customers in this product suite.

Emilie, I wanted to dive a little bit more into the derivatives and how you look to kind of continue to gain share in the derivative market. Does Coinbase need to do this outside the U.S.? Can you continue to grow the derivative appetite inside the U.S.? And how do you go about doing this?

So derivatives at any given time in crypto are like 3 to 4x the volume of spot trading. And so they're a very, very important piece of the market. And so we've obviously felt the need to diversify deeply into that. And I think the answer -- the short answer is we've got to do it not only in the U.S. but globally. If you'll recall, we acquired a company called Deribit that is by far the undisputed leader in crypto options globally. And so that is a great tent pole for us in addition to our spot position.

But the goal here is to make sure that we have one platform for futures, derivatives, spot options and so on all across crypto. This obviously helps us have a global pool of liquidity for things like cross-margining and financing and so on that our customers deeply want. In the U.S., obviously, because we started in the U.S., we have a nice advantage there, particularly with our brand of trust. And so we were, I think, the first to launch a 24/7 perps-like contract in the U.S. with the CFTC's blessing. So you can expect to see more of that in general, like the TLDR is we definitely want to go aggressively broadly with derivatives across the whole globe.

Yes. And one of my observation is the derivatives in the perps part of the derivative market is very concentrated. Any idea why it's so concentrated? And does that make it harder to kind of break in and be a sizable participant in the derivative markets or the perps market versus how successful you've been in the spot market?

Well, I think that some of the attributes of why derivatives have been so popular internationally is people can go really heavy on leverage and can kind of make really, really large bets. So sometimes you see that concentration there. We are going to always stick true to this brand of trust. We're always going to make sure we're protecting our customers and doing things in a more compliant way. So I think we're going to lead with that and the customers who are attracted to that will be drawn to that. Anything to add?

Just like most asset classes, the key here is liquidity, working on the best product, the most contracts with the deepest liquidity on a global basis. And so we believe that we marry our retail customer base with our institutional product to really create those deep liquid markets. We have to build that as we continue to expand internationally away from our deep bench of U.S. customers, but we believe that there's no reason why we won't be able to do so with our expertise in bringing customers to our trusted platform, building those contracts and creating the liquidity over time. So it's a product journey, but we are deep into that product journey.

Emilie, you mentioned Deribit. Can you speak about what Deribit is and what we should expect in the coming -- or looking forward as you continue to build out that business.

So Deribit was an acquisition we did last year. It was the largest crypto options exchange in the world. We've been very pleased with the progress. We're very much on the journey of integration. We should be fully technically integrated by the end of the year. One of the cool things about Deribit is it's got a nice cross margin engine that we're using to kind of integrate across our whole pool of liquidity. And as I mentioned, like we want to have this whole panoply of spot options, futures and so on that we can offer to customers, so we have that global pool of liquidity.

In terms of like next steps with Deribit, we obviously want to be able to offer this in the U.S. as well. And so we're working with the CFTC on that plan. But -- and we'll continue to kind of share milestones along the way as we go through that.

Okay. And then Emilie, finally, on prediction markets, really good traction out of the gate, $100 million, as you said, in annualized revenue shortly after launch. How should we think about the early traction here? And what ultimately is Coinbase's right to win in these markets, given how much they've proliferated across other platforms?

I mean prediction markets is a huge phenomenon. We -- I mean, we were sharing last night about some of the wagers certain folks had on the primaries last night or the NBA semifinals and so on. It's just a fun activity, and I think it's very engaging for users to be able to make these bets on these platforms. In some cases, like I think it's just going to be a more popular activity than spot trading and so on. So we're really pleased we just launched. We have great traction with that $100 million-plus revenue run rate.

I think our right to win generally is about the bundle. Like I think we're obviously crypto first, and we're about a bundle where different customers are going to want to be able to access and tap into what they want to at any given time. We talked before about there's a bull market somewhere at any given time. Perhaps at that point, a customer wants to make a bet on a prediction market. They might also want to be able to trade crypto or equities or so on. And so we offer that ease of use that most trusted bundle for customers, and we think that it's a great value prop to them.

Great. So let me...

I think it's so important what Emilie said that what prediction markets offer is almost an opportunity for a daily use case. And it's exciting to see what the world is doing, what people are engaged with. And when people already have their assets on our platform -- and remember, we are the largest crypto custodian. We hold over 12% of the world's crypto. We had $19 billion of USDC on our platform as of Q1. So people already are storing assets. And now when they have an additional product that they can sell, it creates incremental monetization. It creates engagement with our platform.

And I like to say people are coming for the convenience of being able to trade everything in one place. It's delightful to be able to be like, "Oh, great, I can't go see this game that I want to bet on." But what we can really offer is the true value and why I think we have a long-term right to win is now you can take a bet on global politics on one platform and express that over equities, prediction markets, futures, crypto. It gives you the ability to do much more complex positioning in one platform to take a view on world. And as the world becomes more complex and the opportunities to take bets, we are now a more comprehensive platform that people can express those views.

The Everything Exchange facilitates the Everything Exchange.

Yes.

Okay. Great. Let's move into stablecoins. You have one of the biggest fee wallets in stablecoins, and one could argue that you've been the differentiator from a distribution perspective and the build-out of USDC into being the second largest stablecoin. So maybe let's start at the high level, Emilie. How do you think about your role or Coinbase's role in the stablecoin ecosystem?

Sure. So we believe in the power of stablecoins, first and foremost, as a programmable digital dollar. And we were early in 2018 to partner and bring USDC to life and...

And we should just stop and remind people that we are the distribution platform for stablecoins, that our platform since 2018 has been key to growing regulated stablecoins in the overall ecosystem.

Yes, that we are the #1 distributor of USDC. As Alesia mentioned before, we hold $19 billion of USDC on our platform. At any given time, we roughly extract about 50% of the economics of USDC. And we also enable the trading and custody of other stablecoins on our platform as well. So we're very bullish on stablecoins. We think we're at the very beginning of the journey. And if you think about the different components that we have together as we play this end-to-end platform role, we've got USDC as the digital dollar or other stablecoins as that digital dollar. We've got Base chain as a settlement layer. We've got enterprise APIs that help with enterprise integrations. So we -- and then we also have x402, which I'm sure we'll get into, which is our standard for agentic commerce.

So we have all these pieces of this end-to-end offering, and we think that, that's a very powerful position to have given where we are right now in the beginning.

Yes. I completely agree. And I think one of the messages that I love everybody to take is these different pieces fit really well together, and they're sort of perpetuating the other pieces to be bigger and grow faster and anyway, we'll see how good a job I do here in pulling that all together.

Alesia, you've had success building out USDC as the preferred digital cash balance for Coinbase customers and you're tying USDC to many of the new initiatives at Coinbase, including trading, lending, borrowing and payments. How much do these newer initiatives contribute to Coinbase's presence in stablecoins? And where are you seeing the most momentum today?

Well, these are reinforcing products. So with our partnership with USDC, one of the reasons we've become the distribution platform and one of the reasons we've seen the on-platform growth is we're embedding USDC deeply within our products. So we use it as the base quote asset in our international exchange. So if you want to trade futures, you are trading them against the USDC order book. That grows the USDC balances. We offer lending products for our institutional customers. They can trade on margin. That grew to $1.4 billion as of Q1. That is us lending out USDC collateralized by other crypto assets on our platform. We saw the growth, significant growth, quite candidly, in on-chain agentic commerce. 99% of that's in USDC, 90% of that's on Base. We are building those APIs, as Emilie said, with x402, and that is creating now a payments use case.

So as we embed these stablecoins into the products and services, absolutely, it's a reinforcing flywheel. We see that product grow in the case of lending or trading and then we're seeing USDC balance growth, both on our platform, but also then in the off-platform through the ecosystem as you create more network effect, you create more liquidity, more people will choose that as the asset they want to trade with and participate with in the ecosystem.

And lastly...

Can I pause there, Ken, I'm sorry. And this is where I think USDC is really important. We often talk about it perhaps maybe as a payments story. USDC is a collateral story. It's a trading pair. It is going to be a digital dollar, a better dollar, a global, cheap, fast dollar. And so it is going to underpin many products and services that you see us. participate in.

Last week, you announced -- maybe Emilie, last week, you announced a new partnership with Hyperliquid, one of the largest on-chain trading platforms in the world. Can you walk us through the details here and maybe the financial implications for Coinbase?

Sure. So I'll start and Alesia can pop in there. We announced a partnership with Hyperliquid for USDC to be the primary stablecoin on Hyperliquid. And if you look, USDC was already kind of the majority of the stablecoin usage on Hyperliquid. We had like $5 billion worth of USDC on the platform. And so this was really meant to solidify that adoption and relationship. As part of that, our on-platform balances, we will be holding those of Hyperliquid, which is positive for us. Broadly speaking, we think we're in an early phase of stablecoin adoption. We think this is a big growth vector. And we believe that there are big network effects to stablecoins and that liquidity begets liquidity.

So for us to do this deal was essentially about making sure that we're reinforcing USDC as a vehicle for Hyperliquid, which is obviously quite popular. And then that reinforces the value of USDC over time. So in short, it's like a growth vector for us that we are heavily invested in, and we think that doing these types of deals selectively really helps propagate the network effects and growth of USDC.

Do you want to talk about any more on the economic side?

Think about this as another on-platform customer for us, and we will continue to grow those on-platform balances. We do have rewards agreements in place for the majority of our on-platform balances, and it's important to share that in the movement of CLARITY, it protected activity-based rewards. And so we will see growth in top line revenue. We will see an increase in our sales and marketing expense as it pertains to rewards. And as Emilie said, this is just a reinforcing phenomenon. You saw after GENIUS that we started to see a fragmentation of stablecoins and many people come up with we want to new stablecoin. We are really focused on driving one of the biggest global stablecoins to have deep liquidity and network effect. And this is a big step forward to the network effect of USDC.

Great. Okay. Agentic AI. Okay. So McKinsey projected $3 trillion to $5 trillion of agentic transaction volume by 2030, and that's right around the corner. Alesia, for you and Emilie both, when we think about AI, Coinbase is not the intelligence layer like OpenAI or Google, but rather the financial and transaction layer. So what is the Coinbase tech stack for agentic AI? And how does it leverage the key pieces of the Coinbase infrastructure, again, pulling together some of the things that we've already been talking about.

So we have a product stack that enables agentic AI. We've talked about USDC. It's a digital dollar. We've talked about Base. It's a protocol. It enables fast, cheap global transactions to settle on chain. X402 is a new protocol that we've now added to this stack that enables specifically agentic commerce. And then we have the payments APIs that Emilie mentioned for businesses. So x402, what we've seen is it's processed 100 million payments through this gateway over the last 3 months. We have made this an open source standard on the Linux platform. We have major partners such as Cloudflare, Google, Shopify, others that are helping usher in this future.

On our earnings call last week, mid-call, announced that Amazon is our newest partner, building on the x402, and so that is just getting started. So we absolutely believe that the future is going to be agents. Agents will be outnumbering us humans. Agents will be transacting in new ways. You'll see usage-based activity, and we are building the stack for them. And we've had early success. The things that are phenomenal to share, in addition to 100 million transactions, 99% of this agentic on-chain commerce is happening on USDC. 90% of it is happening on Base. And so you see that our stack is really starting to be the leader in ushering in this future of agentic commerce.

Great. Emilie, anything to add?

No.

Okay. So maybe the next question is, why don't agentic payments work over the existing financial rails? Why can't we just give an agent like my Visa card and have that be the financial layer here in agentic AI?

It's a great question and one that we've talked a lot about. I'm sure it won't surprise no one to hear that I still write checks. I do it rarely, but it still happens. I still have a checkbook in my drawer. I also send wires. I also do stablecoin payments. This is an and just like we send e-mail, we send text, we do messaging on all sorts of platforms. Stablecoins provide a new payment rail or stablecoins plus base. It's a new payment rail. And we've seen innovation in payments for a long time as we've all moved from cash to checks to credit cards to ATM cards, et cetera.

So what these uniquely provide for agents is agents are not human. Agents are going to be looking for micro transactions. They're going to be buying compute. They are going to use ruthless prioritization and try to find the lowest economic cost to execute their transactions. They don't have brand loyalty. They're not emotional in the way that the current system was built for human payments. And they're also going to do so many micro payments.

And so what stablecoins and wallets and the new on-chain infrastructure provide is programmable dollars. You can program $50 can be paid to this vendor. You can give it very specific rules. Agents can't open a new credit card themselves. They're not humans. They can't pass KYC. So what we think it's going to do is usher in a new type of payments that will be the new growth vector of payment types, and that is where we're going to see most of the agentic commerce growth. So you can give your agent credit card. You can also have that credit card number stolen then, by the way, and that creates a lot of fun for all of us.

So as I was doing research on this, and you just mentioned again this concept of micro payments, which is something that's a little bit foreign to me. How does micro payments play into the agentic AI outlook in Coinbase and USDC and base as kind of the enablers of the future of payments here?

So we're moving forward in life and agents, we believe, are going to do more and more activities for us. They are going to be coding for us. They may need to buy compute while they code. They are going to need to execute micro transactions to move forward their workflows, or they may need to buy some data, some research. Do they want to get a subscription? No, they want to buy specific research. And so these are going to, we think, turn into new monetization streams, new ways that we consume products and services. And those will become frequent smaller dose consumptions of information and data or usage, and that's going to be the future of how these agents want to buy and transact online.

Okay. So interesting. Okay. Tokenization. So tokenization is not where Coinbase makes money today, but it's been a focus for Brian, your CEO, when thinking about regulation. So Emilie, can you walk us through how Coinbase thinks about the full tokenization stack from sort of issuance and custody to compliance and trading. And with all those pieces seemingly in place, what's the unlock that gets us from the narrative to real proliferation of tokenized assets on the platform?

Sure. So I think the unlock is CLARITY, to be clear. So that...

Clarity for CLARITY.

Right, the CLARITY Act. And the reason we think that it is so important, why we've spent so many cycles working to get this over the line is because as we've talked about with GENIUS unlocking the stablecoin wave, we think that this then opens up the whole wave of on-chain financial assets and so on. So yes, as you mentioned, we have the full stack of capabilities, whether it's issuance, custody, trading and so on. So that end-to-end stack can then power this on-chain economy once we have that regulatory unlock.

So I think we're in a very, very -- in the very early days of all this with when we have that CLARITY, being able to offer things like tokenized equities and more on-chain assets and activities. In general, we're very bullish on on-chain over the longer term just because we think it's a much more robust system. It's more efficient. There's no middlemen. It's cheaper, it's global. All the things that we care about, it's the fastest settlement. And so to be able to power that in a compliant way is kind of maps exactly to the stack that we've built.

Okay. So maybe moving to infrastructure and resources and delivering the above. I think base is sort of a key part of the infrastructure that's moving the rest of the agenda forward. So that's -- what is Base? What's next for the Base road map? And talk about the growing Base ecosystem. So maybe, Emilie, do you want to start there?

Sure. So Base chain is a settlement layer for on-chain financial transactions for payments and trading. And I think Alesia quoted this, you see things like 99% of agentic on-chain transactions are done via the Base chain. So very powerful early stats here given the fact that we just launched it not too long ago. And so when you think again about that stack that we've been talking about with the digital dollar of USDC or other stablecoins and then Base is a settlement layer and x402 as that standard for agentic commerce, we think that, that's quite powerful.

When we think about Base chain specifically in terms of what the future is for Base chain, it's more of that. We'll need to add things like a privacy layer, for example, because businesses care very much about that, and that's a big theme right now in crypto and in financial transactions. Another thing that we've brought up in the past is that we plan at some point to launch a Base token. So we'll keep folks updated on that progress, but I think that's another exciting part of the road map.

Okay...

And then separate from the chain, we also have the Base app. And the Base app is our self-custodial product that is really designed for customers who want to hold their assets in their own custody, away from a centralized platform and enables us to grow in markets that we don't have a presence. So for example, our custody product is available in major markets such as the U.S., the U.K., EU, Singapore, Australia, Brazil, et cetera, Canada. But there's many, many other countries, and we can move with speed to enter those markets for other countries with the self-custodial product and enable our products to serve the globe and access to over 100 countries through a self-custodial offering. And so a lot of that international customer growth, we anticipate over time will come through the Base app, the self-custodial product.

Okay. Great. Thank you. Okay. In closing here, the question I sort of closed with last year, I think it's fitting again given the dynamic crypto environment. But for both Alesia and Emilie, what do you see as the use cases that are most exciting to you in the crypto ecosystem as you look out to the rest of '26 and into 2027? And how does -- what is exciting for the ecosystem tie into what's exciting for Coinbase? I kind of like that question as well.

Well, it's funny -- it's a great closer. It's funny. It's a summation of everything we just talked about, I think. But stablecoins and payments, I think we're just scratching the surface of that. Our Board constantly tells us like we're -- if there's one place that like we are going to be growing, it is going to be stablecoins and that whole -- that just -- we're in the early innings of what's possible there. Obviously, tokenized equities and tokenized assets, we just think that, that's going to be a very big unlock with CLARITY. And then agentic commerce, which maps all the interesting fun things going on in AI right now and being able to be on the forefront of that with having develop the standard of x402.

So those are the 3 big ones, I think, from our perspective.

I think it's the new products and use cases, but I would also just point to our expansion in derivatives and the growth of our derivatives platform is a key near-term focus for us and where we expect to see a lot of growth this year. It's been one of the biggest drivers of our market share growth, and we anticipate that to continue.

Yes. Great. Okay. Thank you so much for being with me today. We're not taking questions. Thank you to the audience for being here, and enjoy the rest of the conference.

Thank you.

Welcome to the Coinbase Q1 2026 Earnings Call. Before we get into the good stuff, some disclaimers. During today's call, we may make forward-looking statements that may vary materially from our actual results. Please refer to our SEC filings and this slide of the presentation for more information concerning risks, uncertainties and other factors that could cause these results to differ. In addition, our discussion today will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the earnings presentation on our Investor Relations website.

Hello, everyone, and welcome to our Q1 2026 earnings call. My name is Alesia Haas, and I'm the Chief Financial Officer of Coinbase. You may see a new face on this call with us today. Mirati over there. I want to introduce you all to Shan Aggarwal. Sean is our Chief Business Officer, and he's our newest Head of Investor Relations. You're going to see a lot more of him. But I want to tell you a story about San Sean is our OG, Head of IR. Sean led our Series E fundraise back in 2018. He was my right hand as we went public in 2021, and I could not be more delighted to introduce him to his first company earnings call and bring him back to this new set of investors that we have with us today. So welcome, Shan. And I'm going to turn it over to him, and he's going to walk us through our agenda and what to expect in our earnings call today.

Thank you, Alesia, and hi, everyone. Really excited to be here and back in the IR seat. As Alesia mentioned, my name is Shan Aggarwal, and I'm the Chief Business Officer and Head of Investor Relations at Coinbase. I'll be seeing our call today. And in addition to Alesia and I, I am joined by my esteemed colleagues, Brian Armstrong, our Co-Founder and CEO; Emilie Choi, our President and COO; and of course, Paul Bruel, our Chief Legal Officer. -- already diving in our agenda today is that we'll start with comments from Brian and Alesia on Coinbase strategy and Q1 performance. We'll then have time to address questions from both our X and analyst communities. So with that, Brian, over to you.

All right. Thanks, Sean. So I want to start with our mission, which is to increase economic freedom in the world. Our mission matters for everyone because 4 billion people are locked out of the financial system globally, the unbanked and the unbrokered. Crypto fixes this by giving everyone equal access to property rights, stable currency and permissionless financial services.

Now let's take a look at the state of the market. Despite the crypto market being down, the fundamental growth of the on-trend economy is strong. All of finance is moving on chain because crypto provides faster, cheaper and more efficient financial infrastructure. Crypto trading volumes have grown more than 50x in the last 7 years. Stablecoin market cap is now more than $300 billion and growing fast. Tokenized real-world assets are scaling and expected to hit $16 trillion by 2030. And now Crypto has a new catalyst, AI. There will soon be billions of agents transacting and they need rails that can keep up. Crypto is the only option that checks all 3 boxes, fast, cheap and global.

To summarize, the world economy is moving on chain and Coinbase was built to capitalize on this transition. Here's why. First, we're the most trusted brand in crypto. Individuals and businesses trust us to store more crypto than any other company in the world. Second, we've pooled global liquidity on our centralized exchange, creating a powerful network effect. Third, we're the largest regulated stablecoin platform in the world. And fourth, we have a proven track record of building and scaling frontier products.

In short, we believe Coinbase is well positioned to win as the world increasingly moves on chain. You're probably familiar with Coinbase products. But if not, here's a quick reminder. We serve 3 main customer groups, consumers with our retail advanced trading and self-custody apps, institutions with our prime brokerage platform. And for developers, we have CDP or corn-based developer platform, our one-stop shop where any company can integrate crypto. And the most powerful part of our product suite is that they are all built on a shared infrastructure that creates network effects and economies of scale across our platform. You can see the full stack architecture of coin based here. How it works is our battle-tested custody stores more crypto than any other company. Our settlement rails are fast, cheap and global. Our exchange offers deep liquidity from our multiple customer groups. Stable points like USDC, enable efficient money movement, and it's all supported by a decade-plus track record of leaning into regulation and compliance around the world.

Now let's get into Q1. We faced headwinds with a softer trading market this quarter, but we executed well on what was in our control. We saw a huge growth in derivatives trading volume driven by our Everything Exchange. We hit a new all-time high in USGC held in Coinbase products. and saw 10x year-over-year growth in stable coin transactions on base. We're also leading on the next frontier with over 90% of onchain agentic transaction volume happening on base.

So let's walk through some of our key metrics. First, crypto trading market share. Despite the market being down, we continue to grow share globally and reached a new all-time high. When market conditions are difficult, we see customers consolidate activity on platforms they trust. Next, let's touch on assets on platform. In short, Coinbase stores, more crypto than any other platform. And despite asset prices being down, Q1 marked the 12th consecutive quarter of net native unit inflows. This is a key part of our strategy. Our most trusted brand attracts assets on platform, which leads to customers adopting more products.

Finally, I want to highlight stablecoin growth this quarter USDC growth on our platform has hit another all-time high despite broader crypto market performance. We are the largest distributor of USDC, with more than 25% of all USDC held in our products. And importantly, we capture about 50% of all USDC economics.

Moving into an update on our 2026 priorities, which we've told you about in prior sessions, we've made significant progress against our top 3 priorities this quarter. As a reminder, these are the Everything Exchange, so users can trade every asset in 1 place, stable coins and payments, enabling money to move at the speed of the Internet and bringing trading and payments on chain. I'll give a quick overview of each of these.

So first, how we're growing the Everything Exchange. We heard from customers that they wanted to trade more than just crypto on Coinbase, and I'm excited to shared that in the past year, we've transformed Coinbase from a primarily spot-focused crypto platform into a place where you can now trade any asset class. We've added stock trading, 24/7 equity perps retail access and geographic expansion for derivatives, we've added prediction markets. And we're starting to see real traction now validating our Everything Exchange strategy. Derivatives trading is now over $200 million in annualized revenue. Prediction markets are scaling fast reaching $100 million in annualized revenue in March. That's just 2 months after launch. And we added noncrypto contracts like silver, gold, oil, which saw more than 4x growth quarter-over-quarter.

Next, Coinbase is driving stable coin adoption worldwide. Coinbase has a full-stack stablecoin solution across USDC, base and Coinbase developer platform. We're seeing this bundle accelerate adoption of stable coins. First, total stablecoin supply has doubled over the last 2 years, and USDC is taking a bigger share of that growing pie. Second, stable coin transaction volume doubled this quarter and USDC and partner Stablecoins drove more than 80% of that total volume. Lastly, the third chart shows how base is now the dominant change for all stablecoin transactions with 62% share. And we're also building stablecoin infrastructure for agents. So USDC and Coinbase are now powering the majority of unchanged table crane transactions for AI agents. And when agents pay with crypto on chain, they used USDC 99% of the time. and over 90% of those transactions are happening on the base chain in Q1. We're seeing agents also use the x402 protocol for a wide variety of use cases, including trading, AI inference, media generation, storage and more.

In short, Coinbase is at the center of the agent economy. And lastly, our third priority for 2026, growing on chain -- we continue to make defi easy to use through our coin-based app. DEX volumes grew 2x quarter-over-quarter and Borland balances have grown to over $1 billion in the last year. So to wrap up, the future of finance is on chain, and Coinbase is the company best positioned to power it. Crypto is updating every aspect of the financial system. Coinbase has a full stack solution across multiple customer groups and agent commerce is the next frontier. With that, I'll hand it over to Alesia.

Thank you, Brian. In Q1 2026, we generated $1.4 billion of total revenue, a quarterly net loss of $394 million and $303 million of positive adjusted EBITDA. We're going to unpack these results in more in the following slides. But before we dive deeper in the numbers, I want to step back and give you our assessment of the quarter because the headline figures alone don't tell the full story. We are controlling what we can control, and the underlying business performed well. As Brian shared, we reached a new all-time high encryptotrading market share. We posted our 12th consecutive quarter of native unit growth. We saw green shoots in the Everything Exchange from derivatives and prediction markets. We came in under our expense guidance.

Against this backdrop, macro conditions were genuinely tough. Total crypto market cap and total crypto trading volume were both down more than 20% quarter-over-quarter. And volatility in the long tail assets were at historic lows. The bottom line is that we saw price headwinds outpace the strong growth of -- with this in this quarter, but our fundamentals remain strong.

Our Q1 results underscore the message we control what we can control. And when we look at our results versus the outlook we provided in February, we delivered within or better than every range we set. Total revenue for Q1 was down 21% quarter-over-quarter, reflecting the softer market backdrop. As a reminder, our revenue is inherently nonlinear. A significant portion moves in line with crypto asset prices and trading volumes. What matters is our ability to build and grow our product suite and assets on our platform through these cycles and show long-term growth, even amidst the short-term volatility.

Drilling into our transaction revenue of $756 million, consumer was $567 million, down 23% compared to a 35% decline in the overall consumer spot volumes. There were 2 factors at play here. One, we saw a mix shift towards consumer core trading away from advance. Second, we see accelerating contributions from our newer products like derivatives and prediction markets, which contribute to our total revenue, but are not included in trading volume key business metric, which is spot crypto only. On the institutional side, revenue of $136 million declined 27% alongside volumes.

Subscription and services revenue was $584 million, down 16% quarter-over-quarter. We saw continued strength in native unit inflows. However, this growth was offset by prices and rates. Stablecoin revenue was $305 million. Average USDC, held in Coinbase products reached a new all-time high of $19 million. A quick reminder here. Our USDC contract, auto renews, every 3 years into perpetuity. It cannot be terminated.

I also want to flag a reporting change we made in the first quarter. We reclassified $18 million of corporate stablecoin revenue to other revenue. This change reflects our treatment of cash and USDC as completely fungible within our corporate operations. And this is consistent with our decision earlier this year to report payment stablecoin as cash and cash equivalents on our balance sheet. We've recast historical periods for comparability. Blockchain rewards were $101 million, down on price and protocol reward rates, but importantly, we saw native unit growth in staked balances. Interest and finance fee revenue was $68 million, up 13% quarter-over-quarter. Average daily loan balances reached $1.4 billion and active customers grew double digits.

Last, I want to highlight Coinbase One, now over 1 million paid subscribers. A sign of the product value proposition is resonating independent of the broader macro market conditions. It's important to know that Coinbase One members generate incrementally higher trading volume higher revenue. They are our most engaged customers in the products across the portfolio, and they exhibit strong unit economics.

Revenue diversification is 1 of our key financial objectives. We are proud to have 12 products generating more than $100 million in the annualized revenue. Our retail derivatives business, as Brian mentioned earlier, reached a new all-time high in Q1, generating revenue at an annualized run rate exceeding $200 million and putting it on track to be our next product to hit the $250 million product tier. Prediction markets is also tracking well, and it's on track to be the 13th product to cross $100 million in annualized revenue in its second month of meaningful operations. We remain focused on revenue diversification, and we're really encouraged by the breadth of this portfolio and our ability to launch and scale $100 million-plus revenue lines.

Our total operating expenses were $1.4 billion, down 5% quarter-over-quarter. Tech and dev was $526 million, up modestly driven by onetime costs related to acquisitions completed in Q4 2025. G&A declined 17% quarter-over-quarter as we got a head start on expense reductions, driving declines in deal-related legal costs, customer support costs and policy-related expenses.

This is our 13th consecutive quarter of positive adjusted EBITDA, spanning bull markets, bear markets and everything in between. We believe this track record is one of the clearest demonstrations of our commitment and the durability of our business model.

We ended the quarter with over $10 billion in cash and cash equivalents and total available resources of $12 billion. We have the flexibility to invest through the cycle. We can pursue strategic opportunities, we can return capital to shareholders via share repurchases, all simultaneously.

I wanted to remind you that our 2026 convertible notes are due on June 1, unless the notes reach the defined conversion price, we do intend to retire the $1.3 billion obligation. In Q1, we repurchased approximately 6 million shares for $1.1 billion. Our cumulative buybacks have roughly offset 90% of shares that we issued for employee compensation since Q4 of 2024 forward.

Turning to our outlook. We expect subscription and services revenue in the range of $565 million to $645 million, with an opportunity for quarter-over-quarter growth. We expect technology and development and general and administrative expenses to continue to come down sequentially with a range of $820 million to $870 million in Q2, down 4% to 9% from the first quarter. In addition to our recurring expense outlook, we expect to incur $50 million to $60 million in restructuring expenses related to the head count reduction we announced earlier this week. This will be recognized as a stand-alone restructuring line item in our Q2 financials.

As we mentioned in Tuesday's announcement, we are transitioning to be an AI-native company. Our product velocity is already increasing rapidly. The number of requests per engineer is up almost 80% year-over-year. And importantly, our focus on quality is scaling even faster. Integration test coverage across core services is up 3x in the last 6 months. The ability to scale our team members and their ability to iterate and improve our products at these speeds is a game changer for our execution throughput and efficiency.

Before I close, we wanted to provide an annual adjusted expense outlook in addition to our quarterly expense outlook. We define adjusted expenses as technology and development, plus general and administrative, plus sales and marketing, less the amortization of intangibles. We expect 2026 adjusted expenses to be between $4.3 billion and $4.6 billion. This is roughly $500 million lower than our Q4 2025 annualized exit rate at the midpoint. And I also want to point out that absent any growth in USDC rewards we would expect 2026 expenses to be flat to 2025.

With that, this concludes our prepared remarks, and I will hand it back to Shan to moderate Q&A.

Thanks, Alesia. We're going to transition over to Q&A. For this quarter, we're going to take a mix of questions from both our X and our analyst community. All the questions are being submitted to us in writing and we'll try to get broad coverage across topics that folks are interested in. So to start, we talked about 1 that's top of mind for a lot of folks, regulation.

So for Paul, a question comes from James Yaro at Goldman Sachs, who asks, could you comment on the status of the Clarity Act? How do you expect this build to evolve? And what are your latest views on the impacts to the business?

Thanks, Shan. On Clarity, we are confident that the bill is going to head to mark up this month with a floor vote to follow in early summer. All that translates to our confidence that we're going to see a signed piece of legislation by the end of the summer. And all of this timing follows from real progress that we've seen on a particular issue of interest to many, which is the rewards question. Just last week, we saw Senator Telus and Ulster Brooks announce a compromise on Stablecoin Rewards. And while we're certainly not declaring victory here, we appreciate both Senators efforts to work out an important resolution of this issue. And we also appreciate that this is still a live legislative process, which means voices are going to continue to weigh in on the question.

Like every other compromise coming out of Washington, everyone is undoubtedly a little unhappy about where things have landed. But what we can say is that the direction of the and in particular, it's preservation of activity-based rewards while prohibiting a passive, pure bank style deposit style yield really reflects what to us is an approach that can work and will work going forward. So look, the details do matter a lot here, but from the language that was released, we think it's clear. Rewards are going to be protected, and we can preserve what are the key elements of our current program.

As for business impact going forward, there remain a lot of rules that still need to be written once the legislation is passed. So I think it would be premature to get out ahead of that. But what we can say right now is that we are building towards a model that is based on engagement, is based on utility. And we think that these positions are going to serve us and our customers well, no matter what the final framework looks like.

I do think it's important to emphasize 1 further point, though, which is we shouldn't lose sight of the broader picture. Clarity is going to be a significant unlock for the industry, for our customers and for Coinbase, and especially our ability to build new products and services with regulatory clarity in a way that we haven't seen really ever on a time line of years rather than dealing with individual case-by-case concerns. So this is all exactly what we have spent time, energy, sweat and emotion building towards, and we're very excited to continue to keep working through next week's markup and beyond to make sure that this bill gets passed.

Thanks, Paul. Yes, a lot of good discussion on the rewards topic, but clarity is about much more. And so for Brian, this question from Ken Worthington at JPMorgan. You and the crypto community seem to come to a compromise on legislation, particularly around stable coin Rewards, but you were also concerned about DeFi regulatory authority and tokenize securities. When legislation comes out and get signed into law from your perspective, what are the things that you expect to see over the next year in terms of who now will be participating in the crypto ecosystem? And what do you expect they will be doing?

Yes. Well, you're correct that the Clarity Act is about much more than just stablecoins and rewards. I think, as Paul mentioned, it will create a lot of opportunities for people to work on tokenization, having clarity about what's the commodity versus the security exchanges and custodians, what their roles are. DeFi has an important role to play here, self-custodial wallets. And so there's going to be lots of energy that comes out of it. I think it's going to be a little bit like when the Genius Act passed we -- for stable coins, and we saw a couple of hundred large companies in the U.S. come out in the subsequent months and announced integrations with stablecoins. And so this means that hopefully, lots of companies post in a world post clarity being passed, will come out and start to integrate crypto. They might use it to raise money on chain. They might use it to provide crypto services to their customers.

I think it will just unlock a lot of institutional capital that will flow into the space broadly. And the opportunity is really there for Coinbase to go provide those services to all these companies coming into crypto post clarity being passed into law. And actually, power integrations for many of them as well via Coinbase developer platform. So we think it's going to be very additive. We want every company to be integrated into the crypto enabled financial system just like they use the Internet or AI or any other technology. And Coinbase can provide those services to them. So that's what we plan to do.

Great. Okay. Last question on this theme. This 1 for Paul and Alesia from Paul Christensen at Citi, who asks -- do -- would changes in stablecoin Rewards policy lead to changes in contractual revenue share mechanics with Circle.

Well, fortunately, the contracts that we have in place in Circle are set. And as Alesia has underscored, they auto renew. So we expect to continue to go forward with our relationship with Circle under those same terms. Again, the details in the legislation matter. So I can't say until the ink is dried on the final document, the full set of implications may be. But we're confident that this will end in the right place and then our relationship will proceed as it has up until this point.

I don't know have much to add. I just think it's important to know that the revenue share is tied to overall USDC supply and adoption, and it's really unaffected by any rewards language. .

Great. Okay. Transitioning -- we got a question from 1 of our ex analysts at Architect 9000 who asks. It was fairly alarming in your note earlier this week, Brian, to hear that nontechnical developers are pushing code -- AI code into production. Is that really true? And how is Coinbase going to marry AI's ability to move fast while preserving high quality and brand trust.

Yes. So I should have made this more clear in my note, but we encourage product managers, designers, other nontechnical employees to use AI agents to draft code, that's getting easier to do. But human engineers still review all code before it goes into production. In some cases, we have multiple review levels from human engineers just on the most sensitive systems, et cetera, as you can imagine.

So it's important to realize, and I think your question point at this, AI agents are not just about increasing speed of execution in terms of code or enabling lots more people to write it. It's also going to raise the bar on quality and cybersecurity. And we saw a glimpse of this recently actually with the Mythos model that Anthropic put out, where it's actually able to find security vulnerabilities that 99% plus of human engineers would not have been able to find.

So I think that it's important to lean into this as an opportunity to raise quality and cybersecurity standards with AI agents. It's a little bit like self-driving cars. They're getting to a place where they're actually safer than human drivers. And so there will be a point, I think, in the future, where people will be able to -- people will be able to write code, AI agents will be able to review it and check it for security, improve the quality of it. And actually, in certain situations, have it go to production, but that's not yet the case today. And so we want to make sure at Coinbase we are leaning into the frontier, rigorously testing these things oftentimes in parallel to make sure it has a proven track record. And if we see it consistently exceed the standard of what a human could do in certain situations, it would be irresponsible not to automate it further. So that's how we're going to stay on the frontier.

And I just wanted to underscore the comments that I made in opening comments that our investment in quality, our investment in integration testing is exceeding the pace of our growth new pull requests. So we are definitely investing in the testing required to drive up quality on our platform.

Switching gears a little bit for Emilie. A question from Ramsey Assal at Cantor Field, who asks, you were gaining market share recently. Can you give us an update on the competitive environment and on the drivers that have enabled you to win share despite the down market. .

Yes. We reached an all-time high in coin-based crypto trading volume market share in Q1, and we gained share in both spot and derivatives globally. In a market where total crypto trading volumes were down 20% plus quarter-over-quarter. Our market share has grown roughly 5x since Q1 2023. And what we found is that when conditions are difficult, people vote to where they trust. So this is the 12th consecutive quarter of net native unit inflows for us.

Share gains have been driven by product innovation and expansion of our derivatives platform including launching derivatives in our flagship Coinbase app and adding support for non-crypto contracts. Our everything exchange strategy is validating retail derivatives are at $200 million plus of annualized revenue prediction markets or $100 million plus of annualized revenue in March and incremental revenue cross sold into a customer base we've already acquired. So it's very positive. We do also believe that share captured in down markets will be sticky as conditions improve. .

Great. Let's switch gears a little bit and talk about stable coins. So this question also for you, Emilie, from Andrew Jeffrey at William Blair. Can you talk a little bit about what the extent of your stablecoin movement infrastructure ambitions are? Is Coinbase content with being a CPN participant? Or is the company looking to expand offerings such as settlement.

So we have built a faster, cheaper global settlement layer, and we intend to fully leverage it. We have a full stack. We are the primary distributor of USDC as the digital dollar base as the settlement layer. Our payments APIs is the enterprise integration layer and x402 is the open standard for the next wave of agent commerce. We have a vertically integrated stack that no other company in the world owns end-to-end. We're not playing as a network participant. We are the platform that powers stable coins. The market opportunity is pretty massive here, and we still think it's quite early in the cycle.

Okay. Let's continue on that theme a little bit and talk about Gentech and AI native finance. For Brian, question from Rayna Kumar at Oppenheimer. As we get closer to the commercialization of Agentic payments at scale, can you talk about the particular opportunity you see for XR2 specifically, how should we think about incremental USDC on platform growth from x402 adoption? And over time, how meaningful could transaction fees on base and from the x402 facilitator really become?

Yes. So thanks for following x402. For anybody who doesn't know, this is an open protocol that we incubated within Coinbase for Agentic commerce. It allows agents to spend small or large amounts attached to any request, whether that's to e-commerce checkout or any other agent in the world. And we're seeing this emerging area of agent commerce really start to take off.

We've subsequently opened this protocol and put it as part of the Linux Foundation, and lots of other companies have come in to contribute to it and oversee the governance of it, including CloudFlare, AWS, Stripe, Shopify, Google and so it's currently the most popular open standard for Agenda Commerce, which is great.

So your question asked about how this helps Coinbase, Well, there's a couple of ways. One is that 99% of the X402 transactions right now are settled in USDC, that's from Q1. And so we obviously monetize USDC via our relationship with Circle, which is good. 90% of the Agentic stablecoin transaction volumes were settled on base in Q1. So base is the leading chain now. And it just makes sense that there's lots of companies who can build on x402. It is truly an open standard. But because it was incubated within Coinbase, we have really great APIs inside Coinbase developer platform, for instance, that let people integrate with x402, put it into any checkout that they want to make Agentic-enabled. And so it's been a really nice thing that's grown from out of Coinbase to become an open standard that has secondary effects on all of our various products.

This kind of speaks to the full stack solution that Emilie was mentioning. I think we're really the only company that owns that full stack of in committing x402, Coinbase developer platform base and USDC, these are all products that we either co-created or help create, and it's been a really great journey to see that all those pieces come together to become the leading stack for agenticommerce.

All right. Switching gears just slightly. We talked a little bit about stablecoins and payments. One of our top priorities is the everything exchange, of course. So Alesia, a question from Patrick Moly at Piper Sandler, who asks, as you scale the everything exchange across equities, prediction markets and commodities, how should investors think about the monetization time line and the revenue contribution from these new asset classes relative to your core crypto trading business over the next 12 to 18 months?

Thank you for the question, Patrick. So as you heard in our opening comments, the everything Exchange is already moving the needle. We highlighted retail derivatives growth that's now on track for $200 million annualized prediction markets is one of our fastest-growing new products that as of March was $100 million annualized, and this is all less than 2 months after go live. So we are seeing really nice green shoots from these new products that we rolled out with Everything Exchange.

We believe that the non-crypto assets are starting to also gain traction. They were 4x quarter-over-quarter in terms of volume from silver, gold, oil. So this is really tangible signs that our decision to expand out the tradable assets on the Everything Exchange is seeing traction with our customers and seeing engagement. So we hope to have more news to share with you next quarter. We're not going to give an outlook on a per product basis. Our whole goal is to grow our total trading volume market share as we did this quarter to continue to penetrate these new asset classes and engage more and more customers with them.

Great. Maybe continuing on that theme, let's talk about something super fun, at least within the Coinbase walls, talk about crypto options. So Alesia, Owen Lau at Clear Street asks, could you please give us an update on launching crypto options trading in the U.S. and the timing of that? What are the major hurdles in front of you?

Great question, Allen. So as many of you know, we closed the Debit transaction last year. Deribit was the clear leader with in terms of institutional clients and professional market makers and trading options. We are very focused on this integration right now. It is progressing nicely, and we expect to be fully integrated in 2026. This means that we're going to unify spot perps, futures, options, all on a single platform. That's going to provide deep liquidity that's going to provide efficiency across these various asset classes. This is -- you're going to hear incremental milestones as we go through the year towards this outcome.

On the U.S. specifically, I cannot give you a time line on today's call, but we're actively working on it and very optimistic. So coming soon on a global basis, if I could zoom out and talk about derivatives globally as well. both of our exchanges, both the U.S. and international derivatives exchanges achieved new all-time highs in the quarter in terms of revenue contribution. This is included in our institutional transaction revenue line and the institutional derivatives revenue more than offset any declines that we saw in option activity in Deribit during the quarter.

Great. Next relatedly for Brian. Crypto volumes have remained under pressure. Sorry, this question from Devin Ryan at Citizens. But crypto volumes have remained under pressure, especially in more speculative token trading. Even as the industry narrative has become increasingly optimistic toward stable clients, tokenization and utility-driven on chain activity. As we're -- are we in a transition moment where speculative volume is declining before the utility side of the market has produced a step function increase in block space demand. How are you thinking about the timing and magnitude of that shift? And what gives you confidence in the secular growth path for coin-based transaction volumes? .

Yes. So this is really part of the reason why we've been investing in the Everything Exchange. It's to diversify the asset classes that are there. So in recent quarters, this crypto spot trading was down a bit, but as we mentioned, derivatives and prediction markets, some commodities, futures and things like that were up, right? So it's true in any given market, right? Something is always up, some things down. And that's the nature of trading. So it's important we're diversifying that through the Everything Exchange. And then we're also diversifying our revenue from a nontrading point of view into what we call subscription and services, of course and that's now 44% of our net revenue.

So that's a nice balancing factor as well. You had asked about utility. I don't think the utility side is really waiting. I think that -- we're seeing, obviously, stable coins are growing like crazy prediction markets. There's really great signs of adoption for tokenization, more broadly, Agentic commerce that we mentioned even our DFI integrations, such as for DeFi borrow or lend, are growing really nicely. So I think the utility side is already here -- and we're in kind of this interim period where spot crypto assets were down a bit, other asset classes were up. And as we diversify, these things will get balanced out where we'll just be in a more upward channel over time.

Great. Next, for Alesia from Alex Markgraff at KBCM. Can you walk us through the RF? I think many folks are curious to understand how much is a function of the current environment versus AI leverage? And what do you anticipate in terms of cost savings, both in quarter and run rate?

Thanks, Alex. Hopefully, the materials that we provided in the earnings presentation go a long way to providing data for this question. But I want to assume that. So the restructuring reflects 2 forces acting simultaneously. It wasn't all one. It's not all the other and it's hard to just detangle and say what is more or less. We definitely saw market headwinds, and we have definitely also seen a transition to AI native operations.

So as we shared, pull requests are up by engineered by 78% year-over-year. We are seeing continued growth in that, and I think that we're going to only see more and more of our work being done by AI in all of our functions over time. With regard to specific dollars, the actions removed about $500 million of total costs as compared to the Q4 2025 run rate. We provided in our outlook both Q2 as well as full year outlook. The full year adjusted expenses are going to be between $4.3 billion and $4.6 billion. And excluding that USDC rewards growth, that's roughly flat year-over-year in terms of that adjusted OpEx 2025 to 2026.

Great. So we'll go to another question from X for Alesia. And this 1 is from at President Noble related to fees. Do you plan on lowering fees? Morgan Stanley and other Trade banks are offering better prices on their brokerages.

Thanks for this. So our position is, as it's been for a long time. Our clients are not choosing us because we're the cheapest However, we do experiment and we do look at different fee schedules for our customers. They're choosing us today because we're the most trusted, we're the easiest to use, the most crypto stored. We have 80 licenses. We have a global regulatory foundation. Customers have the choice between trading on our core platform, advanced to go onto Coinbase One. And so with this choice, we believe that customers are choosing us for the right product for their means, not on fees alone.

But over the long term, we've always said that we believe that fees could come down as things become commoditized. And so our focus on diversifying our revenue is very important and it's more diversified than ever. We have 12 products with over $100 million of revenue. We've shared with you that we have a really solid forward pipeline of additional products that are scaling and on pace to become our 13th. And so we are not keeping our eye off the ball of the risk of fee compression, but it's not what we're seeing in the near-term business.

Yes. And I'll just add that for customers that are more fee sensitive, we have a couple of really great options already. I mean 1 is that with a Coinbase on subscription, they can get 0 fee trading. So a lot of customers are taking advantage of that. And then in Coinbase Advanced for our more prosumer traders, there's very competitive pricing that scales down really to just a few bps at the high end based on volume. So I think for many of our customers that are -- want to get lower fees or even 0 fee trading, we have great options for them.

Great. Next 1 for Emilie from John Todaro at Needham & Co. Institutional transaction revenue declined more than the retail consumer quarter-over-quarter. Can you frame up the institutional interest in crypto as of late? And if you are surprised to see more weakness in institutional than retail.

Sure. Listen, I think things ebb and flow between institutional and retail, and that's okay -- it's how it's always been for the business, institutional transaction revenue of $136 million declined 27% quarter-on-quarter, which is in line with macro institutional trends. lower volatility reduced hedging demand, specifically at Deribit and options activity declined following all-time high volumes in Q4, that weighs disproportionately on our institutional revenue. Deribit open interest share held steady despite that headwind, and we feel that the durability of positioning is still very much intact.

Underneath the revenue line, institutional engagement was actually quite strong by the end of the quarter. Most of the downtrend happened in January, and active lending plans grew double digits quarter-over-quarter. Average daily loan balances hit an all-time high of $1.4 billion. Forty five major financial institutions have moved tokenization from concept to production in Q1, institutions understand the longer-term utility of crypto and they are definitely positioning ahead of regulation. And on top of that, we have a very strong institutional pipeline that ETFs, including staking, deaths, prime custody activations that we -- that are opening new TAM for us.

Great. And I think we just have time for 1 last question. This 1 from X Credit Brian. What is Coinbase or Brian most excited about for the next 1 to 3 years?

Well, there is lots happening in crypto. I mean, the first is just every asset class is coming on chain, right? Whether it's stocks, prediction markets, commodities, FX, tokenization of all these real-world assets, right, which is about $30 billion today, expected to be $16 trillion by 2030. So the trading is just going to get more and more efficient and more and more of that will flow to onchain.

I think the second 1 is, of course, stablecoins. It's just we're in a golden age right now where payments are now fast, cheap in global. They can be under 1 second, under 1 anywhere in the world, just like sending WhatsApp message or something. It just arrives instantly almost for free anywhere in the world. That's never been possible before in payments and we're going to see more and more payments like global GDP essentially flow to these stablecoin rails. And then agentic commerce is really going to be a catalyst on top of all of that, where I think increasingly, people will rely on these agents to get work done for them. They'll need to get things paid for.

And we launched this website agentic.tmarket, for instance, that's just it's a collection of all the different services out there that are AI agent enabled where agents can connect to them, pay transaction fees through the x402 protocol and get work done on your behalf. And it's just a really exciting time to be building financial infrastructure for -- it's more efficient for the whole world plus AI agents, and that's what I'm excited about doing in the coming years.

All righty. Well, that concludes today's earnings call. Thank you so much for joining us for this Q1 update, and we look forward to speaking with you all next quarter.

All right. Thank you, everyone, for joining us. Today with me, we have Alesia from Coinbase. Jigar Patel, Global Head of Fintech at Morgan Stanley.

Galactican.

Before we get started, let me just read a quick disclaimer. I'd like to remind you that during today's chat, Alesia may make forward-looking statements. Actual results may vary materially from today's statements due to risks, uncertainties and other factors that are described in SEC filings. Our discussion today may include references to non-GAAP financial measures and a reconciliation of non-GAAP financial measures is available in the company's latest shareholder letter.

All right. All good. So with that out of the way, let's -- maybe let's -- Alesia, let's start at the crypto markets first. So October 19, Bitcoin crash, deleveraging. Here we are a couple of months later, the macro backdrop for crypto certainly feels a little bit like crypto winter. At the same time, you now have the tail -- or the headwinds of tariffs, geopolitics, an ongoing war. And we've seen periods of volatility like this before, but do you think this time it's different?

Thank you for having me. It is great to be back. And there's nothing I like more about talking about crypto volatility. I think the important thing is we are no strangers to volatility here at Coinbase or in the crypto market, but this is different. And what's different about this period than the 2022 period, as an example, is what we are seeing now is the volatility and the price declines are really institutionally led. And this is no surprise as with the great success of ETFs and the diversification of crypto becoming more of a mainstream investment asset, you have a heavy institutional role in the market that did not exist quite candidly back in the prior cycles. That was very retail and then crypto event led.

And so with institutional ownership of these assets, we're seeing a much higher correlation with macro events and what is driving institutional trading patterns and risk-off mindset is then impacting crypto. But when you peel back and look at what's happening on our platform, what we're really pleased to see is that our consumer investors, our retail investors are acting like they've done in all prior periods. The vast majority are holding their assets, which we've always seen when we see significant price declines in Bitcoin as we have people that go into HODLing mode. And the retail investors that are active are buying the dip. So net-net, we see buyers on our platform on the retail side.

What we also see is that we are moving from speculation to utility because despite the fact that the crypto prices have fallen off widely, USDC market cap has had a very modest decline. And that's driven by more growth in utility, more growth in stablecoins, which I'm sure we'll talk about later. And I think also this is important because we have always been focused on diversifying our revenue. And so the timing of this works well with the introduction of our Everything Exchange vision that we'll talk more about, and we recently diversified into equities and prediction markets, which will all then trade on different macro drivers is our belief, and they will have more diversification of the types of trades that we expect our clients to do.

Okay. Great. Let's talk about regulation. So Genius Act, you had that last year.

Volatility to regulation, yes.

Volatility of regulation before we get into the company in all the backdrops. So regulation-wise, Genius Act last year, a lot of momentum. Clarity Act, it was coming, it was coming, stalled a bit.

Still coming.

Still coming. The White House has put out March 1, which arguably is a few days past us now to finalize negotiations around what's in or out of the Clarity Act. So can you give us any update on where it sits today and some of the main topical points that are still being finalized?

Absolutely. So we believe that we'll be able to get to legislation this spring. I think it's important that the crypto companies are all united. We are active. We have a seat at the table. And there's probably not a day that's gone by that there's not some negotiations, some discussion being had to try and bring the Clarity Act to a vote. We believe that there can be a win-win with banks. A lot of what you see publicly just talked about is the rewards issue about who can pay rewards on stablecoins, who can pay yield on stablecoins and what that means. There's been a lot of research studies put out on both sides about whether or not this would not have any impact to the broader market participants.

But we believe that there can be a win-win there. What we are trying to do is fight for our customers. We are trying to preserve the benefits of crypto. We are trying to get to clear rules so that once we have rules, we can all go forward and build and have a lot of clarity on what each asset is, what the taxonomy is, what regulator is going to regulate, what asset. But we're really optimistic that we're going to get there, and we think that there's going to be a nice solution in coming weeks or months. This spring feels very hopeful, though.

Beyond Clarity Act, are there any other pieces of legislation that people should watch? There was one with the SEC recently changing the treatment of stablecoins as collateral, but any other pieces of the regulation that are key?

I think that's a really good call. It wasn't so much a change. It was clarifying what the discount rate can be on stablecoin collateral, and it's treating it akin to a money market with a 2% haircut. We think that all of this clarity will help adoption and help people then be more comfortable with using stablecoins in lieu of fiat for assets that are trading 24/7. So stablecoins are a critical payment leg of any tokenized product. And so tokenized is then the key theme here to talk about of what we are focused on with regulators. The SEC has a great task force. We've been actively meeting with the SEC. We've had, I think, 30 meetings in the last year to try to bring forward rules around tokenization.

And these are real tokenized securities, not derivative instruments that you see trading abroad right now. That would be the next kind of pillar of what we really like the regulatory clarity on. What are those rules, how does this work in decentralized protocols? That's what's coming next.

Okay. Let's shift into Coinbase now. The company is much different now than it was a few years ago. I think as part of your latest earnings release, there was a phenomenal stat that showed you have 12 products, $100 million plus of ARR, 6 products or over $250 million plus of ARR. So it's the Everything Exchange. And so can you talk about you've gone from allowing people to first access crypto and then trade crypto to now being able to manage tradable assets. You've launched Coinbase One, which is growing nicely. And then more recently, applying for an OCC trust charter.

Well, there's a lot to unpack there. We can go in a lot of directions. OCC...

It's all in one.

All in one. Yes. We worked really hard to continue to offer our clients the ability to transact with their assets in more and more ways. We are also working really hard to diversify the breadth of assets that people can trade on our platform. So we started with just spot crypto. We moved to derivatives and derivatives is the area that we are probably the most mature is our second pillar of trading. We brought 24/7 perpetual style futures to the United States last year and seen significant growth. We've doubled our trading volume year-over-year, both in market share and total notional on the back of strong derivatives growth.

We bought Deribit last year. Deribit brought us to the market leader in options trading in crypto. So all of this is broadening out the types of assets that our customers can trade on our platform. As we announced in the middle of last year, we had ambitions to diversify that further. And so just in the last few weeks, we've rolled out equities trading now to all of our retail holders. We've launched prediction markets. And so think about these as just building out pillars of asset types that we want to offer. Our ambition is to bring each of those assets on chain. And so while today, they are a regular way in the way of equities, the ambition always is to then take these assets and move them to the new tech stack on chain assets. And we believe that we can service that bridge just like we did with USDC to bring Fiat into stablecoins to bring those assets more deeply embedded within our product stack.

So that is where we're going. We do now have 12 products that are over $100 million of revenue, as you noticed. And we're really working to bring our 13th and our 14th market. But even more importantly to me is I want to move many of them from the $100 million to the $250 million to the $500 million to the $1 billion. We have $2 at $1 billion of annual recurring revenue at this point in time. And so we really want to not only diversify the products, but scale our products in market, and that is a key focus of ours right now. The underpinning regulatory environment is the support infrastructure to become the most trusted, most globally adopted brand. And so with the OCC charter that you mentioned, we have applied for an OCC charter. This will enable us to have federal jurisdiction for our custody business so we can custody an increasing number of assets under one license and one well-respected charter environment.

We are a custodian today of over 12% of our crypto market cap. We really have learned how to custody these bear instruments, and we custody more than 2x any nearest competitor that we can identify. And so as we bring more assets on chain, having the regulatory apparatus to then support the technology that we've built, we think is important to just continue to earn clients' mandates and custody an increasing number of assets and asset types.

Alesia, let's maybe double-click on one of the products you mentioned now being able to trade stocks on the Coinbase platform. Can you talk about how the early engagement and the adoption of that is going?

We're 2 weeks in. So I don't have a lot to share.

Let's say in a volatile stock environment.

Volatility. It's something we know. Our clients know it, too. Too early to share any stats, but we're really pleased with the early and encouraged to see the early engagement from our existing customers. We also announced a partnership with Yahoo! with the rollout of 100% offerings to our customers. And so now you can research a stock on Yahoo!, click through to Coinbase and purchase that into your Coinbase portfolio. So early, early days. We'll have to update you on future calls, but it's encouraged by what we're seeing so far.

Okay. Let's talk about predictions market. So you have a partnership. You launched products. How is Predictions Market integrated into Coinbase? And maybe any stats or insights you can share on the early days of that adoption?

Another Q1 rollout. We partner with Kalshi right now. And so think of us as an introducing broker and then routing our trades or interest in the market to their exchange and their platform. What -- the product is deeply integrated into the Coinbase main app, where, again, the goal is that you're trading more and more assets side by side, and you can choose to deep dive, you can see what's trending. You can see what you may be interested in and what your friends may be interested in. And all of those served up. Too early to share stats at this point in time. What I think is important, though, is we are focused on getting a great product experience for our existing customers before we are rolling up marketing dollars to make this a new customer channel. And so we're going to be iterating and getting the product really dialed in for those customers and more to come as we kind of scale.

Let's talk about another product, which, I guess, is not a Q1 rollout, but an earlier rollout, Coinbase One. So now up to almost 1 million paid subscribers. How is that growing? What's in the road map to keep growing Coinbase One customers?

Coinbase One has been one of the areas of focus for our most loyal, most engaged customers on our platform. And what we began to do last year was roll out increasing rewards and benefits for being a Coinbase One member. So 3 major changes. One, we now offer a Coinbase One credit card, so people can use credit and earn up to 4% Bitcoin on any of their spend. This has driven a lot of Coinbase One growth because it's a gated product, and we are just getting reports of customer delight in using this product. It creates a flywheel then if they're owning more Bitcoin in their portfolio. And then once we find that people own Bitcoin, they are more likely to trade and engage with other products and services on our platform.

In addition to the credit card, we also gated USDC rewards behind the Coinbase One membership. So now you have the ability to earn rewards on your USDC balances, you can earn Bitcoin back on your credit card spend, and then we introduce more tiers. So these customers, what we tend to find now are holding USDC, earning rewards, using a card, buying Bitcoin, diversifying their trading into other coins, most likely to stake in this population and getting more deeply involved in our platform. The combination of tiering the subscriber base to meet customers of any asset size, putting more benefits behind the program is really nice growth that's coming behind that, and there'll be more to come.

By the way, I forgot to mention, I am a Coinbase One customer, so I'm added into that. Let's talk about -- I expected that. Let's talk about tokenized equities. You've seen now one of the first tokenized equities offering with the figure transaction. You've seen some of the traditional exchanges start offering ETFs with 24/7 trading. The SEC is starting to put some framework around it. So can you talk about where Coinbase is in its rollout of tokenized equities? And how do you think the market evolves?

Well, I think the market evolves that eventually all the assets that we've ever known or talked about are on chain assets. So I think that's a matter of when, not an if at this point in time. And you see that by broad institutional interest and adoption of putting assets on chain. And now it's a sequencing conversation. It's a regulatory clarity question. So where we are is active in technology and regulatory clarity conversations with the SEC. We want tokenized equities to be freely usable and interoperable with DeFi protocols, and we believe that creates the most benefit to end customers. The ability for me to just send you a security. My grandmother would turn over her stock certificates and endorse them over to her children. I love the idea of my parents being able to gift stock to me directly without, no offense, having to go through a broker.

Now I think it's also important that you get all the benefits of stock ownership, though. We believe that it's important for our clients to own the securities in their own name. I think this really gets to the benefit that I would know who our retail shareholders are. I don't know who my retail shareholders are today as they're held in street name as opposed to individual names. So there's a lot of benefits that we see with moving into tokenized equities, but they need the benefit of being able to be self-custodied and move on chain. And that is what we're in active conversations with to try and bring that world into fruition.

Let's pivot to the other side of the Everything Exchange, the institutional side. So you have a large custody business. You work with many of the biggest institutions today. Talk us -- take us through the road map on the institutional side.

The institutional vision for the Everything Exchange is similar to retail, it's stocking the shelves. The key priority this year is to integrate Deribit and bring options side by side with perpetual futures with the other derivative products we offer and crypto. So that is the most near-term stocking the shelves. The benefit of this and what we're driving for our institutional customers is deep liquidity in all of these products and the ability to then get cross margin to create more leveraged efficient trading, lower cost, less liquidity having to put to work. This is what we're hearing from our institutional clients that they would really benefit from. Over time, then adding more assets to this platform to give them the ability to just be the most capital efficient they can be is our ambition and goal with the Everything Exchange for institutional clients.

Can you talk about as part of that the Coinbase developer platform? I think many people have focused on that, but between what is it, do you think there's more monetization that becomes unlocked as part of the Clarity Act or any of the regulatory actions in place?

Thanks for that. So the developer platform, think about this as we've talked about the products that we are selling directly to our customers. But as I mentioned earlier, one of the things that we believe that we are uniquely skilled at is we have built products that we can safely store bare instruments and not only store bare instruments, but make them liquid, make them tradable 24/7 and really reduce the risk. So we have really strong operational controls that we can then bring assets from cold storage to a hot wallet, trade, move those assets off our platform, bring assets from outside vendors back into our platform.

This technology is what has enabled us to win 80% of the ETF custody so far as an example. We are white labeling these tools. We are white labeling our custody business. We are white labeling our exchange, the ability to trade through our broker and making that available to banks, fintechs, so they all can offer crypto trading to their end users. And we are finding that we are the partner of choice for many institutions. So they can then offer these end services. So we have 5 G-SIBs that we work with. We have over 250 other fintechs and other corporates that are building on our developer toolkits.

But really then what you see is that revenue coming to our institutional business. So it monetizes the same way as our institutional business as those have all been tiered pricing. And so the more volume you get into the lower tier set. Obviously, if you are building a product on top of our rails and then you can offer it to a larger group, we tend to be in that lower fee set. So that's how you're going to see that monetize through our P&L, but it's really then enabling us to be an infrastructure partner behind a lot of the growth of crypto that you see throughout the ecosystem.

Let's flip over, Alesia, to stablecoin. So I talked about crypto winter. The other analogy we always hear, it feels like stablecoin summer. Everybody loves talking about stablecoins. So you mentioned USDC. How do you think about what's going on with stablecoins in terms of the growth that we're seeing in market, but potentially the exposure to interest rates that they have?

So stablecoins are a digital dollar. And I think we underestimate digital dollars because digital dollars can transact globally, they can transact cheaply. They can transact with speed. You can self-custody them. And so who doesn't want the highest reward, lowest risk, cheapest transaction, most globally acceptable dollar. It has a lot of benefits over other forms of dollars. But at the end of the day, it's a dollar. So yes, it's subject to interest rate headwinds. But the utility of money moving to the lowest friction place is the trend that we are going after. And so what we're seeing is, as we mentioned, with tokenized assets and the trends that you're seeing for tokenized assets, stablecoins are the payment leg. In DVP, you need to have a 24/7 digital dollar to go against any form of tokenized assets. So just the growth of tokenization leads to the growth of stablecoins.

And that trend is different than macroeconomic trading headwinds on Bitcoin as an example. We're also seeing it have broad adoption in payments. And then we're seeing more adoption with agentic commerce and payments. We saw an all-time high in base transactions driven off the back of agentic commerce and payment use cases. So I think there's a number of tailwinds, just cheaper, faster global payments, moving the tokenization that requires then to have a stablecoin to be the payment leg for DVP and agentic commerce that are all giving stablecoins this tailwind. And so one, what stablecoin will win then. And so we have seen everyone else wants a stablecoin. Let's go create more stablecoins. Our belief is like any new technology, and we've all seen this with any new technology is you have fragmentation before you then have adoption and consolidation. And we are in the fragmentation era of both protocols and stable coins.

And I think what you need to focus on is which ones are getting network effect, where are you seeing broad adoption? Where is there enough liquidity because what you need for collateral use is you need liquidity, which ones are meeting global regulatory requirements around, is it a payment stablecoin in the U.S.? Is it MiCA compliant in the EU? And so these will start to gain adoption. And then I do believe there's going to be network effects over these stablecoins. We are believers, though, for the network effect, you need to be able to make this economically beneficial to participants, which is why we are active in sharing rewards and making sure people feel like they can benefit economically from these, no different than if they were going to create their own.

I want to go back on the -- just the regulatory point since we're on stablecoin. So we're in the most kind of regulatory-friendly environment that we've seen around crypto, but there's varying jurisdictions of people have to be Genius Act compliant by some point. They have to be MiCA compliant by some point. Do you think even with administration changes, there's things on the regulatory front that change that maybe make the U.S. better or worse place in terms of crypto and maybe push things outside?

With the Genius Act today, I think that we can be very competitive on stablecoins, and I think it's very aligned with MiCA requirements. So -- but I do think that you will see if we create different barriers that make it unattractive to build in the U.S., just like we saw in the past administration, we saw development move outside, and we saw adoption. I mean stablecoins are more broadly adopted outside the U.S. than they are in the U.S. today. So absolutely, I think that the regulatory environment for global technology where people can hold things in self-custody, you will see money move to the most attractive and most beneficial environment.

Got it. Let's switch over to capital allocation. So we talked about the market downturn. You've talked about using the free cash flow, the profitability that Coinbase has to potentially acquire more Bitcoin and repurchase stock. How do you weigh off that trade-off? By the way, we had [ Michael Feller ] up here the other day, and he would say just keep buying Bitcoin, 100% allocation.

We're not doing 100% allocation to Bitcoin. We're an operating company. I don't think of them as a trade-off, though. I think that we view that we committed to be EBITDA positive in all operating environments, and we then believe that we are taking a percentage of our operating income and allocating that to Bitcoin purchases. We are dollar cost averagers. We are in the market every week. We buy a small amount every week based on the percentage of our operating income. So that is just a steady small dollars going in on a weekly basis to kind of build up a long-term portfolio and align with our business interest and our client interest.

Our stock repurchases are different. Our stock repurchases then are driven to offset our dilution as we are very focused on then keeping an eye on total dilution and being opportunistic. So when we see price dislocation in our shares and we believe that we have more opportunity to grow our valuation, we can be opportunistic and put more dollars. We bought $1.7 billion of stock by -- through mid-February, between Q4 and mid-February, and our Board authorized another $2 billion to put to work opportunistically and offset future dilution.

The other part of capital allocation, M&A. So 2025, you could say it was a banner year for M&A for Coinbase. You did the Deribit acquisition, I think the largest crypto acquisition announced. But then there was, I think you had probably 10-plus acquisitions. So can you take us through how you -- well, a, how the acquisitions have gone from what you can see? And then how do you think about that going forward, especially in a more volatile market environment like this where there could be more opportunities available and Coinbase is the buyer of choice.

As, Jigar, we have a very sophisticated corporate team and a very active corp dev team. So we did close 10 acquisitions last year. The largest was Deribit, the second largest was Echo. Please note, Deribit was like up here in terms of size, then Echo was here, and there was like very small things. So we count in that 10, we do acqui-hires where we could hire small technical teams that will come in and drive more product development in an organic basis in that approach. So we are always looking for talent to build out more technical talent. We would buy clients. We would buy assets, we buy technology, we buy licenses. And the deals that we are most likely to be doing in size are ones like Deribit, which introduced us into options. We bought a market leader. And what we saw after acquiring Deribit is they grew their transaction volume post Coinbase, one because we brought our trusted brand behind it. We have a better balance sheet.

So as a counterparty, institutions were like great product. Oh, now I've got a stronger counterparty. I can put more capital to work. I can hold more open interest, I can trade. This is great. That's a 1 plus 1 equals 3 for us. And so we saw really positive revenue synergies on that as well as then we can drive the cost synergies through the back office, the compliance, the finance, et cetera. So we will always look for those types of deals. When we look going forward to 2026, the reality is we're going to be active in any market that we find ourselves in. We do find, obviously, that private companies don't reprice as quickly as public companies. So sometimes we have to be more patient to deploy that capital. But everything will be in service of our 3 priorities this year, whether it could be something that would help us build the everything exchange to give us more depth in any of those 4 pillars that I mentioned or to broaden the assets that we can trade on our platform.

Two, we're looking for anything that will grow payments use cases and stablecoin use cases. And then third is our third goal is to bring more dollars on chain. And that's through base integration, that's through bringing more DeFi applications into the Coinbase main app. So anything in that spirit would be the third area of interest.

Let's, Alesia, go back to 2022, 2023. that volatility in that environment today, volatile as well, but Coinbase is a much different company. We talked about just the revenue scale, the product diversity and the scale. If you had to go back and think about what were the lessons learned over the last 3, 4 years, what would they be?

Well, many of you have probably heard us say that this, but when we went public, we had seen volatility, obviously, before we went public. And we communicated to the market that we wanted to break even over a cycle. And the market quickly said, no, no, no, no. That is not an appropriate strategy, Coinbase. And so we pivoted and committed to then be adjusted EBITDA positive in any market environment we found ourselves in, and we realized it was important not only for our investors, but also for our institutional clients that they saw us to very strongly financially positioned and able to withstand any volatility in the top line revenue and make sure that it was translating to positive cash flow.

For any of my debt investors in the room, I also hear you and I see you, and this is important to us all as well. So we really pivoted our strategy to being able to generate positive adjusted EBITDA, cash flow in any market environment. And then through our stock repurchase program, use that cash flow to then bring down the dilution from stock-based compensation. So that is our commitment. That is what we now set our eye on. So as we look towards volatility and potential top line volatility as we go into 2026, we are keeping a close eye on our expenses and making sure that we are not growing expenses that we can't support through any type of environment that we are potentially interested in.

But the key here is we are focused on diversifying that revenue and getting away from what we consider the true peaks and volatility in crypto and building more products, more verticals that we think will behave differently in different market environments.

Let's talk about AI. I know you mentioned agentic commerce, but talk about how AI can also play into -- there's AI, there's a quantum part of it, but like how does AI play into a company like Coinbase? Where do you use it? Where do you see it?

Well, you dropped quantum in there. So let me address quantum first, and then we'll get into the AI because I think they're tangentially related, but we think about them differently. So there's been a lot of talk about the risk of quantum computing to crypto. And what I want to share is that this is something that we are keeping our eye on carefully. We have founded a research team that is actively participating in this, and we will be active in the community to try to ensure that we are lending our technical support and our research and our knowledge to getting the protocols updated so we are completely able to absorb any risk that comes.

So while it's not the #1 thing we worry about right now, it is something that we are closely paying attention to and watching. With regards to AI, I would say that it is -- I'm sure like with every other company you've heard present today, it is top of mind for every employee at Coinbase. So it is built into our hiring. We are now no longer hiring anybody that cannot demonstrate AI proficiency. We are encouraging tinkering throughout our team. So we are looking at who is tinkering with AI. We believe that we are seeing the most progress with bottoms-up AI adoption, which means that the person who owns a process in the company, if given the right tools and support, is best able to automate that process and develop an agent to then do that work. We are not finding it to be productive to just hire an AI team and then say, dear AI team, please fix my accounts payable process and automate it. No, we are finding it best to teach our AI team how to use the tools.

So we have most of my finance team on cloud right now. We have most of our HR team on cloud right now. We have very high expectations throughout Coinbase that we are going to use AI proficiently, and we are going to all become managers of agents in addition to our workforce. So we haven't had any change to our hiring plans. We've seen the most success in automating areas of our consumer and our compliance support. So on-chain transaction monitoring, consumer compliance and support has been moved to AI for the majority of calls. Some queues are like 80% to 90% now agents. A lot of our institutional onboarding has now moved to agents, digesting all of the information we get from a client to ensure it's compliant with policy and then decisioning it for onboarding. So we'll see more and more of the processes. I mean it is amazing just week over week what changes though right now.

Got it.

I didn't talk about agentic commerce. The more exciting thing, the revenue opportunity. That's just like on the expense side. And I guess as the CFO, I spend a lot of time on my expense side. On the revenue opportunity, we have partnered with Google, Cloudflare and others to bring forth X402. X402 is an agent protocol, which enables agents to transact with stablecoins seamlessly. And we are seeing that with base with our embedded wallet product really start to see nice growth. And I think that, that is just starting. We are just at the very bottom of that curve. But I do think agentic commerce using stablecoins on base and other protocols is going to see material growth over the next few years.

Let's -- we've covered a lot of ground. Maybe let's talk about double-sided question here. The most underappreciated thing about Coinbase or what investors often get wrong about Coinbase that you'd want to correct. And then if you think about -- you talked about agentic commerce, we talked about stable coins, the proficient use of AI, more friendly regulatory regime. If you could 5, 10 years out, what are the biggest opportunities for Coinbase?

All right. The thing that people most often get wrong, I would say, is having a very short-term focus and getting too caught up in near-term volatility and not zooming out and looking at the bigger picture. So looking at the fact that Bitcoin has been the best-performing asset over the last 10 years, looking at it and saying, oh, there's near-term correlation with equities. Well, if you zoom out and look at this over a longer period of time, there's not. So getting caught in near-term versus longer-term trends, thinking about the tailwinds of moving assets on chain, thinking about just the infrastructure that Coinbase builds year-over-year to kind of drive forward this world. So near-term versus long-term thinking.

Second, how much we have diversified that we are no longer just a simple Bitcoin trading platform now that we have 12 products that have over $100 million of annualized revenue to over $1 billion of annualized revenue that we're diversified, we're growing, we are mixing. Third, that we are the institutional partner of choice that really on the developer question, we now are sitting behind and touching transactions through a stack. And whether we're offering them direct to consumers or enabling others to offer them, we are a critical component of infrastructure for this technology.

And what if I look out 5 to 10 years, one, I believe that we're going to see more and more GDP move on chain. So we talked about we're going to tokenize everything. I said it's a matter of when, not if. I think that we will see an increasing amount of trading happening on assets that are on chain. I think we won't talk about it being on chain probably in 10 years. I think that it will just kind of bleed behind.

It will be chain native.

It will be native. It will be just like we don't talk about like we traded a digital security. We didn't like physically hand a stock certificate across the stock exchange for like we don't talk about that anymore. It just -- we traded an asset. We're going to just trade assets and the technology will kind of hide behind the curtains for most consumers. and institutions. And I think that we'll see agents drive micro payments drive the dominant payment trend.

I have one wildcard question, if you want to go there. All right. It was around the Coinbase Super Bowl ad.

Okay.

Who selected the karaoke song behind that? It was a great ad.

It was a great ad. We have a wonderful CMO named Cat Ferdon and you can give her all the credit.

Awesome. All right. Well, Alesia, thank you so much for taking us through Coinbase and sharing your insights.

Thank you so much.

Good afternoon, and welcome to the Coinbase Fourth Quarter and Full Year 2025 Earnings Call. My name is Anil Gupta, and I'm Vice President of Investor Relations at Coinbase. Joining me on today's call are Brian Armstrong, Co-Founder and CEO; Emilie Choi, President and COO; Alesia Haas, CFO; and Paul Grewal, Chief Legal Officer. During today's call, we may make forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings. Our discussion today will also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures. We'll start today's call with comments from Brian and Alesia and then take questions. And with that, I'll turn it over to Brian.

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prices, but Bitcoin remains the best-performing asset class of the past decade. We've been through cycles like this many times at Coinbase and adoption continues to grow, regulatory clarity is on the horizon, and I'm more bullish than ever. Moreover, we've successfully diversified the business where stablecoins, subscription and services revenue and now trading of other asset classes like stocks, prediction markets and commodities means our revenue is less correlated to crypto price fluctuations.

We launched the Everything Exchange in Q4 and are seeing early signs of success. Global trading volume and market share doubled year-over-year, reaching new all-time highs. Just last week, as crypto prices fell, gold and silver futures drove record notional volume on our exchange. We hit our highest 24-hour trading volume in over a year, in fact, and Base set a new transaction all-time high with AI agents adopting stablecoin wallets. Base is quickly establishing itself as the onchain home for AI. So looking ahead, our strong balance sheet and progress on the Everything Exchange gives us the ability to continue investing in these market conditions. We'll keep buying Bitcoin. We'll continue to buy our stock back, and we won't stop building.

Now I want to talk about how we're going to win in 2026. Financial services is a massive industry, and there's multiple trillions of dollars of revenue up for grabs. Crypto is updating the financial system from trading to payments to lending and Coinbase is the best positioned company in the world to capitalize on this transformation. Here are 4 reasons why. Number one, we store more crypto than any other company. We're the most trusted brand in crypto, and we work with thousands of institutions, including 5 G-SIB banks and 150 government agencies, just as one example, we store 12% of all crypto in the world, more than the next 4 competitors combined. Assets on platform has grown about 3x over the past 3 years. And these assets are very sticky as we connect more products into them. So that's the first reason.

Number two, we've doubled our trading volume and market share year-over-year. We started off as the leader in the U.S. And now as regulatory clarity has emerged around the world, we're growing our share internationally as well. Number three, we've diversified our revenue streams so that it's not just trading specific. We now have 12 products doing over $100 million in annualized revenue. Subscription and services revenue hit all-time highs, up 5.5x from the peak in 2021, and we generated positive adjusted EBITDA in any market condition and consistently profitable on the adjusted EBITDA and adjusted net income basis over the last 2 years. And finally, number four, we have deep crypto expertise at Coinbase. This manifests in the unique products that we've been able to offer. So for example, we were early to offer DX trading, which now allows us to have millions of crypto assets available to trade. We were early on DeFi borrower lend. We were early on building out the base chain. We've even migrated to our multiparty computation cold storage system, the next generation of it, which has allowed us to accelerate the speed at which customers can complete transactions. So this deep crypto expertise really is one of our core strengths. So for these reasons, we're best positioned to win this transformation as more and more financial services are updated by crypto, this big secular trend.

Now in 2026, we have 3 top priorities that we're focused on, and I'll quickly run through those. So the first one is to grow the Everything Exchange. In Q2 last year, we introduced our Everything Exchange vision, which is one platform for all tradable assets, whether that's crypto, equities, prediction markets, commodities and more. And our thesis here is simple. For customers, the ideal experience is to have access to every investment and trading product that they want in one trusted place wherever their assets reside. Stocks and prediction markets are natural extensions of our core business, providing a clear path to increasing product stickiness and revenue generation. It's working. Early feedback from our customers is very positive, and we see a number of users crossing over to trade commodities and equities alongside their crypto. We hit all-time highs in derivatives volume and revenue in Q4. And a few weeks ago, we rolled out prediction markets to 100% of our customers. Soon, we'll add more markets and a dedicated sports hub for prediction markets. Equities have rolled out and we'll have almost 10,000 tickers live this month. And in Q4, we even acquired Echo to enable more efficient onchain capital formation. This can offer unique investment products to our customers on our Everything Exchange from the private market. We're working on shipping tokenized equities, which will be a major positive change to the financial system. And with the crypto forward leadership of the SEC, we believe there's a path to get there. We'll also be expanding the Everything Exchange to more countries around the world. So that's our #1 priority in 2026 is growing the Everything Exchange.

Our second priority is that we're scaling stablecoins and payments. Stablecoins are the second killer app in crypto, and most are still underestimating the potential of a digital dollar. In Q4, we hit an all-time high in USDC stored and Coinbase products, which helped USDC reach an all-time high market cap of about $75 billion. In 2026, we're focused on expanding stablecoin utility with deeper product integrations, scaling out our payments infrastructure in Coinbase developer platform and Coinbase business. We're even protecting the ability to pay rewards to customers using stablecoins to ensure customers can benefit from this and that regulated U.S. stablecoins remain competitive with offshore or unregulated offerings. If you were designing money from scratch today, you'd get crypto and stablecoins where you can transfer funds anywhere in the world in under a second for less than $0.01. With the unrivaled efficiency gains, all signs point to stablecoins continuing to grow. We're even seeing these AI agents adopt stablecoins for payment, and I believe that stablecoins will be the default payment method for AI agents. Okay. So that's our second priority, stablecoins and payments.

Our third and final priority in this 2026 time frame is to bring the world onchain. Now onchain is a key part of our business strategy and our mission, and this is the broad term that we use for DeFi, self-custodial wallets and full adoption of decentralized technology as opposed to centralized intermediaries. We're seeing growing adoption of self-custodial wallets around the world, which let people store their funds and instead of trusting a third party. And with just a smartphone and an Internet connection, anyone can get access to more financial services, improved financial services and participate in the global economy. We have a winning onchain strategy. And in 2026, you'll see more DeFi integrations in the Coinbase app. You'll see scaled adoption of the base app with its new focus on trading. We'll continue to increase transaction volume on the base chain and all of the above will increase the percentage of onchain activity powered by Coinbase infrastructure. So in closing, as crypto continues to update the financial system, Coinbase is the best positioned company to capitalize on this transition and bring more economic freedom to the world. Now I'll turn it over to Alesia.

Thanks, Brian. Good afternoon, everyone. 2025 was a strong year for Coinbase, both operationally, as Brian just highlighted and financially. We executed consistently against our goals. We delivered or outperformed our revenue and expense guidance that we provided every quarter. Our 2025 total revenue was $7.2 billion, a 9% year-over-year increase. Subscription and services revenue reached $2.8 billion, up 23% year-over-year and more than 5.5x higher than the prior cycle peak in 2021. As Brian noted, we are pleased to see the growth of the number of products generating $100 million of annualized revenue. And equally, if not more pleased to see many of these products scale. And we are working hard to see more products join the $250 million, $500 million and $1 billion annualized revenue club.

Turning to our Q4 results. I'm going to start with some highlights. We did have quarter-over-quarter softer market conditions. Crypto market cap was down 11% quarter-over-quarter. However, we outperformed the market on total trading volume, driven by strong derivatives volume growth. Deribit saw another all-time high quarter. Q4 marked our ninth consecutive quarter of native unit inflows. This is inflows to our assets on platform, where customers then in turn stake, they custody, they engage in USDC. So we're seeing growth in native units despite the price headwinds. It was our 12th consecutive quarter of adjusted EBITDA profitability. We are a business that is prepared for volatility. We have diversified over the last 4 years. Our transaction revenue is diversified and will continue as we execute against the Everything Exchange. As we mentioned, we have 12 products with over $100 million of annualized revenue, and we are scaling them. Half of those are over $250 million. As we enter the first quarter and see even more volatility, what we are pleased to see is that our retail customers are HODLing like they always have, but those who are in the market, they are buying the dip. Every week, we've seen net buying versus selling on our platform as we've entered this year. And as Brian mentioned, Coinbase is buying the dip. We've deployed $1.7 billion to repurchase shares. We fully offset our 2025 dilution from stock-based compensation, and we're buying Bitcoin.

So let's dive into the details. Q4 total revenue was $1.8 billion, down 5% quarter-over-quarter. Q4 transaction revenue was $983 million, down 6% quarter-over-quarter, while subscription and services revenue was $727 million, down 3% quarter-over-quarter. Turning to expenses. Total operating expenses were $1.5 billion, up 9% quarter-over-quarter and in line with our outlook. Technology and development, general and administrative and sales and marketing expenses collectively increased 14% quarter-over-quarter, primarily driven by costs associated with the recently closed acquisitions of Deribit and Echo and higher USDC rewards, reflecting the record USDC balances held in Coinbase products. When you exclude deal-related costs associated with our M&A activity in 2025, tech and dev G&A plus sales and marketing would have increased 11% on a quarter-over-quarter basis. We ended the year with 4,951 full-time employees, up 3% quarter-over-quarter as we continue to invest in product team development, customer support and compliance infrastructure. Adjusted EBITDA in the fourth quarter was $566 million and adjusted net income was $178 million. On a GAAP basis, we reported a net loss of $667 million, primarily driven by a $718 million unrealized loss on our crypto investment portfolio and a $395 million loss on strategic investments, which includes our investment in Circle. As I mentioned, we're adding to our crypto investment portfolio on a weekly basis. We've modestly increased the size of our weekly purchase to build positions in these price markets. Importantly, we remain in a very strong capital and liquidity position. We ended the year with $11.3 billion in cash and cash equivalents and total available resources of approximately $14.1 billion when you include our crypto assets held for investments and collateral. As our stock price declined during Q4 and through early February, we took the opportunity to begin repurchasing our stock within our previously approved authorization. As of today, we have repurchased $1.7 billion of our common stock, fully offsetting dilution from stock-based compensation for the year 2025. We secured an $815 million notional discount to the average price we issued that stock-based compensation in 2025. In January, our Board approved an additional $2 billion share repurchase authorization, which we plan to continue to deploy opportunistically when we see price dislocations and to manage down our future dilution from stock-based compensation.

Now I'm going to touch briefly on our Q1 outlook. Through February 10, we have generated approximately $420 million of transaction revenue. Markets have experienced heightened volatility as we began the year. And so while we always caution extrapolation, it's even more important when we see volatility spikes. For the first quarter, we expect subscription and services revenue to be in the range of $550 million to $630 million, reflecting the lower average crypto price environment we are in, lower interest rates and lower staking protocol rewards rates compared to the fourth quarter. On the expense side, we expect technology and development plus general and administrative expenses to be flat quarter-over-quarter in the same range we guided last quarter in the range of $925 million to $975 million. Similarly, we expect sales and marketing expenses to be flat to down quarter-over-quarter in the range of $25 million to $35 million, with our performance in the range largely depending on performance marketing opportunities and the USCC balances on our platform. Overall, while crypto markets remain cyclical, we believe Coinbase enters 2026 from a position of strength. We have a more diversified revenue base. We have a scaled global platform and with the balance sheet that we can be flexible to continue and invest through the cycle. With that, let's go to questions.

All right. We'll take our first questions submitted to us on X. Our first one comes from Mike Pob65, who asks, are you making any headway on positive outcomes regarding the GENIUS Act?

Yes, I can take that one. So the answer is yes. We're -- I'm actually quite optimistic that we'll get something through here in the next few months. And I just want to say a big shout out of appreciation to everyone in the Senate and the administration. I think they're doing all the hard work here really to help bring this to a good place. And there's lots of constituents around the table. I'd say the crypto industry is united in their asks and the things that are important to them. Other constituents are around the table, of course, as well. And I think there's an opportunity to make a win-win outcome here for everyone, for banks and crypto companies and the U.S. citizen and everyone. And so what we've really focused on is what matters most to our customers, preserving the benefits of crypto, making sure that there's not any kind of protectionism happening for incumbents, but we just want to have a good level playing field. And I think that everyone understands that, and they're all leaning in to try to create a good outcome here. The Genius Act was just passed 6 months ago. So we're careful to make sure that nothing is being relitigated there. But I think there's a good path to get something through. And really, others are doing the majority of the work here, and we try to add in commentary where helpful, but hopefully, we get to a good outcome in the next few months.

Our second question is from Internet Token who asks, with base TVL and sequencer revenue growing strongly in late 2025, what percentage of overall subscription and services revenue do you expect Layer 2 activity from Base and partners to contribute in 2026? And are there plans to further incentivize builders there?

I'll start with this one, Brian, and then hand it over to you. So first, I just want to a little bit correct the question. Base revenue, we monetize both directly and indirectly. Directly, we're monetizing base through sequencer fees. And those sequencer fees are recorded in other transaction revenue, not in our subscription and services revenue. However, base benefits us indirectly as well. And indirectly, we are using base to monetize throughout our stack, both for Coinbase builders and our own products. And so for example, USDC on base does drive USDC revenue through subscription and services. We don't have a forecast that we're offering today, but our goal throughout all of our products and services is to continue to drive quality drive users to our platform to monetize through the stack of products and services we offer. But Brian, do you want to touch on incentives?

Yes. So for the second part of the question about what incentives we're putting out there to build -- for builders on base. So we're doing this in a number of different ways. We do give out grants called base grants for builders. We're improving our developer tools all the time just to make it simple for folks to onboard. And we're getting distribution from any of these builders through our apps. So an example of this recently is like these AI agents that have been spinning up, we put out some really useful tools for developers to just get any AI agent a crypto wallet and begin to make stablecoin payments and begin to complete agent of commerce essentially. And that started to get quite a good amount of traction. We're exploring a base token as well. which we've mentioned in the past. And then the base app itself, which is taking this more trading-focused approach, we think it can help driving distribution for builders on base. So yes, these are all ways that we're growing adoption. And the base chain itself is -- works well across payments, trading, DeFi, a multitude of use cases. So it's -- our goal is to help it be really like the primary utility layer for crypto, all built on Ethereum.

And our third and final question from X comes from Chief Skp, who asks, what product or platform initiative are you most excited about that investors may be underestimating today?

Yes. Well, I think the 2 I'd draw folks' attention to are the Everything Exchange, right? I think it's a big vision that how do we get all tradable assets onchain. And the end state of this is that we'd want to see 24/7 global markets, -- anybody can come in and participate. There's a more level playing field, democratizes access to a lot of this. And it will just make it much easier to do capital formation, price discovery. I think the ideal outcome here is we'd be one of the top exchanges in the whole world across any asset class. That's really the vision for the Everything Exchange. And because we are -- we have this deep crypto expertise, I think -- and crypto is the most important technology updating the financial system right now. I think we'll have an advantage there. The second one I'd point people to are stablecoin payments. I mean I think we're still in the very early days of this. Stablecoins are already -- have already gotten pretty big, but I think that we're just scratching the surface and payments globally would -- they flow to the path of least resistance. And stablecoin rails are just -- they're faster, they're cheaper, more global. And so today, about half of 1% of global GDP runs on crypto rails. I don't see any reason why that couldn't be 10% or 20% in the next decade. And so we think there's a lot of room to run there as well.

All right. We'll now take questions from our research analysts. Questions were submitted to us in writing, and we'll take one question per analyst and optimize to cover as broad a range of topics as possible without being repetitive. Our first question comes from Andrew Jeffrey at William Blair, who asks, please discuss line of sight to Everything Exchange monetization. What are your thoughts on the timing about revenue diversification?

Thank you, P. Diversification has long been a focus of ours. So when I look at 2026, what I would focus on is diversification of tradable assets under the Everything Exchange. Derivatives will be a big growth driver, we believe, in 2026. We have good momentum both across the U.S. and our international markets. We have momentum coming from the integration of options into our platform from the Deribit acquisition that we did in late 2025. So we believe that this can be a large part of our future story and strategy. In addition, within the last few weeks, as Brian shared, we have rolled out prediction markets and we have rolled out equities. There's early encouraging signals, but we don't want to get ahead of ourselves. So we will share more updates at the end of Q1 when we have more than weeks and days of data under our belt. We're really proud that historically, we've had achievements in driving diversification. We have 12 products, as we mentioned, with over $100 million of annualized revenue. Derivatives is included in that. We're working hard to scale, and we see more and more of these products able to graduate and hope that they will join the $250 million tier of annualized revenue, where we already have 6 of those 12 products. Ultimately, the goal of all of these products is that we are driving assets on platform on our platform. We are growing those native units, driving that flywheel where customers hold their assets, we hope they will trade more products and the more tradable products we give to them, that will drive the monetization on trading. And underpinning that with our subscription and services, we store those assets. We provide platforms like USDC, which is a clear benefit to be able to trade in and out of various markets and other horizontals that will really support that trading growth.

Next question is from Ken Worthington at JPMorgan, who asks, could your economic relationship with Circle change depending upon language in a market structure bill? In particular, could passage of a bill such as clarity that eliminates promotional payments to stablecoin holders directly eliminate or directly curtail Coinbase's participation in Circle reserve fee income?

Yes. So the short answer to your question is no. We don't see any way that this market structure legislation would change our economic relationship with Circle. The part that's being debated in the Senate draft for clarity, actually, the House draft already received a strong bipartisan vote and didn't have any restrictions on these stablecoin rewards. But some drafts we saw actually more like amendments, I would say, in the Senate banking draft. We're contemplating that and this prohibiting rewards essentially in various ways. And the irony actually is if that were to go into law, it would actually make us more profitable because we would just continue to receive the economics from Circle, but we -- today, we pass majority of that along to the customer. If we were prohibited from doing that, ironically, it would just make us more profitable. But we actually don't want that to happen for a number of reasons. One is that we think it's better for customers. We think it's better for the United States of America so that these regulated stablecoins can be competitive on a global stage. And it's already allowed under the Genius Act, which just became law 5 months ago. So our strong point of view is that, that should continue to be allowed, and we'll keep fighting for that.

Our next question is from Owen Lau at Clear Street, who asks, the valuation of the whole sector, including tokens and equities has come down. How does Coinbase think about the opportunities in larger-scale buybacks and M&A?

Thanks for the question, Owen. So we're very focused on it. As I mentioned in my opening comments, we ended the year in a strong financial position with over $11 billion in cash and cash equivalents. We are focused on buybacks. As I mentioned in my prior comments, we've deployed $1.7 billion to repurchase 8.2 million shares under our buyback program. That includes Q4 through February 10. 2025 was an incredible year for us on the M&A front. We completed 10 acquisitions/aqui hires, and each one helped us enable acceleration in our product road map, including Deribit, which is the largest crypto deal of all times. We're deploying our money into Bitcoin purchases. We significantly grew our portfolio in 2025. We doubled the number of BTC native units we held in our investment portfolio. So we are going to continue down all those paths. We're going to continue buying Bitcoin, continue buying back, continue to look at opportunistic M&A and continue to really dynamically manage the opportunities that we see ahead of us. We feel very proud that we've delivered 12 consecutive quarters of positive adjusted EBITDA. And so we've proven that we can drive profitable profits in any market environment. We will continue to do so in 2026 and then allocate that capital with the highest ROI to our business.

Our next question is from Patrick Moley at Piper Sandler, who asks, what have you seen in terms of prediction market adoption to date among Coinbase customers? Do you have plans to build your own prediction market venue? Or are you comfortable continuing to act as a retail distribution for existing venues?

Yes, I can take that one. So our prediction markets really just rolled out to 100% of customers about a couple of weeks ago. So it's early days, but so far, the interest has been great. Super Bowl weekend was a really great moment where a lot of customers got to experience it for the first time. And we're making lots of improvements rapidly on both the UX, adding more markets, having a dedicated sports hub where people can see live scores and things like that. And frankly, just marketing and getting the word out. I think a lot of Coinbase customers are delighted to find out that this is available in the app because they already store quite a lot of assets with us. And so we just need to make them aware of it, and I think it's going to be a really good outcome. We launched it with our partnership with Kai, and they've been a great partner. It's not an exclusive arrangement. We also have the ability to launch our own markets. Nothing to announce on that at the moment, but we're keeping all options open.

Our next question is from James Yaro at Goldman Sachs. Do you think we're heading into another crypto winter? How long until the cycle could begin to recover? And how should investors think about the KPIs suggesting that the cycle could begin to turn?

Yes, I can touch on that. So in general, we don't try to predict the future too much here. We see our job as just building great products and services for our customers, and then we leave the investment decisions to them. I will say that in general, I kind of enjoy these periods sometimes when the market is down ironically just because it allows us to keep building. There's opportunities in every market, whether it's up and down. And so it gives us a chance to buy Bitcoin. It gives us a chance to buy back our stock. And we've been through so many cycles like this in crypto. I actually don't think it's that connected to core KPIs like you asked about or some sort of fundamentals. There's a lot of kind of Monday morning quarterbacking happening where people will look backwards and say, "Oh, it must be because of Kevin Warsh is an inflation hawk or quantum computing is on the horizon or something. And I actually think markets are a little bit more like psychological things where people think someone else is going to think something, so they try to get ahead of it. And I don't think this market correction is that connected to any fundamentals. We're still seeing good growth of stablecoin adoption and other kind of indicators. So I'd say in this environment, we are seeing traders on our -- like at these prices, we're seeing people on our platform who are net buyers. But I would leave the investment decisions to you all on this call.

Next question is from Ben Budish at Barclays. Can you talk about your 2026 spending plans? Given a variety -- given a wide variety of potential top line outcomes in 2026, -- how do you think about need to spend versus want to spend? And where is there most flex in the cost base? Is it marketing, venture moonshot type investments, et cetera?

Thanks, Ben. I love the way you frame this as need to spend versus want to spend because I would definitely say there's lots of employees who want to spend. That's our job to figure out the right investments for the company and making sure that we're deploying our capital prudently. So 2025 was an investment year. We included a chart in our shareholder letter that showed that the majority of our year-over-year increase went into, first and foremost, sales and marketing. USDC rewards were the single largest contributor to year-over-year expense growth in connection to the year-over-year all-time high we saw in USDC held in Coinbase products. Another 16% of the year-over-year increase was driven by M&A, the majority of which was deal-related expenses and not core to our operations. When you look at our Q1 expense outlook, the range in the outlook is flat to our Q4 expense outlook. So while we had growth in 2025, right now, as we enter 2026, we are focused on flat for the first quarter. While we take into consideration the conditions we operate in, it's very dynamic as we've just rolled out a number of new products and services. And so we are going to be nimble as we go through the year and look at the opportunities that we have ahead of ourselves versus our expenses. And so we are keeping our eye on the ball. But right now, for Q1, flat to Q4.

Our next question is from Robbie Bamberger at Baird. Yesterday, a Wall Street Journal article said that Blockfill was suspending customer withdrawals. And today, Coinbase has reportedly had issues with customers trying to buy, sell and transfer. Was the Coinbase issue just a tech mishap and not a more severe issue? Does the amount of leverage in the crypto ecosystem increase the risk that we may be more prone to customer freezes during quick pullbacks?

I'll take this one. If anyone wants to add, please jump in. We did have an event yesterday where some users briefly experienced interruptions in their ability to buy, sell and transfer crypto on our retail and prime platform. Derivatives and equities trading remain undefected. This was a result of a technical issue, unrelated to trading volume, unrelated to any market conditions. The issue is now resolved. We've made significant investments in our platform to hopefully mitigate these types of events and outages that historically have been driven by volume changes and feel very proud of our investments, but we will still have technical bumps at points in time.

Next one is from Alex Markgraff at KeyBanc Capital Markets. As you work to scale the Everything Exchange, can you describe the strategy for bringing customer assets to Coinbase? To what extent do you believe -- do you expect equities and prediction markets to act as a front door to net new users?

Sure. So our strategy overall, we call it the asset accumulation flywheel. And it starts with being the most trusted brand in crypto. That causes people to store more assets with us. We store more crypto than any other company in the world, as I mentioned in my opening comments. So when people are storing their assets with us because of this trust, we have an opportunity to connect more and more products into those assets, right? And whether that's Coinbase card or they have a loan or they're earning rewards on staking or USDC, and they're also getting access to more and more trading products through the Everything Exchange. We see that the more products people connect into those assets, the more sticky they are. And we use the monetization from that to really complete the flywheel and we invest back in being the more trusted brand and adding more products. And so -- as we've added in some of these asset classes like equities and prediction markets and commodities into the Everything Exchange, the first step is it just makes the product more valuable for our existing users, but we're also seeing it help attract more traditional investors who want to come in and onboard and just have an easiest place to trade every asset class in one spot, maybe get better rewards on their credit card, maybe get a better rate lending out their money. And ultimately, crypto is going to be here to update financial services more broadly and just make better financial services. So that's a little bit about our asset accumulation flywheel strategy.

Next one is from Ramsey El-Assal at Cantor Fitzgerald. You guys have made some key acquisitions in 2025. Can you help us think through your M&A strategy at this point? What parts of the business are you looking to bolster with M&A? And what types of assets are you looking at?

I can take this. Yes, I think 2025 was a fantastic year for M&A at Coinbase and included some great marquee pickups, Deribit and Echo and others. We made 10 acquisitions and acqui-hires, and each of them accelerates our product road map. In 2026, we're obviously being very selective as usual, but we're going to be aggressive where assets meaningfully pull forward the road map. And thematically, we're looking for incremental M&A opportunities in advancing the Everything exchange, owning more onchain infrastructure and bundling stablecoins and payments infrastructure.

Our next one is from Crypto P. Christiansen at Citi. There's a recent debate that the original version of L2s as branded chards for scaling is no longer entirely valid as Ethereum L1 is improving its own capacity and L2 decentralization has been slower than expected. The debate further argues that L2s should focus on value-added features, including AI, privacy, et cetera. What's Coinbase's view on the base L2 value prop going forward in this respect? And how might potential DeFi regulations shape Base's future?

Yes, sure. So Volk had a great post on this recently. And I think in some ways, he's right, Ethereum doesn't need dozens or hundreds of different L2s. We've seen that Base has rapidly become the #1 L2 on Ethereum. And it's really -- it's a broad utility that makes it attractive to developers, right? It's really great for payments. It's great for trading. It's great for DeFi. People wanting to build different types of applications can come in. And B, it does have amazing scale, right? It's been able to move really fast, have great speed of execution and frankly, move a little faster than the Ethereum L1, which is by design. I mean, they should be a little bit -- they're probably even more decentralized, a little more cautious, right? But we can inherit a lot of the security constraints from the L1 and then the L2 can move a bit faster. So the scale, speed of execution on base has been really good. We're also working on adding novel features like you mentioned privacy. I think private transactions or optional private transactions will be a big differentiator. And the base app is good for distribution, like the base token we're exploring, et cetera. So there's a lot that we can do there. Longer term, I do think the line between L1s and L2s could be a little blurry. And it's it's not entirely clear that there's a definition -- a hard definition of one versus the other. So anyway, we'll continue to build base in rapid succession and just -- I think we can attract a lot of development activity and adoption.

Next question is from Devin Ryan at Citizens. Stablecoin adoption is a 2026 priority, but we've seen market cap flatline for the last couple of months. Why has that been? And what gives you confidence around growth in 2026? And can you give any color around incremental adoption trends?

I'll start here, Brian, if you want to add on. So I think there's 2 things that are happening. One is we've seen risk appetite be relatively range bound. And when you think about stablecoins, first and foremost, product market fit was as a trading pair to enable global traders to move money across the exchange ecosystem. They used it against the longer tail of assets. We've seen a shift now where there's not as much risk appetite for those longer tail. And so we've seen speculation activity come down a little bit. And as a result, stablecoin market cap has not been expanding because there was no risk and leverage expansion. The second thing that we see is higher velocity of stablecoin payments, settlements, remittances. So we've seen more transaction volume, but not necessarily a higher market cap as a result of that. So we're monetizing stablecoins in incremental and new ways. I think we still have confidence and optimism for 2026 because we are more deeply embedding stablecoins in our products and services. What we've demonstrated is that we have been a key driver of USDC's market cap growth and a key driver of our growth in assets on our platform due to our ability to embed and create differentiated experience with USDC and our products and services. And so we're excited about our ability to continue to do so and to more deeply create value through the payments priorities that Brian articulated as our second growth area and through just the growth of the Everything Exchange, where we believe that using USDC on our platform will become a great experience for our users.

Yes. I guess the only thing I'd add is that one of the things that gives me confidence about continued growth is just the Genius Act passing in the U.S. And we saw, I think, 150 companies in the 3 months following that piece of legislation going into law that came out and announced stablecoin integrations. And it's just it's faster, it's cheaper, it's more global. There's no company in the world that wants to pay more money for moving their money, right? So I think that, that's an incredible tailwind to the continued adoption of stablecoins. And in particular, it's important that these stablecoins preserve the ability to have rewards programs. There are -- the U.S. regulated stablecoins don't exist in a vacuum. In fact, today, they're the minority of all dollar issued stablecoins globally. And now that we have this legislation, we need to make sure that the U.S. regulated ones can actually remain competitive, right? Like the Chinese Central Bank digital currency came out and said they're going to pay interest on stablecoins. Some of the offshore regulated ones would love it if the regulated ones in the U.S. couldn't pay rewards just because it would make them preserve their profit margins, right? And so for the U.S. regulated stablecoins to be competitive, bring this industry -- repatriate those reserves and bring it within the U.S. regulatory perimeter, they're going to have to be competitive and paying rewards is a big part of that.

Our next question is from John Todaro at Needham. Can you provide an update on how much USDC market cap is currently on the Coinbase platform, i.e., a January average or February number?

We don't provide January, February data on the USDC balances. So I'd point to our shareholder letter for our end of year balance in our products as well as any details on the revenue that we earned on USDC in that period.

Next one is from Beau Pay at U.S. Tiger. Can you quantify the effective take rate compression from simple to advanced and Coinbase One users? Structurally, where do you see normalized consumer take rates settling over the next 2 to 3 years?

Thank you, Bo, for my quarterly take rate question. What we saw in the quarter was a mix shift with more volume going to our advanced product and more trading volume coming from Coinbase One users. So as we grow our Coinbase One members, an increasing amount of trading volume we expect to shift under the Coinbase One membership umbrella. And they benefit from up to no trading fees, although we do still generate a spread on those transactions, which is showing up recorded as retail transaction revenue. So I don't have a view, and I can't tell you when the take rates will need to compress from simple to advanced. What I can say is we are very focused on growing Coinbase One membership. And I think with the growth of Coinbase One membership, what you will see is more and more trading occur under that membership umbrella.

Our next one is from Gus Gala at Monash Crespi Hart. Adoption on commerce and developer rails, you talked about on Page 19 of the shareholder letter. How do you work with Circle and USDC on real-world volume commercialization? Can you give us an update on the time you expect it takes to get up the S-curve in B2B payments? How is this different from potential revenue S-curve? Contrast that with USDC on base for more consumer-centric volumes via X402.

So what I will share with you is that we work on our own products as it relates to driving payments on USDC. We partner with Circle on overall items, but we also compete with them. And our goal is to drive a payments vertical, as Brian shared in our goals for 2026, where we create the best place for businesses to come transact in USDC on base to enable their payments businesses. You'll see more about this as we go through the year. This is early in our product journey, but we're really pleased with the advancements in Q4 to build out the product set and APIs, and now we're working on go-to-market and driving customer growth and adoption.

And our final question comes from Dan Dolev at Mizuho. How should we think about the strength of the casual crypto trader in this winter? Any pattern you can call out for when they come back eventually?

I guess I will take that one, too. I think that we -- I've been in this seat now. It will be 8 years, come April. Emilie has been here in over 8 years. Brian has been here 12 plus. We've seen lots of crypto market price cycles at this point in time. What continues to be true for at least the last 8 years is that the majority of retail consumers on our platform HODL through price declines. They tend to be more active in periods of high volatility. What we're pleased to see in Q1 is for those who are active, they are in a net buy versus sell position. Consumers are tending to be buying a dip right now. But we are seeing more pullback as markets move to a risk off. We've seen this before. It speaks to our goals of diversification, both in the growth of our subscription and services business, but also in diversifying the assets so they can trade anything under the sun and not limited to crypto assets. We're really pleased with what we've released so far. And as we go through the year, we're hoping to demonstrate to you that we can continue to diversify those revenue streams.

All right. Well, that does it for today. Thank you for joining us, and we look forward to speaking to you again on our next call.

Hi, everyone. Thank you for coming today, whether you're here at Fort Mason or watching online, I'm excited to welcome you to first Coinbase System Update. Today, we'll update you on everything we've built in the second half of this year. And we started Coinbase with a simple belief that people deserve more from the outdated financial system, and crypto makes it possible.

87% of Americans say [ fees are delays ] and unequal access in the current system, it's just not working for them. And they're looking for new ways to grow their wealth and participate in the economy. So we have an opportunity to use crypto to update the financial system, increase economic freedom in the world. For example, if you've ever tried sending money abroad, you know how painful it is. Not everyone has access to banking. Traditional bank hours are 9 to 4, Monday to Saturday. Trading hours for most assets are even shorter.

Capital formation is only available to a select few and middlemen take a slice of everything you do. Cryptocurrency addresses so many of these problems, making the financial system faster, cheaper, easier, more rewarding and more accessible. And that's why for the last 13 years, we've been relentlessly updating the system so anyone can achieve economic freedom. Coinbase builds products to help individuals, businesses, financial institutions, governments. We've also built a developer platform to make crypto integration effortless for any company.

And these are our custodial offerings where we store private keys and funds on your behalf, providing convenience, security, recovery options and regulatory compliance. We've also added a set of noncustodial products through the Base app, which gives you complete control of your own funds. These allow us to innovate on the frontier and reach more countries globally. So you'll hear updates on each of these today.

So we're growing each of these products with this virtuous flywheel. Customers know that we're the most trusted name in crypto, so they store their assets with us. And they're more likely to use products where their assets already reside. This drives customer retention, allowing us to invest back in trust and the cycle repeats, accumulating more assets on Coinbase. Today, to the best of our knowledge, Coinbase stores more crypto than any other company in the world. In fact, our assets on platform have grown 5x over the past 3 years.

And as of Q3, we had more than $500 billion in crypto assets on platform. Our goal is to become the #1 financial service app in the world. And to do that, we need to be the most trusted place to manage your entire financial life. So to that end, we've been building across these 3 phases of crypto adoption. Number one, investment; number two, financial services; and three, an app platform for developers to build on.

So let's start with investment. And trading has always been crypto's first use case, and Coinbase has been the leader in U.S. spot trading. So we started by offering trading of just a few crypto assets, then we got to a few hundred. And there are now millions of assets on Coinbase with decentralized exchange integration available for trade, placing us far ahead of the competition.

Now people love trading crypto, but they're also looking to build wealth with a broader set of assets. So in a few moments, you're going to hear how Coinbase is now the best place to trade every asset, not just crypto. And customers want one place where they can trade equities, prediction markets, commodities, using spot trading, derivatives and options. And as every asset class comes on chain, we can build faster, cheaper and more global markets.

So Coinbase is no longer a place to just trade crypto. It's a place where you can trade everything. And the everything exchange creates a future where every asset is tokenized and accessible to everyone in one seamless, secure user-friendly experience.

So that's investment. Now we're not just a trading platform. We're also building a place to manage your entire financial life. And so when we bring financial services onto crypto rails, we're able to offer services that are faster and cheaper with greater rewards. So today, we'll share some new ways that Coinbase financial services can unlock opportunities beyond what traditional banks offer. Finally, we'll talk about how we're building crypto infrastructure that any business or developer can use.

Coinbase Developer Platform, or CDP, is our crypto as-a-Service offering, which makes it seamless for any company to integrate custody, trading, payments and stablecoins. And today, we'll share a slate of new APIs and services for CDP. We've also incubated the most popular Layer 2 blockchain on top of Ethereum called Base, which gives developers a powerful foundation to build crypto utility into any app.

Today, we're going to share the latest product updates on the Base app, our self-custodial wallet that makes it easy for anyone to get on chain anywhere in the world. So over the next hour, you're going to hear why we believe the future of finance is on Coinbase. And to walk you through some of these exciting announcements, here is Max Branzburg.

Thanks, Brian. The system update has officially begun. Crypto has shown us that markets can be always on, efficient and accessible to anyone, anywhere in the world. It has shown us that when people have access to open markets, they can achieve better financial outcomes and increase their economic freedom. And Coinbase has made it safe and easy to participate, trading, saving, borrowing, lending and spending in ways that are more rewarding, efficient and accessible.

And now it's time to expand that impact even further. Millions more crypto assets, new ways to invest and even new asset classes, all in one place with the Everything Exchange. So you can trade every asset from wherever you are in the world on one single trusted platform, which is why today, we're introducing our next major asset class, stock trading is now available on Coinbase.

So let's see how this works. I opened up my Coinbase app where I can now see a dedicated section for stocks on the Trade tab. I'm going to buy NVIDIA for this demo. And after just a few taps, I can buy NVIDIA using USDC, where I'm also earning best-in-class rewards. And the best part is that you only need one account. So now you can trade stocks and a huge selection of crypto, all in one place, one portfolio view, one wallet, one transaction history. This is a major milestone in our plan to enable 24/7 trading of stocks and ETFs from anywhere in the world powered by crypto.

And that future is closer than you think. Next up, we're launching equity perpetuals, so you can get 24/7 access to trade equities capital efficiently from anywhere. So let's take a look at this, too.

I'm back in the Trade tab, where there's a whole section for perpetuals. I can now see contracts for single stocks and indices. And early next year, these contracts will be available to traders on both our simple and advanced trading platform outside the U.S., enabling trading with up to 20x leverage. Traders across the world will be able to react instantly to earnings, macro events and weekend news with one of the most efficient trading instruments created in crypto, now coming to the largest asset class in the world.

Markets are evolving in real time, becoming more efficient, always on and accessible to anyone. As we've done throughout our history, we are updating the system. This is the future, and we're building it now. But stocks aren't the only new asset class coming to Coinbase. On the Everything Exchange, you'll be able to trade anything, anytime, anywhere. And that's why today, we're also launching Prediction Markets. So let's take a look. I'm back in the Coinbase app, and now I see a new tab dedicated to predictions. And it's not just crypto predictions, you can now participate in markets on everything happening in the world.

You can see a ton of different categories from sports to crypto to entertainment. If you're into sports, you can trade on who will win the big game. And you can see buying a contract is just as easy as buying Bitcoin. If you follow the news, you can trade on election outcomes, policy decisions or economic performance. All of these contracts are offered through our partnerships with Kalshi.

Prediction markets enabled increased access to information and markets that have historically not existed, and they're now available directly in the Coinbase app. Okay. So I shared we're launching stock trading, equity perpetuals and prediction markets so far. Who want to hear some more? All right. So while the Everything Exchange enables you to trade new asset classes, we are laser-focused on expanding the world-class crypto trading experience at Coinbase's core.

Let's start with derivatives, which account for over 75% of the global crypto market today. Trading derivatives used to require a pro trading platform or an offshore exchange, but that changes today. All U.S. traders can now trade futures and perpetual futures in an intuitive, easy-to-use interface directly on Coinbase.

So let me show you. On the Trade tab, you'll now see sections for perpetuals and futures. And we have more than 30 futures and perps contracts live in the U.S. across asset classes from crypto to commodities to equity indices with plans to expand to hundreds more contracts over time. Now everyone can trade more with less using leverage. And we've made the most powerful crypto trading product easy to use for everyone, including the ability to manage your position by setting a take profit and stop loss.

And unlike other ways that traders access derivatives today, this is fully regulated and available to everyone in the U.S. now. For our international customers, we have hundreds of derivatives contracts already available on Coinbase Advance. And this is just the beginning of our derivatives efforts. We will continue to expand the derivatives available to trade and make Coinbase the most efficient trading venue in the world.

Now beyond derivatives, new assets are getting created and launched every day. And the Everything Exchange is redefining what it means to have the broadest and best access to assets in one place. Coinbase started by making it easy to buy Bitcoin and then expanded to enable trading of hundreds of assets. Starting today, you can now access millions of assets through decentralized exchange trading on Coinbase, including on Solana.

Accessing the broadest selection of assets used to mean navigating separate wallets, remembering seed phrases and using complex interfaces. But now you can trade millions of on-chain assets as soon as they're created, all within the Coinbase app and without waiting for a centralized exchange listing. And it's just as easy to buy long-tail assets as it is to buy Bitcoin, all with the same security and trust that you know and love in Coinbase.

So let me show you how it works. I'm in the Coinbase app on the Trade tab, and I can see a trending list of assets. I see Solana assets alongside other crypto assets, and I can even filter by network if I want to just see Solana assets. I can use my existing USDC balance or I can even buy Solana assets directly with a bank account or a debit card. There are over 16 million tokens and more than $3 trillion of volume on the Solana network alone.

And as of today, it's all accessible in the Coinbase app. Over the last year, we've dramatically improved Solana network support on Coinbase from sending and receiving to staking to now enabling trading of every Solana asset as soon as it's created. And we're not stopping there. We'll continue to make on-chain trading even better over the coming months.

Now access to assets doesn't just mean existing assets. We're also launching a new token sales platform on Coinbase, enabling traders to get early access to the most popular projects in crypto before they launch. This is pretty cool, guys. Come on. Until now, token sales have been broken. Projects use air drops or launch pads that make it hard for real community members to participate at scale. It's difficult for projects to get their tokens in the hands of people who actually want to use them.

So let's take a look at how we're fixing this. We recently completed our first sale with Monad. At any point during the week of the sale, you could request tokens in just a few [ taps ]. Our allocation algorithm then broadly distributed them using a bottoms-up approach that limits concentration among buyers so everyone gets their fair share. And the first sale was oversubscribed with customers requesting $269 million in allocations. It was one of the most widely distributed token sales in history with over 85,000 participants across 70 countries.

Imagine what happens when every project can launch like this. With our new token sale platform, Coinbase is now the best place for any asset issuer to launch. So who's ready to start trading? Coinbase was the original pioneer of secure, trusted and intuitive trading for crypto assets. The next era begins today as we expand on this foundation with new asset classes like stocks, prediction markets and derivatives, along with [ dex ] trading and token sales. But updating the system isn't limited to trading. The tools to save and spend are getting updated too, and Coinbase is becoming the most rewarding place to grow and use your money.

To hear how that's already happening on Coinbase today and some ways we're making it even better, please join me in welcoming Ben Shen.

Thanks, Max. Coinbase is becoming the place where customers are managing their entire financial lives, whether it's getting a credit card, a loan or sending money to friends and family, we want Coinbase to be the best place to manage and grow your money with opportunities that traditional banks simply do not offer.

Let me show you how this works, starting where much of our money often begins, our paycheck. We are letting you get paid directly into Coinbase while automatically investing and earning. You can set up direct deposit, allocate your paychecks across crypto of your choice and cash, growing your money exactly the way you want each time you get paid. This will naturally extend to stocks and other assets on the Everything Exchange.

Once your direct deposit hits, your cash immediately starts compounding. You can earn 3.5% in USDC rewards with weekly payouts with a Coinbase One membership. That's nearly 9x the national average savings rate. And for those who want to supercharge their earnings, you can lend your USDC on Coinbase. Banks are constantly lending out your money while keeping the profits.

On Coinbase, the power shifts back to you. You control when to lend, access your money whenever you want and keep the rewards. This entire system powered by crypto offers superior returns and flexibility. Our customers have already lent over $1 billion since we launched just 3 months ago, earning up to 10% in rewards on their USDC. Customers are also staking assets like Ethereum, Solana and more to maximize their long-term growth, and they've earned over $1 billion in staking rewards since 2023.

And for the first time ever, you can now instantly unstake your assets on Coinbase, meaning that you can earn with confidence on your crypto, knowing that you can get instant liquidity at any time, whether for trading or any other use case. This is true wealth building with rates and liquidity that traditional financial institutions simply cannot match. Retail customers are voting with their assets. As of the third quarter, they held over $200 billion in assets on Coinbase, more than tripling since 2023.

Sometimes life can bring unexpected expenses or require large purchases such as a down payment on a home. Coinbase makes managing these expenses easier than ever with our Borrow product. You can instantly access cash without selling the assets that you truly believe in. And since January, our customers have already accessed $1.5 billion in liquidity at rates which are lower than most traditional bank loans and with more immediate accessibility.

You can borrow up to $5 million against your Bitcoin, and we just launched the ability to borrow up to $1 million against your Ethereum. Plus, we're planning to expand to many other assets that you can trade on the Everything Exchange. Now let me show you how easy it is to actually use your money on Coinbase. With our new dedicated Pay tab, you can send USDC or any other crypto asset like Bitcoin to anyone in the world instantly and for free by simply using a phone number, e-mail or wallet address.

We're seeing our customers paying friends back, making purchases and gifting crypto, including to those who don't even own crypto or don't have a Coinbase account and who can easily sign up to claim their payments. Even better, our customers are now earning up to 4% in Bitcoin on their everyday purchases. We launched the Coinbase One card 3 months ago, and our customers are absolutely loving it, earning over $16 million in Bitcoin during that time.

The truth is most credit card rewards are often limited to a few categories or lose value over time. With the Coinbase One card, you don't need to worry about points, categories or blackout dates. We give you Bitcoin, the most rewarding and flexible asset on the planet. And you can do whatever you want with it, hold it, send it, spend it or sell it. To make things even more exciting, you get chances to win up to $100,000 in Bitcoin each month by simply taking out your Coinbase One card and spending with it.

With 0 trading fees, boosted earnings and more ways to build your wealth coming next year, Coinbase One is the best membership for growing your money. At Coinbase, we're not just building the best trading platform. We're building the primary financial account of the future. The traditional financial system limits your money. Crypto unlocks it. And now it's all in one place on Coinbase. Brian, back to you.

All right. Thanks, Ben, for that update. Now I want to tell you about something called Next Bets. For years, we've run a program internally at Coinbase called Next Bets, where we put small teams on moonshot ideas to push the frontier of product innovation. Two examples of ideas that came out of this program in the past are USDC and Base. And today, I'm proud to share our latest Next Bet, which leverages AI to improve your financial life. Everyone deserves access to powerful financial features like we just saw from Max and Ben. But we know many people don't know how to use these tools or even for those who do, AI eliminates the repetitive tasks and toil of managing your finances. So we're launching a new product today. It's called Coinbase Advisor. To tell you more, please join me in welcoming to the stage, Lincoln Murr.

Thank you, Brian. everyone. I'm Lincoln Murr, and I'm the product lead for the Coinbase Advisor team. Our goal has been to find the next big unlock for our customers. And as we looked at the landscape, we kept coming back to one realization. At Coinbase, we've democratized access to the markets, but access isn't the same thing as success. Aside from your friends telling you to buy their favorite token, most people simply don't know how to turn a high-level idea into an investable strategy.

Historically, high-quality financial guidance has been locked behind a [ velvet ] rope. It was a luxury product designed for the wealthy and priced out of reach for everyone else. We believe elite financial advice should be available to everyone to help drive economic freedom. Even for those who are already power users, we believe AI will eliminate repetitive tasks and drive new insights.

So today, I am proud to introduce Coinbase Advisor. Coinbase Advisor is an AI-powered adviser that is designed to help you manage your financial life. It turns natural language requests into clear, actionable financial plans using the products, data and tools available on Coinbase. It can even spot the opportunities you never would have thought to ask about.

Let's see how it works. First, I'll ask the AI to build me a portfolio. And behind the scenes, Coinbase Advisor will evaluate my existing holdings and ask some clarifying questions to better understand my portfolio goals. Then in seconds, Coinbase Advisor builds a personalized allocation based on the risk tolerance I shared earlier. Looks like it's recommending Bitcoin, Ethereum and USDC [indiscernible] for my moderate risk level. This AI model is actively curated by a team of portfolio managers with 75 years of combined experience. And I can go ahead and tap the buy button and execute the trades directly in this interface.

The portfolio looks pretty good and honestly makes me more bullish on AI. So with that in mind, let's ask the adviser to include some investments signaling AI adoption in the portfolio. And we can see a list of prediction markets related to this AI adoption theme. Things like will ChatGPT reach 1 billion weekly active users in 2026 or even if we'll achieve AGI in 2030. In the future, we'll also [indiscernible] equities like Taiwan Semiconductor Manufacturing Company, which are associated with AI.

Now that I have this portfolio built, I want to make sure that I stay up to date with the market and any of the news that might impact me. Fortunately, Coinbase Advisors Insights feature curates news based on what matters to me. daily market intelligence, real-time portfolio insights and recommendations, all in one place. I just click on a specific story, get the summary and ask for a recommended action. This story about how Vanguard and Bank of America are expanding access to ETFs gives me advice around dollar cost averaging into Bitcoin over the next several months. Over time, we want to improve the Advisor to be a holistic guide throughout your portfolio journey.

We want to bring in numerous new features that allow us to take you through various different insights and do things like automated trades or actions that you may have never considered based on learnings about your interests and holdings. They can help with educational opportunities, rebalancing or even yield optimization. This is about raising the baseline for everyone. AI enables anyone to keep your financial life on track and automate your busy work. It levels the playing field by making advanced strategies a standard feature of your personal account. We're building this in the open, and we want you on the journey. Today, Beta Access is launching to select Coinbase One subscribers. You can go to [ coinbase.com/adviser ] to sign up for the wait list with a larger release and more features coming very soon. Thank you.

All right. Thank you, Lincoln. So so far today, we've shown you only our products focused on individual consumers. But improving economic freedom means bringing this new financial system to businesses as well. So we built Coinbase Business, a primary financial account for companies and Coinbase developer platform, which makes it easy for developers to integrate crypto anywhere. To share more about how we can bring every business on chain, let's bring up Sid and Alec.

Thanks, Brian. Hi, folks. I'm Sid, and I lead Coinbase business. Now you just saw all of our big updates on the Coinbase app. What if we took the power of everything Coinbase and also gave it to businesses. That's exactly what we did earlier this year with the beta launch of Coinbase Business. So a few months ago, we set out to make it easier for companies to use crypto in real and everyday ways and the momentum has been huge.

We've seen consistent double-digit growth month-over-month. And with our beta launch, Coinbase Business is now used and trusted by over 1,600 companies from small startups all the way to global brands. So today, we're excited to announce Coinbase Business is officially out of beta and available to everyone. We're also announcing a set of major new features for Coinbase Business.

But before I get into that, I just want to quickly acknowledge just how hard it is to run a business today. So businesses today lose up to 3% on every payment because of card fees, and that's a huge hit to their margins. Chargebacks and fraud are rising. Global reach is limited by the footprint of their payment processors. B2B payments take days to settle and global treasury management is still just too complicated and expensive. And so that's the state of the union in 2025. High fees, slow settlement, limited global reach and way too much friction.

And so that's exactly why we built Coinbase Business. Now don't just take my word for it. I want you to meet some real customers who've been using Coinbase Business already. Let's start with one of the biggest challenges that businesses face today, which is moving money across borders. Let's meet [ Unblock Global ]. They're a fast-growing energy infra startup with operations in both the U.S. and Argentina. Now they have to move money across borders very often to fund operations, replenish working capital or take [indiscernible], which is a truly global digital marketing start-up. They're headquartered in the U.S., their CEO is in Sweden, and they have employees and contractors all over the world.

Now they need to pay their contractors, engineers, designers quickly and reliably every month. Before Coinbase business, this is what that process looked like. So they would buy USDC on one platform in one country. They send it to a separate wallet for safekeeping, then they move it again to a local exchange and then convert it to local currency for payouts. It's slow, manual and expensive.

Now with Coinbase Business, they use our new payouts feature and simplify it all. Both Unblock, [indiscernible] and all our customers can now move their money globally, whether it's working capital to Argentina or contractor payments to Turkey. It's all just a few clicks. We're also supercharging the AI industry with the power of Internet native money. So let's meet Browserbase. They enable AI agents to browse the Internet just like a real person, reading pages, filling forms, completing tasks. Now with Coinbase business APIs, those agents can also make payments. And then take Yelp, they send micro payments to their users around the world in return for training AI models, once again with Coinbase Business.

Finally, we have OpenRouter, which is a leading API gateway for AI models, and they accept developer payments from all over the world in real time using our infrastructure. These companies are building the future of AI. And now with Coinbase business, their money moves at the speed of their innovation. Now why cutting-edge AI agents are obviously very, very cool. We know that most global commerce today is still old school, human-to-human, business-to-business, agencies, contractors, service providers. And for these businesses, basic payments aren't enough.

They need receipts, they need a bill, documentation, a formal request for payment. And that's why I'm very excited to announce today that we're launching invoices on Coinbase Business. So starting today, companies can generate professional invoices right inside Coinbase business with line items, due dates, terms. Our customers can get paid instantly and no wire fees, no delays, and their finance team gets the clean reporting that they need to close their books.

Now we've spent a lot of time talking about global start-ups, AI companies. I also want to just spotlight some everyday merchants that we interact with on a day-to-day basis. So let's take PLVR, they're a ticketing platform based in Singapore. They've integrated our new payment linked API to accept crypto checkouts and then they issue NFT tickets. It's a seamless instant flow, and it eliminates all of the fraudulent chargebacks that typically plague the ticketing industry.

Or take noun coffee + wine bar. They're a vibrant neighborhood hub in L.A. They accept crypto payments at the point of sale using tap to pay on Base. No 3% card fees, they get paid instantly and their cash is earning higher rewards than it would in a business bank. And their customers love the payment flow. And then just across the Bay Bridge from here, we have sports clubs like Oakland Roots. They receive sponsorship dollars in USDC and then they pay out local artists in crypto for showcasing their artwork at every match.

Beyond payments, companies are also using Coinbase Business as they're all in one place to store, trade and manage assets. And very soon, businesses will get the same powerful trading experience you just saw in the retail app. They will be able to store and swap hundreds of different currencies, stocks, FX transactions and any token they need on the Everything Exchange.

So if you think back to where we started, high fees, slow settlement, limited reach and tons of friction. The customers I showed you today demonstrate exactly how Coinbase business has already solved those problems. With Coinbase Business, they get cheap, fast, global and easy payments. That's the big shift we're seeing. Coinbase has now become a full financial toolkit for businesses.

As of today, we're live in the U.S. and Singapore with more regions launching soon. And if you're a business owner, we've made it super simple to get started. There's no application fees, no sales calls. Just go to coinbase.com/business and sign up. And now to show you where we're taking our infrastructure next, here's Alec.

Thanks, Sid. I'm Alec Lovettt, and I lead the infrastructure business at Coinbase. As Brian shared, Coinbase has been building products in crypto for more than a decade. And as we build, we make the underlying capabilities available as infrastructure and APIs in the Coinbase developer platform or what we call Crypto-as-a-Service. And we power crypto products for banks, fintechs, payment companies and start-ups of any size.

Zooming out, crypto is rapidly updating the financial services we use every day. There are now over 700 million global crypto owners. Stablecoins power trillions in annual transactions and over $200 billion of crypto is traded by consumers every day. Innovative companies understand this shift, and they're racing to ensure that their customers can access crypto through their existing products. Currently, we power crypto products for many of the best companies in the world, start-ups like Moonshot, scaling companies like [ Webo ] and banks like JPMorgan and PNC. Today, we're announcing a major update to the Coinbase developer platform with a suite of enterprise APIs focused on the 4 pillars where we see the fastest adoption and most exciting use cases, custody, payments, trading and stablecoins.

CDP makes it easy for any company to get started with crypto as a service. In a matter of minutes, you can sign up, get API keys, add your team members and start building. Now I'm going to walk through some of the exciting new APIs we've launched. And to show you how this works in real time, the screen behind me will switch between the portal where our APIs live at coinbase.com and a demo app that we've built with our APIs for System Update.

Every crypto integration starts with custody. Earlier this quarter, we launched an embedded wallet product that makes it dead simple to add crypto custody to any app. Our embedded wallets are fully customizable, highly scalable and compatible with a full range of log-in methods. Our products enable our customers to speed run their crypto integrations and add crypto custody to any application.

While custody is the bedrock of crypto applications, as we heard from Sid, the fastest-growing use case is payments. Stablecoin payments are growing like wildfire because companies have figured out that they can be faster, cheaper and more global than traditional payment methods. Our customers are using stablecoins to pay vendors, pay contractors and freelancers and manage their treasury more efficiently.

With our APIs, you can move fiat into stablecoin, send and receive stablecoins instantly to deposit addresses anywhere in the world. In a matter of minutes, we can build those payment capabilities into our demo app to enable peer-to-peer transfers or turn on powerful mass payouts for use cases like creator payments and payroll. Today, fintech companies like [ Deal, Routable, Papaya and DLocal ] are all building great products for their customers using our payment APIs. And it's not just send and receive. A growing number of companies also want to accept stablecoins at checkout.

There are over 100 million stablecoin wallets globally, which makes stablecoins a truly global payment method. However, to date, stablecoin payments have been too hard to use and inaccessible relative to traditional card and bank payments, but we fixed this. CDP's one-click stablecoin checkout experience is compatible with any stablecoin wallet in the world and it's simpler than the most popular checkout methods, including credit cards.

We've used CDP APIs to embed this experience in our demo app and have enabled one-click stablecoin payments from any wallet. We're proud that Shopify, our launch partner on this product, is ramping up across their merchant base and that payment companies like [ Checkout.com ] and [indiscernible] are launching with us in 2026.

Now we've heard a lot about trading today. And unsurprisingly, the banks and fintechs that we work with want to get in the game and offer crypto trading experiences to their customers. Our APIs make it simple to integrate crypto, buy, sell and hold functionality that is all powered by the same Coinbase exchange and custody that powers our Coinbase app. With these APIs, we can build an intuitive, totally customized interface into our demo app and execute a purchase of Bitcoin or any other asset.

Our trading APIs provide infrastructure and trusted security while our customers own the experience and branding. We recently launched with PNC, one of the largest retail banks in the U.S., alongside [indiscernible] and many more that are already running on our platform. So we've covered new product launches across custody, payments and trading. But before I wrap, I want to share 2 brand-new products in the CDP portfolio. The first is a payment protocol called x402. x402 is an open Internet standard that makes it easy to attach a stablecoin payment request to any web transaction. It enables AI agents to pay for content and execute transactions using stablecoins and is taking off like wildfire.

Over the past 30 days, the standard has enabled over 200 million of annualized transactions, and it's open source, available for free, but can be coupled with our infrastructure products like Wallets and Payments to build end-to-end solutions. As a next step, we're developing the x402 foundation with Cloudflare and other partners to ensure the standard remains open and can be used fairly by any company in the world.

And one final launch, a product that seamlessly accompanies our custody payments and trading products. Today, we're announcing that you can now create your own custom-branded stablecoin with Coinbase backed by USDC. Coinbase custom stablecoins offer the ability to embed your brand in every transaction, rewards on balances with best-in-class economics and a seamless issuance process managed by Coinbase.

We're working with innovative partners like Solflare, Flipkash and R2, all who are launching with custom stablecoins in the coming months. So whether you're a bank, a fintech, a payment company or a start-up just getting off the ground, Coinbase's infrastructure provides the trust, scale and product depth to get you started and grow with you. Visit us at cdp.coinbase.com to start building.

Now back to Brian.

All right. Thank you so much, Sid and Alec. I'm excited to see what businesses can build on chain. All right. So, so far, we've talked about custodial solutions that we're building. But self-custodial solutions where you control your own assets are also critical for a few reasons. Because they aren't regulated like traditional financial services, self-custodial products can be distributed globally from day 1, helping us bring economic freedom to more places around the globe.

Our self-custodial wallets also offer dramatically simpler onboarding with greater privacy. And we believe self-custody is essential to bringing 1 billion people on chain and bringing the benefits of crypto to everyone around the world. This summer, we released a beta of our self-custodial wallet called the Base app.

To tell you more about it, please welcome to the stage, Jesse Pollak.

Thank you, Brian, and hello, everybody. I'm Jesse Pollak, the creator of Base. And Brian mentioned that we're building a new self-custodial wallet, and that's true. But just like your smartphone doesn't just make phone calls, the wallet is rapidly expanding. With decentralized protocols unlocking new use cases and thousands of third-party apps, the wallet is rapidly evolving. It's becoming an everything app that does social, trading, payments, finance and so much more. And we are starting to see people all around the world use this everything app to start to make it in the new global economy.

And to show you why we're excited, I want to start with the video.

[Presentation]

Today, I'm excited to talk about how we're going to help millions of people make it on Base. And the idea starts with a very simple new reality that's only possible with crypto. On Base, everything is tokenized and tradable, protocols, apps, creators, posts, all of it is directly valued in the free and open market. This new market puts the value of your content, your creativity and your career in your hands, and it creates billions of tradable global assets.

So now your friends, your fans, your community can share in the upside you create and traders around the world can back the next generation of builders and creators. In this new economy, it comes together in the base app. It looks a lot like the apps you're probably used to. But here, everything you build and create has value. It's built on open protocols like Ethereum and [ Zuora ] and Forecaster and XMTP that anyone can build on and scrolling your feed, it actually makes you money.

Until now, the base app experience has been invite only. Over 1 million people have been patiently waiting as we let folks in to try a new experience. And over the last several months, we've been listening to feedback, shipping updates and improving the app every single day. And the early results, they've blown us away. People are trading 5x more with the new social feed.

Creators from over 100 countries have earned instantly in the app. And active users, they're using an average of 3 mini apps per week to help them navigate this new economy. And today, we're announcing that the beta is over and the new Base app is officially available to everyone everywhere.

So now let's walk through the app, and I want to show you what I'm most excited about. And it starts with anyone being able to log into the Base app with just an e-mail. Once I'm in, I'm in a feed, and I can start scrolling. And this looks like a regular feed. Except for now, everything is tokenized and tradable. And in this feed, I see many things that I'm interested in, like what my friends are trading and how much money they're making, funny memes and inspiring content going viral, new assets going through price discovery, communities forming in real time.

But unlike a typical social feed, because everything is an asset, we unlock an entirely new kind of investing and earning. So let's take a look. I see that my friend, Tody, he bought some [ Avantus ]. It's a perp exchange on Base. And Tody is one of the earliest Base builders. And I know he has a really keen eye for finding talent very early. And it looks like it's getting momentum and he's up. I don't want to miss out. So all I have to do is double tap to do a quick buy and immediately, I trade $10 worth of Avantus. We made it dead simple, set up a quick buy amount and just double tap to buy in the feed in seconds.

And coming in early 2026, we're going to make it so people like Tody, they earn from the trades that they influence in the Base app. So that every trade becomes an opportunity to make money and to create a virtuous cycle that grows the entire economy. Now let's go a little bit deeper to see what else he's got. I see he has a huge amount of CODI. What's CODI? Well, it's a token from a puzzle game that's built on Base, where players can earn CODI by cracking riddles and codes. And it's been trending in the Base app, and I can get started without downloading anything, one tap and I'm in.

If I want, I can start playing and then I can actually make money just from playing a game. But instead of playing today's game, I'm just going to buy some CODI, one tap, and I'll use that the next time I play. In the Base app, this is just one of thousands of mini apps from builders all around the world. And because of that one post from CODI, I got alpha about a new coin, discovered and backed a new app that I'm going to start playing every single day. And you know what, since CODI clearly knows what's up, I'm going to follow him, and I can turn on notifications for both his trades and his posts.

Next, I'm curious about what else is going on in the Base economy. And so let me take a look at the Trade tab and see trending coins. Let's see what's actually getting some traction. I can filter that trade tab by different categories of assets as well as market cap, liquidity, volume. And what we're seeing happen on Base is that it's gradually becoming the best place to trade every single asset from Bitcoin to Solana to stocks, to perpetual futures, every asset available to everyone, everywhere.

And one of the asset classes that I'm personally most excited about is creators and content. And just to break it down, these assets are the tokenized versions of your profile and post that you've been putting in social media for the last 2 decades that you've been giving away to corporations for the last 2 decades. And by tokenizing them on Base, creators now directly capture the value of their creativity with no middlemen taking 95% of that value. And it looks like one of the top creator coins is [indiscernible] from Naomi.

Let's go check out our profile. Naomi is an awesome creator. She also happens to be an elite athlete training for the Olympics. And her most recent post, they categorized her whole journey. And because every single one of her post is tokenized and tradable, all the content that she shares actually helps her earn. In fact, she's been able to fully self-fund all of her training just by being a creator on Base. And I, of course, can just double tap to buy this post about training in Spain. And as one of her supporters, as this content starts to go viral, I actually share in the upside.

And if you're a creator on base like Naomi, it's not just your content that has value. It's also you. [ Affrochip ] represents the entire value of all of the content that Naomi has ever posted on Base. It's called the Creator Coin. And we believe Creator Coins allow creators to monetize their value directly, not just through ads or merch or brand deals, but through true ownership and a direct relationship with your fans. And this is a real shift for social.

As a creator, Naomi is now fully in control. She's earning directly from her creativity, and she's making more as she scales. And when I buy her coin, I'm no longer just a follower. Now I can be a stakeholder, a part of her journey and actually share in the upside when she wins. When a creator succeeds, now everyone can share in that success.

And one of the incredible things about the way this earning works is that it all happens instantly. Unlike other social networks, you don't need a follow her account or stats to qualify to earn and you don't need to wait days or months for a payout. Your earnings flow instantly into your wallet. And then with all the money you make creating, there's so many other ways you can earn in the base economy, including USDC Rewards, where you can get 3.35% just for saving dollars.

And Naomi is just one of many creators you can follow. New creators have been joining Base throughout the beta. They're having fun and they're making money. And we're focused on onboarding more creators around the world. And whether you're an aspiring creator, looking to grow or you're an influencer bringing your community into this new economy, we want to help you succeed.

On the Base app, you can own your content. You can earn instantly and you will never need to rebuild your following again because it's actually yours. And alongside all these new features that we've just talked about for trading and creating, I just want to remind everyone that the Base app remains the best way to just use crypto. It is a world-class self-custodial wallet. It supports 10 networks with many more coming. It has 16 local currencies, including the euro and the Nigerian naira and so many others. It has fast, low-cost on and off-ramps globally.

It enables sign-in on thousands of apps that all support it. And we have instant payments on more and more Shopify stores. This is the best wallet for the new Internet, and it's coming together to be the self-custodial wallet of the future, a new creator economy, social trading, incredible apps, encrypted chat and powerful money management, all in one simple app for everything, for everyone, everywhere. So I have one app for all of you.

If you're watching this or if you're in the audience, if you already have the Coinbase Wallet app or the base app, just update in the App Store and you can get going. If you don't, you can download the base app at base.app. It's available to everyone, everywhere in the world. And I want you to try it out, post a piece of content, double tap and buy in the feed, launch an app, make money and then take that money and support other builders, trade every single asset you can imagine with predictions and stocks and so many more things coming soon.

And since it's December 17, I couldn't help but finish with a holiday surprise as part of the Base app launch, which is that over the next 3 days until noon Eastern on December 21, we want your help bringing new people to Base. And by bringing new people to Base, you can earn your share of up to $2 million just by signing up, using the app and inviting friends to do the same. We are in the very early days of building a new global economy. And in order to do that, it's going to take all of us working together. So help us grow Base and let's make it in 2026. Thank you for being here.

Thank you for building with us. [indiscernible].

All right. So we hope that whatever you heard today, it leaves you feeling more optimistic about our financial future. To recap, here's everything we shipped in the second half of this year at Coinbase. First, we launched the Everything Exchange. You can now trade multiple asset classes on Coinbase, equities, prediction markets, millions of crypto assets, token sales, simple derivatives, anywhere, anytime. Next, Coinbase. It's not just the trading platform. We're building it to power your entire financial life. So today, we announced direct deposit, instant unstaking, Ethereum-backed loans, updates to our Borrower product and a redesigned peer-to-peer payment experience. We also shared an AI-powered adviser designed to help you manage your financial life.

Next, we shared what we're building for businesses and developers. So Coinbase Business is now out of beta and available to everyone. And we shared a number of updates to our fast-growing Coinbase developer platform with a suite of APIs designed to integrate crypto into any app.

Finally, we shared the new Base app. It's finally out of beta and officially available to everyone. That's a lot of updates. In 2012, we set out to increase economic freedom. And today, the future of finance is taking shape on Coinbase. But before we wrap up, I want to share with you one more thing. So for years now, we've been hearing strong demand from funds and asset managers that are looking to tokenize real-world assets.

Like us, they believe that crypto rails can democratize access to capital markets, improve liquidity, eliminate settlement risk and reduce back-office fees. We've actually been tokenizing assets for many years at Coinbase with [ wrapped ] Bitcoin and stablecoins, but that was just the beginning. So today, we're excited to introduce another new product, Coinbase Tokenize.

Coinbase Tokenize is our end-to-end solution for bringing off-chain assets on chain. It combines issuance, custody, compliance and trading all in one place. And Coinbase is uniquely situated to create a market for tokenized assets. On the one hand, we have millions of retail and institutional investors who hold over $500 billion in assets on our platform, and they're looking for differentiated opportunities to invest in. On the other hand, we work with the world's largest institutions and funds already who already trust us for institutional-grade custody.

So we can help them get distribution for their products and make this market. Coinbase tokenize will bring new assets on chain from equities to private companies, funds, real estate and more. This is the future we're building toward where assets move at the speed of the Internet. If you're a company or institution looking to tokenize your assets, get in touch with us. So that's our update. increasing -- increasing economic freedom in the world has always been our mission, and these products are how we deliver it to you. The future of finance is on Coinbase. Thank you so much.

Well, thanks, everybody, for joining us. Before we get started here with Coinbase -- and I know there's some confusion around the room, so thanks for everybody for being flexible. The team from Coinbase has asked me to read their quick safe harbor before we get started with Q&A. Is it working now? Great. Thank you so much. It works better.

During today's discussion, Coinbase may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in Coinbase's SEC filings. The discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the Shareholder Letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to but not as a substitute for GAAP measures.

So with out of the way, Alesia, thank you very much for being here.

Thank you, James. I'm delighted to be here second year in a row. I love it.

That's great. So maybe I'll just kick right off and get into at least I'm sure a lot of the questions you've been getting and want to set the stage for everybody about the market generally. The trading activity has been very volatile of late, the last couple of months at least. From your perspective, kind of what set that off? And how would you characterize who has been trading, who has been selling and what the reaction of other participants in the market has been so far?

Great. Well, it's important to note that volatility is not new to crypto. And what we've seen over the last few months does have historical precedent. But as always, there's new drivers to what caused recent volatility in the markets. So we are seeing crypto more heavily correlated with broader macro trends. So on October 10, we saw a significant sell-off in the market. Three things were happening at the time: one, Trump had announced tariffs against China; two, there was a view on changing in Fed rates; and three, and probably the crypto-specific incident was what caused the largest so in liquidation is there was a poor price feed that came in from one of the large global exchanges into some of the DeFi protocols.

And as a result, it showed -- and so the price being here, the price was here, and it resulted in auto deleveraging. And that auto deleveraging then had a cascading impact where there was $19 billion of liquidation, the largest liquidation event in crypto's history, concentrated amongst the non-U.S. exchanges, concentrated on a few very specific platforms. And so that's really what caused them to fall.

Got it. So that's kind of what that has set it all.

It's the triggering event.

Right. Triggering event. And then what's your sense of like has that been entirely cleaned up? I think there have been some people speculating that maybe more recent kind of sustained weakness where we've kind of -- at least for Bitcoin been around this $90,000 level has been just ongoing cleanup from that? Or what's your -- any sense as to what the follow-on trading activity has been like?

So we're really business as usual on our platform. I want to share that we are very concentrated within our U.S. market, it's our large home market. Our second largest market is actually the U.K. and then Europe. So we do not have as much exposure to Asia and rest of world as many other platforms do. So we are business as usual. And what I think is important to look at recently is in the last week alone, you've seen positive net inflows now back into ETFs. And so I think that we have -- are starting to see stability again and people are really buying the dip in the $80,000, $85,000 Bitcoin price level.

I think what this is demonstrating though, unlike past events where there has been significant dislocation in crypto, I mean, 2022 was not too long ago where when we saw significant disruptions, we also saw numerous bankruptcies. We haven't had any bankruptcies. We haven't had any systemic fallout of any firms. People took some losses, but it shows the depth and maturation of the market. I think that we are renormalizing, moving back and starting to see that again in a bit.

Yes. I think that resilience is notable. So what about incremental implications? What do you think -- are there implications from recent volatility on market structure, winners, losers, et cetera? Or do you feel like most of the market has absorbed it relatively well as we kind of move forward as we have been?

That's a great question. In the U.S. and in other regulated markets, we definitely have rules from the CFTC as an example, in the United States, around how much leverage we can have in contracts. We have many nonregulated market participants within crypto where leverage is much higher. And so I do think it's important for market participants for traders to understand leverage levels, understand their counterparties, understand the risk that they're taking as they engage. And you're going to have rules in many parts of the world that will then dictate those leverage limits.

But as we can see with decentralized finance in other markets, there's always going to be some aspect of unregulated entities that have higher leverage. And high leverage can lead to -- we've all seen this in all asset classes around all of history, high leverage, unregulation, you can have bubbles, you can have bankruptcies, you can have price dislocation. But I think as more and more of wealth flows into crypto in markets that have more concentrations of wealth, it will balance out and kind of create more broader stability over time.

Got it. And then just kind of last market-related question before we kind of move on specifically to Coinbase and how you see the landscape. But how do you track like elements of leverage? Or what's your -- are you able to get a good sense of how much leverage is in the different parts of the market, et cetera? Because that's a question that we often get and one that I find hard to answer.

It is hard to answer. And it's hard to answer because there's not a lot of disclosures amongst many of the platforms that then offer levered products. We are unique in that we are public. You can read our financial statements. You can see the leverage. You can see that our products offer nominal leverage and that we're fully collateralized. And so we don't have the same types of highly levered products that you can see throughout the market. But no, because of lack of disclosures, it is hard to get that level of transparency.

We do, for at least our own customers, underwrite our customers where we're extending leverage and have a very good sense of the leverage within our own portfolio and our book and are proud to say that we haven't had any losses in our credit book, are proud to say that we haven't had any significant deleveraging. On October 10, for example, we had 2 margin calls. It was immaterial. We didn't talk about it with the market because it was so single-digit millions type of earning.

That's really encouraging. So let's talk about regulatory. You mentioned that just a moment ago, but spending a couple of more minutes there. I guess, arguably doing business as a crypto firm has not been easy over the last few years. But seemingly, where it seems like, I guess, we're moving into a more favorable backdrop with supportive new administration, et cetera. From your perspective, how are conversations with regulators and policymakers generally compared to a year ago?

I can't help equip that when you're innovating at the edge of a new technology, nothing is supposed to be easy. It is supposed to be hard. Otherwise, we'd all be doing it. We've obviously, in the United States, had a sea change. I mean Europe led with MiCA. We've had leadership in Singapore to bring crypto regulation forward in other countries. But the U.S. had really, in the past administration, been quite antagonistic against the industry. So I cannot tell you what a sea change it's been, what the pendulum has shifted in the other direction.

I was meeting with a bank officer yesterday. And his comment to me was, in banking, we've been beat up for so long that when we got the new administration, we started saying, "Oh, can we move from here to here? 1 inch forward?" And all of a sudden, the regulator is like, "No, we'd like you to move over here, like maybe a foot forward." And he was like, "I have to drive my own risk teams all the way across. He's like we've been so conditioned to that innovation is incremental, and now we have this opportunity to have constructive data-driven discussions with our regulators."

So one, we've got the GENIUS Act passed in the U.S. The GENIUS Act is stablecoin legislation that brings forth who can issue stablecoins, what reserves look like, what disclosures look like, very straightforward rules that we can now use stablecoins as payment vehicles. This is opening up the opportunity for payments growth on stablecoins. How do we think about stablecoins' collateral and trading and markets activity, all opening up possibilities because of the GENIUS Act. You've seen a growth in overall stablecoin market cap. You've seen growth in overall payments volume. So regulatory clarity brings in market participants, brings in confidence in operating in this ecosystem.

We are pursuing the same with market clarity rules. And the CLARITY Act has received markups from both Senate Ag and Senate Banking, good bipartisan support, getting everything through Congress in the U.S. is not a straight line as anybody who's tried to get legislation passed in the U.S. knows. And so we move forward. We get distracted by something else going on, but cryptos keep pushing. So we are still very optimistic that this will get passed given the number of days left in calendar year 2025, less likely this year, but really strong momentum coming out of Senate still. So we think that this is near term.

So on that point is like one of the things that, obviously, everybody is waiting for is the next piece of legislation, the proposed CLARITY Act. And it seems like with that passage once again is that you could encourage or at least have more people be amenable to looking at the market and entering the market. So how do you -- with that being the case, though, it also seems like you could see more competition for Coinbase. How do you win with that additional competition potentially entering the space? And what is, from your perspective, the unlock anticipated from a regulatory clarity that you're looking for?

So let me ask what Clarity is, and then we'll talk about competition as the second step. So the CLARITY Act is going to give us asset taxonomy. So what does that mean? It's going to share with us what is a security, what is a commodity. It's going to create delineation between what falls under the SEC's jurisdiction and the CFTC's jurisdiction. It's going to cement these into law so that we are not at the whims of administration changes to say what we can and cannot do as a business. And we believe that this will bring more developers back to the U.S. It will drive innovation as everyone is going to be able to focus on their product road maps versus their legal bills to defend themselves against government inquiries.

So it will just provide the rules of the road for how we bring forth crypto commodities, crypto securities into the market. Absolutely, though, we expect that once we have these rules and there's not a threat of enforcement action, it will bring more market participants in. It will bring more banks in. It should bring in more fintechs. It should bring in more corporates. Broadly, we think this will grow the overall market. So in addition to being risk to Coinbase, it's opportunity for Coinbase because of just the growth. So we believe that we're going to see more competition against our products.

I think it's important to share that we are the most diversified platform in crypto in the United States. We have products for our retail investors for institutions. We have developer tools. And we have amongst those different customer sets, trading products, financial services products. And we see today spot competition. So we have competition against our custody business for institutions as an example. That's one of our many products. So we have competition for retail. So we're definitely going to see it in spot. I don't think we're going to see it on the broad.

What's also important is this competition provides a new revenue stream opportunity for us. So we have a business that we call crypto as a Service. What we recognize is that we can provide tools to banks to fintechs to others who want to then build in crypto and provide cryptos to their end customers, where we white label our solutions and allow them to use our APIs to then serve their end customers. In that way, we're an infrastructure company, very much like Amazon was an infrastructure company. They built their logistics business and their cloud business to serve their merchant needs, then they sold all those services to others who needed similar.

So we can offer custody. We can offer back-end trading. We can offer on-ramps, fiat to crypto on-ramps. We have over 260 businesses who are now building on our platform. And so that will then feed into our institutional revenues. It feeds into our custody revenues, into our institutional trading revenues into the USDC balances. But this is the way that we can also grow because we can enable many of those companies to get to market very quickly through building on our tools versus building vertical stack on their own.

Got it. So let's talk about in terms of like your business development and kind of your capabilities. Coinbase has been quite active on the M&A front. Can you help us understand what are you looking for when you're looking to do acquisitions? What are you looking to add to Coinbase's capabilities?

Sure. We are very acquisitive. We're probably the most acquisitive in the crypto space. We've done 8 deals this year. Many of those deals, most of you will not have heard of. We do what we call aqui-hires, where we're looking for unique talent, and those would be teams of maybe 5, 10 people that will just bring very unique talent and accelerate our existing organic road map. We count those as M&A.

And then we have the other end of the spectrum, things like Deribit. Deribit was a platform that we acquired and closed this August. It's a derivatives platform that brought us options capabilities. we can talk more about Deribit later. We don't know if we go into depth here. But the spectrum is we're looking for talent. We're looking for product. We're looking for things that can bolt on to our platform to offer more types of tradable assets to our universe.

We look for new licenses. So as we enter new markets, oftentimes, we need to get a license to be able to operate. Last year, we bought a MiFID license in Europe, so we could then offer certain products to the European customers on a go-to-market versus a reverse solicitation by obtaining that MiFID license. So those are the types of things. It's people, it's products, it's licenses. It's anything that's going to advance our road map that we think that will add unique capabilities and serve our end customers.

Got it. So let's spend a minute or 2 on Deribit. It's, as I understand, a non-U.S. derivatives exchange, et cetera. Is there a plan, I guess, with Deribit to bring it into the U.S. or leverage their platform to scale internationally? What might make sense in how you would approach taking advantage of what you got in that acquisition?

Absolutely. Deribit is an options platform, as I just mentioned. They have 75% of the options trading market share. They are the market leader in options. That is not all they do, but that is where their dominant position lies. Coinbase is dominant in spot trading. That is where our historical strength has been. We are more than 50%, for example, of the U.S. spot trading market. We are a growing share in the international spot trading market. We had just recently launched derivatives, meaning futures. So we have perpetual futures throughout outside the U.S. We also have now perpetual futures. We're really proud to say in the U.S.

Adding options, we now have futures, options spot that we can bring all in one platform. So this is currently Deribit had only offered this to institutional customers and advanced traders, so sophisticated individual traders outside the U.S. Step one is to just integrate options into our international business. So then all of our customers, both Deribit customers and Coinbase customers, will have one trading platform where they can trade spot alongside futures, alongside options. What we think this provides is capital efficiency.

We offer cross margining, for example, on spot and futures today for institutional customers. That's typically 2x more capital efficient, so people can put less dollars to work and trade more, which they find very attractive. Adding options just continues to expand out the collaterals, expand out the tradable universe on our platform. Step one is international. Step 2 is we absolutely would like to bring this to the U.S., but that's going to be further on down the road map. We just closed in August. So we are good at many things, but integrations are complex, and we want to do this right.

So let's talk about 4 options and that kind of thing. It seems like the natural -- and you mentioned earlier that you have product for not only consumers and individual trading, but also institutional. And institutional has clearly been kind of the aspiration for the industry for years, right? And with the GENIUS Act and now with the CLARITY Act presumably going to pass at some point, the expectation is that there's going to be increasing interest from institutional investors generally.

Can you give us an overview of like Coinbase's institutional offering today? And how has that business evolved over the last few years, but really with the setting the stage to help us understand what you see as the growth opportunity within institutional for Coinbase?

Sure. So our institutional business looks and feels very much like any other prime services business today, except for crypto. So we offer integrated custody, trading, financing. And in the trading, we're expanding out the asset classes that one can trade. What we're seeing is that we have over 1/3 of the top 100 hedge funds as clients of our platform. We won 80% of the ETF custody business. The ETF providers not only custody with us, but they source the crypto that they need to back the ETFs on our exchange. They use financing products. So we have an integrated offering.

And what we have found is that we're the only institutional-grade player in the market at this point in time. And you can see that by evidence that there are other Bitcoin custody providers. There's many of them. But when we can win 80% of that business, it demonstrates that we are at the scale that can serve institutional clients in the likes of BlackRock, et cetera, that we can pass that operational due diligence. So we have a very robust institutional offering. We are finding that we are continuing to be a platform of choice.

So for example, we just had news, was it yesterday, this morning. I'm a little bit off in my time zones right now. PNC Bank has become a partner where they're now offering Bitcoin to their high net worth customers and executing that all through our platform that we are subcustodian. There's trading on our platform to offer that to their end users. PNC Bank is one of the major regional banks in the United States. So institutional has the foundation to grow.

As you pointed out, we do see post regulatory clarity. We get inbound interest from new corporate. Governments, many governments now is an interesting new clients that are looking to acquire Bitcoin and hold that as a strategic reserve asset, the U.S. included. Many of these are the types of customers that we are now poised to serve with our business.

So talking about different types of products that are in the market, we've seen multiple crypto ETFs startup over the past year or so. And you've also taken -- and you mentioned a moment ago, some additional custodian role for vast majority of these assets. Like how do you think about the long-term opportunity and role of Coinbase to support the ETF world? And what do you think that ecosystem of players looks like in the long run?

It's a great question. I think what's really interesting is you can see the demand for access to crypto. And so you've seen new wrappers come out such as the ETFs, such as the digital, the treasury companies, providing different wrappers, different structures to enable more and more asset categories, more and more investor types to find exposure to underlying crypto assets. And our role in the ETFs is that we are acting as subcustodian for all of the Bitcoin that sit behind the ETF.

We are also supporting the ETF issuers through being a deep liquid market to be able to buy that crypto to support that. And oftentimes that we're also using financing because crypto is a 24/7 instant settlement asset class. And so as an ETF issuer, you can choose to either prefund Coinbase and other platforms where you want to buy your coin or you can get trade finance from Coinbase to say, "All right, I'm going to take credit from Coinbase and I will settle out my wire in hours, days, whatever the case may be for normal fiat settlement time." We can offer that full integrated service.

But importantly, and many of you probably have this within your own businesses, when you get to a certain size and scale as many of these ETF issuers are, business continuity is of critical importance. And so you do have to have multiple service providers for each service that you have to ensure that you can provide 24/7 constant uptime. So we will see many of these adopt additional custodians, additional financing partners. And I think that is a natural evolution, and it shows also just the demand and maturity of the asset class to get to the point where we're focused more on business continuity and redundancy and crisis management than just say, can I buy crypto, how do I put it on my balance sheet, where we were 5 years ago.

Right. So let's talk about just a few minutes left here, but I did want to touch on a couple of specific products. And let's start with USDC and in particular, on the institutional side, where are you seeing demand or growth increasing the amount of USDC they're holding? Is it primarily individuals? Or is it institutional? And what are they using for anything, those stablecoin assets to transact for?

It's both. We see demand both on the retail and on the institutional side. On the institutional side, what's important about what USDC started is a trading pair. So we just talked about how crypto markets are 24/7, their instant settlement. Fiat is not a 24/7 instant settlement market. There's market hours. The banks aren't open on Sunday. And so what traders, what market participants needed was the ability to settle back to fiat and to have a stable asset to be able to sit in a market, but not around the world.

So what the institutional clients are mostly doing is holding it as a settlement asset. They use it to provide liquidity across all the trading pairs. They use it to have arbitrage trades across various different liquidity pools and exchanges around the world. And with our international exchange, for example, we only quote in USDC. So if you want to buy a perp, you have to have USDC in that account. we don't quote back to fiat. We've done it a crypto only. So it's all crypto, crypto trading essentially or crypto stablecoin, I should say.

So the institutions are holding it predominantly there, and that's where the bulk of it is a trading behavior. But increasingly now, post GENIUS, we're seeing companies want to hold it for payments. That is nascent behavior, starting to see real growth there, but that's a trend that we expect to continue.

So key question has been -- and love to get kind of what you think, how you think this plays itself out. There is the open question of, for example, Coinbase is paying of rewards on stablecoin, whether that in the rule-making process will be categorized as interest payments effectively and hence, be prohibited or if it won't be or maybe it will just be -- I think everybody prefer if it was just addressed in the CLARITY Act to clean up the uncertainty there.

Well, it was addressed very cleanly actually in the GENIUS Act. So we have law on this right now that issuers cannot pay interest on the stablecoins. Coinbase is rewards. So we're paying that on the behavior of the total client activity on our platform. Lots of companies have rewards programs. So it's very structurally different than passing on interest on a balance, what we have designed on our own platform.

Got it. That's helpful. Lastly here, just quickly on credit card. You recently launched your own credit card. What are your expectations for that product? And what is the early response? And I guess, really, what is the customer profile you're going after? And how is your offering different than what's already in the market?

It's an incredibly unique offering as we're offering up to 4% Bitcoin back. That is a unique rewards program to receive Bitcoin back on your purchases. And it's unique because Bitcoin is an asset that many believe, including myself, has long-term asset appreciation value, where many points programs have had deflation in them over time. And so now to have effectively your points go into an investment vehicle versus going into something that could have a deflationary impact, we think it's really differentiated.

What we've seen is rapid adoption of the card. It is gated behind the Coinbase One membership. So we're also seeing growth of Coinbase One. We use the card as a customer acquisition vehicle quite candidly, and we're really focused on building that Coinbase One subscriber base because what we see with Coinbase One subscribers is that they tend to be more actively engaged on our platform with many of our other products and services. We're monetizing through the product stack with the acquisition vehicle of the Coinbase card. But we're delighted to see that it's become a top-of-wallet card. people we've had incredible positive feedback both on the design of the card and the utility of the card.

Got it. Last question. How do you think about managing and operating the business through crypto cycles? I mean there seems to be cyclical volatility, but how do you think about managing the business through those?

I think that we've become very good at this. I'm almost going on 8 years here at Coinbase. Prior to that, I was at a hedge fund where I wasn't able to forecast returns very effectively either. So basically, the last decade of my career has been managing and forecasting businesses that are crystal ball. So the answer is we are never right at one forecast, but we are very good at swim lanes, and we are very good at scenario planning. And so we manage the business through scenarios. And we have triggers about various scenarios and various levels of revenue about what that means to our operating expenses and how do we then manage the OpEx.

So we focus on components of variable expenses, how do we bring those up and down with various revenues. And we're always planning risk scenarios and downside scenarios and ensuring that we can cover those operating expenses and be EBITDA positive in all operating conditions if those low revenue periods emerge.

Got it. Well, that's all the time we have. We're right at the top of the hour.

Thanks, James.

Thank you so much. Appreciate it.

All right. Let's get started here. Can you hear me? Okay. So up next, we have Alesia Haas, CFO of Coinbase [indiscernible] joined the company in 2018. And since then has built the, I would say, preeminent U.S. crypto exchange and infrastructure business with aspirations across much of the crypto ecosystem. Thanks so much for joining us.

Before we get started, I'd like to remind you that during today's discussion, conveys may make forward-looking statements. Actual results may vary materially from today's statements. information considering risks and uncertainties and other factors that could cause these results fees included in [indiscernible] SEC filings. The discussion today will also include references to certain non-GAAP financial measures.

Reconciliations to those directly accountable GAAP financial meters are provided a shareholder of the company's Investor Relations website. Non-GAAP financial expense should be considered in addition to, but not as a substitute for GAAP measures.

All right. Alicia. Let's start with the regulatory background I tried you in quick.

Okay. Let's do it. I love it.

I'm sure everyone loves our legal disclaimers. I'm sure they're great.

SP1 We have to read a lot of color to, so I've gotten good at being quick. Okay. So maybe let's turn to regulation on that note. Maybe just a mark-to-market on the regulatory backdrop today. We've now seen 3 different drafts of the market structure bill and they're a little bit different. So maybe what are the key items you're looking for in the Clarity Act and maybe any perspective on when we might see this finalized.

Great question. So just zooming out, as we enter the year with the tailwinds of regulatory clarity on the new administration, there are 2 acts that we were seeking. One was the Genus Act, which was passed earlier this year, which gave us market rules around stable coins. And so at that point, you've seen just a proliferation of stable point activity. Market caps are up, trading the volumes are up in stable coin, payments are up, we can talk about earlier. But the second important regulatory that we are looking for is the CLARITY Act. And the Clarity Act we often refer to as the Market Structure Act. What this is trying to achieve is clarity as to the taxonomy of assets, definitions around what is the security, what is the commodity what is a network token, i.e., something that looks like Aerium, which is used for gas and speaking. So taxonomy around the assets, it gives clarity as to the what the SEC will oversee, what the CFTC will oversee, it provides durability of this. It would leave us with more confidence to be able to innovate here in the U.S. because we would not be subject to administration changes and the various financial services regulators saying, you may do this, you may not do this. So needs to act in order to provide that just durability for American innovation to move forward with our road map. We are looking for clarity around consumer protection. What does that mean? -- for crypto. What did the AML rules mean that we are strong AML but workable AML? How do we continue to have innovation here in the U.S. And just making sure that we then have these very clear delineations I think, between the to take away some of the ambiguity of like the gray space that was existing where we don't have rules around this is my astros my asset regulated. So that's what we're looking for. And we have seen graphs there is strong bipartisan support here, which we're really grateful for. It's important to note that we had bipartisan support with the Genius act earlier this year, but also last year, when FIT-2 passed through the House Financial Services which was the market structure in the old administration, we have a lot of bipartisan support. So optimistic. We're making progress, hopefully, early next year, but we don't get to control the time line of DC like we do our own product road maps. So harder to put a pin in.

Makes sense. Okay. So we've also seen in recent weeks, a notable selloff in crypto market cap. And on our math, industry trading volumes are down 27% quarter-to-date annualized and might disagree to my numbers, and that's versus roughly 25% through the first quarters of the year, 3 quarters of the year. Maybe you could just reflect on the activity you've seen across the platform. how is risk appetite changed? And maybe you could also, within that answer, comment a little bit on retail versus institutional? And then maybe also comment a little bit on what we're seeing on chain. such as D5 projects.

Sure. So on October 10, there was a market incident where a bad data feed resulted in a sharp selloff. I would say that volatility is not to crypto. And what we were really proud of for our own platform is that the investments we've made in our products, we maintained uptime, we were able to navigate this. And the reality is we're business as usual at coin based. The sharp selloff in certain D5 protocols did result in auto deleveraging on certain platforms. So those platforms that pulled those price fees and then got the bad price feed that then said, oasis worth left, they deleveraged and they sold off assets. That did not happen on our platform, but we do not have as highly levered products in our [indiscernible] our customers. So I think get the credit to want our risk management to the durability of our controls with multiple price speeds to be able to ensure that we are getting good market structure. I think it goes to support the importance of market structure and regulatory clarity on what controls are needed to have safe, healthy markets. And I think that, again, for us, we were business as usual. We did not see significant deleveraging. And this is why disclosures is why people need to understand the counterparties that they're transacting with and the risk that they're in transacting with across the overall crypto ecosystem.

Recent events aside, maybe we can turn a little bit to your core business and in particular, retail spot trading. Can you talk a little bit about how the competitive environment talk a little bit about the competitive ironmen and how that's evolved. And then maybe just thinking about monetization as more options to enter the speed.

Okay. let's talk about retail fees. We always get to talk about retail fees. So let me talk about competition first. Well, a few years ago, we were out here saying, crypto, everyone's going to trade crypto, or one's like a Hongkong base a trading crypto on your platform. And what it's like wonderful to see is that lots of now fintechs and traditional financial services players saying, oh, I think my customers want to trade crypto. How am I going to offer trading crypto within my products and services? So one, I think crypto has really arrived at the mainstream. I think this is now itself as an asset class that many individuals, corporate, governments, businesses, I think financial services providers want to trade, want access to in various [indiscernible]. So not only do we have spot, we now have ETFs, we now have digital asset treasury. We just have any wrapper that you can think of, let's trade crypto. So the market is definitely getting more robust and there's many more participants in the market. What I'll share, though, is that we are probably the most diverse platform, meaning that we are offering a series of products and services to a much wider consumer business developer set than any other product. So we do have competition, but we tend to see 1:1. So we'll have competition for our custody business alone or we'll have competition for our retail trading business, where we'll have competition for our institutional. So we are definitely seeing competitors come in to various things. But we do not see anybody that is competing with us on the breadth of the product offering that we go to market with. But what I do think this shows is that we're seeing maturation. This is good for customers. This is good for our maturity of the space and the building of the overall market, and we'll need to continue to compete. What this means for fees we long have said -- since we went public, for any of us, those of you who have followed us since our road show or since before, we were been asked about retail spread compression and the retail fees. We have yet to see the deciding factor in how consumers choose platforms. I absolutely believe, I have believed for as long as I've been in this seat, that when you see [indiscernible], you will see -- when you see the comparable products offered in many places that, that will naturally then shift the decision point of consumers to choose fees as a deciding factor versus to date, it's been the product, it's been the breadth of the offering. It's been trust. It's been safety -- how do I safely ensure that I sleep at night knowing my crept won't get still in. Those are the things that we really engage and transact with customers on. So we have continued to experiment with our fees. -- we've raised our fee since going public. Our competitors have raised their fees over the last 2 years. So I do not think this is going to be a near term. But because of this risk, we've been focused on diversifying our revenues. And we've been really growing our non-trading revenue businesses for the last few years as well. So if you look back over the last 3 to 4 years, when we went public, it was 4% of our total revenue coming from subscription and services revenue. given volatility of trading fees, some quarters, it's 50%, some quarters a little bit more than 50%, but we've really seen nice sequential growth of those revenues. And that's what we're focused on. diversification of revenues ensuring that we are growing that customer relationship on the retail side, but they're doing multiple things with us. We're excited about Plant-based One's offering and continuing to grow that subscriber base of business, and we'll adapt the ball to the market.

Makes sense. So we'll touch on subscription services in a little bit, but I do want to just touch on a little bit more of the growth in the core business. And I think derivatives is one of the exciting growth areas within the core. And so maybe just an update on the growth of derivatives now that you've integrated the business with a bit and having. I guess, having both businesses, what does that mean for growth? And then finally, and I know there's a lot of questions, but how developed are the products you're building using terabits tech in the U.S.

Okay. If I forget one of those sub questions, like push me on that because there's a lot of little impact there. So there is trading. We've talked a lot about derivatives trading outside the United States being the predominant volume in the crypto market. coin base introduced a product about 1.5 years ago for international growth. And we've also then brought a product to the U.S. over the last year. We were the first to bring perpetual trading perpetual futures to the U.S. and that has been growing nicely. That's a market that we are growing the TAM. So there was no existing players, no products, and we are steadily growing that volume in the U.S. Outside the U.S. Over the course of this year, our focus has been building liquidity, depth of market, onboarding customers, bringing our product to parity with the global product set. And what we've seen over the course of the year is that we've been able to then reduce the rebates and incentives that had been offering in order to really build that liquidity and onboard participants into our market. And we're steadily now gaining share. That organic growth combined with the acquisition of Dariba, we only [indiscernible] in August. I love that you said that it's integrated. -- we are not so magic that we've integrated within 3 months. So this is going to be a multi-quarter integration of this new option platform into our product set. But now our vision is to bring spot futures and options, all within 1 interface. So our institutional clients can trade that entire set of assets. That's going to be multiple quarters, but we are on a very steady track to bring that product bringing options into the U.S. is also on the road map. But first, we're going to get the international product set integrated then subsequently. So a multi-quarter initiative to bring those to the U.S. and to the retail customers. I think you covered all the questions. on that one. .

So maybe just 1 more on derivatives, which is the revenue profile in the organic business. I think you just touched a little bit on the rebates. But maybe you could just contextualize for us how we should think about, I guess, the time period over which you would expect this to start to really contribute materially to results as you wind down those incentives.

All right. A little forward-looking statements land in here. So all of those comments that we made earlier around our legal disclaimers, look, this year has been about building a product and the foundation and building that liquidity. So we think based on our Q3 comments that we've been able to start to tail down those rebates and incentives. So we're looking with cautious optimism with the combination of options and purpose on the same platform, with being able to see the market share gains that we've had that we are setting the course for a very solid growth year next year, but that's going to depend a lot on how the market evolves. So still new.

Fair enough. You actually brought up digital asset treasuries. I just -- just to get your perspective on how you service those clients, where they touch your business? And obviously, there's been a little bit of disruption there. So does that change the way you're thinking about that client set?

So that client no different than any other client. Some of the core products and services that they need when they are touching cryptos, they need to custody those crypto assets and they need to acquire those crypto assets sit within the funds. And so one, we offer custody to some of those companies; two, because we have the deepest order books and markets in the United States, like oftentimes, we're either directly enabling those companies to buy via our platform or market makers who might supply them are then trading on our exchange in order to supply those assets into those funds. So indirectly, directly in many ways that we're back in service provider to the growth of that market.

Okay. Perfect. So let's turn to subscription services. As I look at it, the big areas, focus seem to be stable coin, staking lending and then base. And so maybe we go through each 1 of those in turn. Maybe let's start with staking. How do you think about penetration of staking are there other asset classes you're working on building out? And how should we think about the road map for staking?

So staking is about a $700 million last 12 months business for us. We have an opportunity to continue to deepen the taking penetration of assets on our platform. So we are not 100% stake to our clients have not all chosen to stake on our platform. So that is 1 growth vehicle. Two, we just got approval from regulators to be able to enable the ETFs to take the assets underlying ETFs. So as the ETFs specifically the theory of ETFs have grown, those now can become stakable assets. Three, new blockchains, there's been a proliferation of new blockchains. Many of those are going to become proof-of-stake consensus mechanisms. And so as those blockchains grow with their development and assets, that becomes a new channel or potential taking growth as well. So -- and then last, some of you remember when the SEC suit us, we had 10 states with follow-on actions that said, see staking in our states. We've now unlocked Five of those states to say like we can revisit. But if we drop those suits in additional 5 states, including the state of New York, we will be able to then grow taking in those states. .

You're a leader in crypto prime brokerage already. Maybe you could just help us think through the growth prospects in prime and what you still need to build there obviously more nascent product than retail trading, I think, across the industry. So do you think you have adequate financing capacity for this business today after the convert a few months ago? And -- how should we think about financing cadence going forward?

Sorry. So when we talk about Prime, hitting my mic, we think about Prime to be the combination of our institutional trading for custody and then prime financing. So we're bringing those 3 things together underlying that prime product. We absolutely now have that product built and we are seeing great organic growth of that product, and we're seeing more and more clients choose to adopt financing as part of their trading strategies. We offer a series of financing products, everything from trade finance, which is when markets are 24/7, they're instant settlement. So when a client, for example, an ETF is sure, needs to buy the Bitcoin Ethereum to underlie their ETFs. They need to either pre-fund or seek trade finance from coin Basin settle out whenever their wire clears, hours or days later. So those are very quick term loans. We also offer margin trading and so we can trade with collateral. All of our loans are collateralized. They have often excess collateral. We're a collateral manager. Those are all on our platform. We've never taken a credit loss. We don't have a credit provision due to the collateral that we hold against these assets. We bootstrapped this lending growth through our own balance sheet through the cash that we've issued through our converts and other debt offerings. We had on average about $1 billion outstanding in the third quarter of loans. That's up about 20% year-to-date. And we do have capacity with the recent debt to continue to scale this. However, we're also starting to build out reaction. And this is only for institutional to institutional. This is on a fully opt-in, disclosed basis. So we are not renovating without customer consent. We are not touching our retail funds. But if the institutions choose to say, yes, I'd like a yield. I'd like to be able to lend out my assets. They can opt into that program, and then we can use that as additional assets to the fund loans. So we're building out that product and liquidity for a 2-sided marketplace and using our own corporate assets to be stress this growth. And that's how I think we'll scale on a longer-term basis.

Makes sense. Let's turn to the Layer 2 protocol base. Could you just remind us of your goals for the infrastructure layer? And I would note that I think you've continued to reduce fees on base over time. So how do you think about monetizing this versus making it decentralized?

We hope to do all of the above it. We hope it's decentralized, we hope it's monetized, and we hope to grow it. So our Layer 2 protocol base based is a chain -- it's a messaging layer, it's a network. It's how we transact and we built base to be back, to be cheap, to be global, to be able to serve all of the payment use cases that we saw, the trading use cases, in our own platform, we are growing USGC on base as an example. So we have over $15 billion of UDC on base. And then when we can send USGC peer-to-peer for milliseconds, millicent instant confirms for all intents and purposes and fractions of pennies of cost to be able to transact on chain. The goal of lowering the fees, in part is we are working on scaling. There is no limit to scaling. We have not found an upper bound. It is just a matter of to invest and scale this network. And in doing so, bringing those fees down. Much like has texting became free and over time, if you all remember, it used to used to pay for texting, you still have like a package of how many techs you can send a month. So those are are old enough in the room to remember this. But then when it became free, we texted a lot more. We sound like hundreds, if not thousands of techs a day. We think that, that will have a lot payments. As you reduce the fee and make these things basically miles like so cheap, you can send micro payments. you can pay on a consumption basis, you can change the nature of how we use and transact in money. So in part, we believe that just lowering friction, making this easy to adopt for developers who are then integrating crypto payments and base into their app will open up then the aperture of what they can create bringing developers to base, creating this infrastructure to be very flexible and meet their needs is the ports goal right now. So over time, when we believe that we can drive meaningful volume, that volume even if it's for fractions of a penny will drive revenue. But most importantly for us at [indiscernible] for others, we really hope that most of the revenue growth is through indirect revenue. So as I mentioned, [indiscernible] can monetize or you can transact within as and build sentiment base. The more apps we build on base, for example, in our own based app where it's an aggregation layer to introduce lots of D5 protocols to our users. We can run advertising revenue. So we have other ways that we really seek to monotype and really think a base of a utility as an ecosystem layer that we would like to drive interoperability and network effect to enable lots of developers to build on chains.

You talked about payments a little bit. I'd just love to get your perspective on stable coins and how that market develops. And you've already started to see a little bit of fragmentation in stable coins. And I still think we haven't seen full clarity on what banks can do, what Big Tech can do in the space. So how do you think about stable coin market structure, if I were to call it that. And then how do you think about your role in this? Obviously, you have USDC, you're very involved in U.S. D.C. but you started to see the proliferation of stable coin service providers. So how do you think about the ways in which coin base can be involved in the stablecoin ecosystem?

So we're going to be customer-led, and we want to list everything on our platform that is safe and legal to do so, and then we'll enable our customers to dictate how they want to transact in crypto. To this point, USDC has been the asset of choice for many of our market makers and those in the U.S. who are looking to use it for their trading and for our DFI apps, we're looking to really integrate that because I have the deepest liquidity. In the U.S. no other stable coins really reached escape velocity in terms of market cap or volume that it can be really ubiquitously used across these platforms. In the international markets, obviously, Tether is the largest most liquid stable claim. And so between Tether and [indiscernible], that really drives what you see today as stablecoin volume. There has been a proliferation of additional stable points and lots of conversations. I think like any new technology, you tend to see fragmentation and then you see consolidation. So I think we're in a fragmentation where we're going to see if any of these new stable points get adopted by customers and develop enough liquidity that they become in regular business flows. We will, as I mentioned, follow our customers in doing so. We are not exclusive to any single stable coin and would look to strike commercial agreements with things that we think make sense for customer growth. Our role because of our large distribution because we have many customers on our platform and because of our links with the decentralized protocols, gives us a unique role to play in this space. We're a distributor. And so at least in the U.S. markets today, large stable point would need to kind of transact with us because of our connection through the ecosystem in order to really gain that large volume in.

Okay. Maybe on the base app, -- can you just walk us through the key components that you're planning to build there first? And then how you think about scaling, rolling out new features and monetizing the app?

It early to have this conversation because we have an app in beta that hasn't been released at this point in time. But the -- if you've seen Jessie [indiscernible] of our most both goal product managers. He's everywhere on a he's everywhere in the market. So you probably have heard what you said in many forms. But what we're really looking to build is that aggregation layer. We're really looking to build a single self-custody on chain application where you can run your entire on-chanexistence. It will have the ability to trade the ability to buy sell any asset, the ability to have content points and social messaging, payments, identity all embedded in 1 curated experience. So that is what we are building. There'll be more to come as that really gets released into the market. there's over 1 million on the wait list. And for the customers that are in beta, we're getting incredibly positive feedback. So we're excited about its potential, but venture early days. So more to come in future quarters.

Maybe dovetailing the app with coin-based one. Maybe you could just talk a little bit about the subscription model that you're rolling out, your aspirations there and how you plan to drive the adoption.

All right, 2 different things. The base app self-custody coin-based on a subscription product for the custody product. So our custody product is where coin-based is holding your keys coin-based is responsible to make sure those keys do not get stolen from you. We offer very similar things you can buy and sell thousands of crypto assets. We've now integrated with Dex trading. So not only do you have access to the 300 assets that we've listed on our centralized exchange, you've got access to 40,000 other assets, so it's a longer tail of crypto. So broad access to buy and sell discover. You can stake your assets. You can make payments in USC. You can do many similar things, no social aspects on the point base [indiscernible] is unique to the base app. But point base 1 then is a subscription product that takes away your trading fees that offers you special access to the coin-based card, which we can talk about, which I think has been a great success of ours differentiated customer support, different account protection. And we're seeing a lot of nice growth there. And more importantly, customers of Coinbase One tend to transact with more products on our platform and drive more activity across the product fleet.

So you brought up the coin-based card. So maybe we could just touch a little bit on that. Do you view that as a customer acquisition tool? How do you link it into -- or how do you embed that into bringing more customer engagement platform.

We absolutely view it as a customer acquisition tool. As when we launch the claim based card, we saw both brand-new customers as well as inactive customers get the card and become more active. So what is unique about the [indiscernible], it's a partnership with Amex, we are not credit risk on our platform. So it is really a customer acquisition vehicle. But it uniquely offers Bitcoin Rewards. And what we're hearing from our customers is this car is becoming top of wallet. They love the ability to spend and earn up to 4% Bitcoin back is a differentiated reward system in the overall card universe. And it becomes a passive asset that can grow over time versus other payment point systems which broadly can be viewed as things that could depreciate in value over time or your points have less purchasing power. And so we think that we've positioned this really nicely with unique benefits, and as a result, are seeing nice customer adoption and growth. that also grows the coin-based One membership because to get the card, you have to become a coin-based 1 member.

Okay. So I know there's more products coming in addition to all the ones we went through. So I'm not going to try to get into any of those, but I do just want to ask about tokenization at a high level. And more in the sense of how do you think about what tokenization of equities means for market structure? And then specifically, how do you think that the fact that the offerings are somewhat different and not necessarily interoperable that issue gets solved in terms of -- I guess the interoperability problem gets resolved.

Between equities and crypto [indiscernible] the commodities. Tokenized equities and regular equities or tokenized equities and crypto commodities.

[indiscernible]

Any of the permutations and how this works together.

I think there are questions on both, honestly.

Okay. Gosh, there's so many Robin Wolf, we can go down here. Let's see if I pick the right one. What I want to say about tokenized equities is we have not yet seen tokenized equities in the market yet. And that is because we are still working with the SEC to gain clarity on how market structure will work. And so it's a little bit to be determined, not able to be answered yet. So a lot of folks, us included, are working on product innovation at the kind of frontier of crypto securities -- I'm sorry, equity securities, on chain. And things that you have to answer is how do you think about [indiscernible] security transact in DFI. How did the AML rules follow on? How do you pay dividends if it's in a self-hosted wallet. How do you think about corporate action. So these are the types of conversations that are being held with the SEC and other market participants to think through these permutations. I think there's also a lot of questions around will you tokenize any existing security? And do you want a tokenized security and a regular security to trade and how does that work if the market gets -- if they unpeg from one another, will enough market makers participate on both sides to create market efficiency. These are things that -- versus new native on chain securities where you don't have an analogous asset in the traditional way. So lots of conversations are being had about these market structure rules, and there's not yet answers. We are excited to be driving this conversation and excited to bring forth products, and I think that we will have more to share in coming weeks, if not months. .

I look forward to it.

But I want to -- like pencil, we do have a product announcement event on December 17 that we would invite you all to tune in on. We have been head down deep at work for the last 2 quarters on some new asset categories to expand out the tradable assets on our platform and our vision of what we call the everything hand we'll be making updates to that and sharing those all with you on December 17.

Great. Let's turn to investment. So on the last earnings call, you indicated that the sequential rate of operating expense growth was slow as compared to your 4Q '25 rate of growth. Maybe if there's any ability if you could provide a little texture on the moving parts of the expense base. I'm not trying to forward guidance, but just how we should think about the different pieces of your expenses around investments versus run the business? Maybe that's a good way to put it.

Sure. So 2025, as we characterize for many of you was an investment year. As we saw regulatory clarity on the horizon, we saw the opportunity to expand out the investable assets. We really made a number of new investments in the platform, taking out new product capabilities to shore up our foundations to expand the platform quite candidly, to be able to handle the volatility of the October 10 day without having any downtime. So this was an investment year. We've grown headcount over 20% through the third quarter. We also did the acquisition of Terabit, -- we've done the acquisition of Echo. These both contribute a lot of headcount. And so as we're sharing with you on December 17, there's a lot of products went from 0 to 1 this year. 0 to 1 products, the expense perceives the revenue because we had like get some bills. As we look forward to the first quarter of 2026, we really think of that as digestion. As we go into 2026, we're digesting the growth that we absorbed in 2025. We are going to focus on scaling new products that went from 0 to 1 to get them to 1 to 10. We are going to focus on bringing everybody kind of to their full potential at Coinbase, making sure that those folks that have been with us 3 months are operating the same speed of those that have been with us for 2 years. And so we will see sequential growth Q1 versus Q4, but at a much, much more moderate level. So really think of it as a digestion year with more moderate growth where 2025 was a big investment year.

Is there any reason to to think that as you migrate the business from being more trading to being more subscription services, that would have any impact on your margin profile? Or are you seeing similar margins obviously, adjusting for the cyclicality of -- across both of the keys.

Yes. We have really strong unit economics. We look for all products to have positive unit economics. Some products the credit card, we are treating as a customer acquisition vehicle. And so we think of it as stapled into then the Coinbase One subscription product, which then we look at those overall economics. So some products have various margin, but we think that we are going to run a very healthy EBITDA and margin business on an adjusted basis for the full product portfolio. The goal here though is a more diversified revenue to create less volatility in the top line.

Makes sense. Okay. So we're almost out of time here. So maybe just as a wrap-up. So 2025 has been a transformative year for the industry and for coin base itself. You talked about all these products that you're rolling out, the diversification of revenue. So what should we be looking forward to in 2026? And what are you most excited about for next year?

It has been a year. I mean there's been a pendulum shift on the regulatory environment. We went from no innovation to let's have commercial rational conversations about what is possible incredible change. We have the start of the year, we didn't have perpetual feature Yes, we didn't have options. And by the time we end the year with our new product announcements, we're going to have materially expanded the tradable assets on our platform. We're excited about that as going into 2026 with a much wider product set available to our customers. We are excited to see the continuation of the regulatory clarity, where I think that we will have market structure, hopefully in the early half of 2026. We are excited to see quite candidly, the continued intersection of opportunity with AI to make us more efficient and AI and crypto coming together with the things we didn't talk about today was with 402 and [indiscernible] and how you we are bringing for the product to enable agents to transact with wallets on chain. Those things starting to take little seeds a will tiny seeds that are being planted, but we're seeing some good organic kind of adoption, not monetize well. This is just infrastructure that needs to be built to open up the ability for these type of payments activity. So a lot of seeds planted this year. A lot of new kind of 0 to 1, as I mentioned, and I'm excited for those things to take spot next year.

Okay. Well, with that, we're about out of time.

Thank you so much, James. Happy holidays to everybody. Good to see you all. Thank you.

Thank you.

Good afternoon, and welcome to the Coinbase Third Quarter 2025 Earnings Call. My name is Anil Gupta, and I'm Vice President of Investor Relations at Coinbase.

Joining me on today's call are Brian Armstrong, Co-Founder and CEO; Emilie Choi, President and COO; Alesia Haas, CFO; and Paul Grewal, Chief Legal Officer.

During today's call, we may make forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings. Our discussion today will also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website.

Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures. We'll start today's call with opening comments from Brian and Alesia and then take calls to take questions from our retail shareholders and our research analysts.

With that, I'll turn it over to Brian for opening comments.

Thanks, Anil. It was another great quarter for Coinbase. We continue to drive strong financial performance and build the everything exchange that we had announced last quarter.

Financially, Coinbase's core business is incredibly strong, and we're very well positioned for the opportunities ahead of us. Our strong financial performance in Q3 was driven by continued product execution. Total revenue was $1.9 billion, adjusted EBITDA was $801 million. We ended Q3 with $11.9 billion in USD resources and another $2.6 billion in long-term crypto investments.

So just a quick refresher. Our mission is to increase economic freedom in the world at Coinbase and crypto is the technology that we're going to harness to get there. Crypto rails will power more and more of financial services over time because they're faster, cheaper and more global. With just a smartphone, for instance, anyone in the world can access trading and payments, raise money to start a business or get access to credit.

Coinbase is the most trusted brand in crypto with deep technical expertise. And as finance moves to these rails with increasing regulatory clarity, we're uniquely positioned to lead and capture the upside of this paradigm shift.

In Q2, we introduced The Everything Exchange, a one-stop shop to trade every asset class. Customers want one venue to trade spot crypto assets, derivatives and options but also equities, prediction markets, commodities and more. In Q3, we executed on that vision by expanding spot coverage, growing our derivatives offering and laying the groundwork for new asset classes on our platform.

In terms of spot coverage, we turbocharged our trading platform in Q3 by adding decentralized exchange or DEX integrations, which expanded access to tradable assets from about 300 to over 40,000 assets in the U.S. With DEX integrated under the hood, customers get day 1 access to new tokens as they are created, and we capture the upside when one of those takes off.

We've also made strong progress in growing our derivatives product. As a reminder, derivatives account for about 80% of all crypto trading volume. And in Q3, we were the first to launch CFTC-regulated 24/7 perpetual style futures in the U.S. Early traction is strong for our U.S. style purpose product, which helps drive all-time highs in U.S. derivatives volumes and market share.

We closed the Deribit acquisition, bringing the #1 crypto options venue into Coinbase and Deribit plus Coinbase saw over $840 billion in total derivatives volume in Q3, driven by stronger participation from institutions and advanced traders.

Next, let's touch on how we're accelerating Stablecoin adoption by improving payments. The majority of Global Payments will shift to stablecoins over time because they allow you to send money anywhere in the world in under one second for less than $0.01. And no other payment rail can match this.

Adoption is already well underway as stablecoin market cap hit $300 billion driven by companies and financial institutions using them for payments and treasury, and we expect policy tailwinds like the Genius Act to continue to accelerate this.

In Q3, Coinbase customers held on average, $15 billion of USTC on platform, making us the largest contributor to USTC's all-time high $74 billion market cap. USDC continues to be the top-performing major stable coin in the crypto ecosystem, growing more than 2x as much as the largest competitor.

In closing, with regulatory clarity accelerating, crypto rail are set to power more and more of global GDP for trading, payments in every financial service. Coinbase is well positioned to be the partner of choice for companies and financial institutions, including Citi, which we just announced last week, who are looking to come on chain.

Through the end of the year, we're heads down building the everything exchange and scaling stablecoin payments with USDC, Speaking of which, I'm super excited to share that on December 17, we're hosting our H2 product event but we'll go through everything we've built in the second half of this year. Tune into the live stream for a closer look at the next phase of the everything exchange.

I'll now turn it over to Alesia.

Thanks, Brian, and good afternoon, everyone. As Brian shared, it was a strong quarter for coin based. We had total revenue of $1.9 billion, net income of $433 million, adjusted EBITDA was $801 million, and adjusted net income was $421 million.

So let's dive deeper into our Q3 results. As always, any comparison all share is going to be on a quarter-over-quarter basis unless I note otherwise. In the third quarter, our U.S. and global spot -- sorry, global spot market trading volume increased 29% and 38%, respectively. This is a global market. Against that, our Coinbase's Q3 consumer spot trading volume grew 37% to $59 billion. And consumer transaction revenue grew 30% to $844 million. The main difference between the growth rate in volume and revenue was due to a higher mix of advanced trading volume, which has a lower fee rate.

A couple of callouts on what drove this growth. First, as Brian mentioned, we made progress on growing the number of assets available to our customers, both in terms of spot and derivatives assets. Second, our advanced trading volumes were supported by price increases and the long tail of assets as well as our concerted effort to attract and retain high priority traders through a new white glove service offering.

Our institutional business had strong results across the board. Total institutional transaction revenue was $135 million, up 122%. And the primary growth driver was derivatives. We closed Deribit on August 14, which contributed $52 million to revenue, driven by continued growth of options trading, which led to all-time high notional volumes.

Additionally, we saw revenue growth in both our exchange and Coinbase prime businesses in the third quarter.

Now turning to S&S revenue, which grew 14% quarter-over-quarter to $747 million. We saw strong native unit inflows across USDC balances in Coinbase products, average loan balances across our institutional financing products and assets under custody.

We ended the third quarter with $516 billion in assets on platform. Total operating expenses decreased 9% to $1.4 billion. Technology and development, general and administrative and sales and marketing expenses collectively increased 14% to $1.1 billion, largely driven by headcount and USDC rewards growth.

I note that Deribit contributed $30 million to total operating expenses in the third quarter, including $16 million in deal-related amortization, the majority of which was recorded in sales and marketing. We ended the third quarter with 4,795 full-time employees, up 12%.

I want to turn your attention to 2 below the line items that affected our GAAP profitability. First, we had a $424 million gain from the ongoing fair value remeasurement of our crypto investment portfolio. Second, we had a $381 million expense in other expenses, largely driven by unrealized losses related to our investment in Circle as their stock price was lower as of the end of third quarter as it compared to the end of second quarter.

Including both of these items, net income was $433 million. Excluding both of these items, adjusted net income was $421 million.

Now let's turn to our Q4 outlook. The fourth quarter is off to a strong start, and we expect October transaction revenue to be approximately $385 million. We expect subscription and services revenue to be in the range of $710 million to $790 million, driven by higher average crypto prices and continued growth of the Coinbase on subscriber base.

On the expense side, our expense range is higher quarter-over-quarter for tech and dev and G&A in the range of $925 million to $975 million, up approximately $100 million at the midpoint. Approximately half of this increase is due to the recent acquisitions of Deribit and Echo. The remainder of the quarter-over-quarter increase is largely due to headcount growth, which we expect to grow at a slower rate in the fourth quarter as compared to the third quarter.

Sales and marketing is expected to be in the range of $215 million to $315 million. Where we land in this range will largely be determined by performance marketing spend opportunities and USDC balances and Coinbase products, which drive USDC rewards.

Included within the above outlook ranges is approximately $70 million of total depreciation and amortization for Q4. This is an increase from historical averages, which has been driven higher due to amortization of intangibles from our recent acquisitions.

Over the course of 2025, we've made a significant investment in headcount to capitalize on the many opportunities we see and accelerate our vision on the everything exchange. As we look to early 2026, we plan to absorb the employees we brought into the company and focus on execution and anticipate that our sequential rate of operating expense growth will slow as compared to our Q4 rate.

With that, let's go to questions.

Thanks. So let's begin with pre-submitted questions from retail shareholders. Many of the top questions touch on similar topics, so for efficiency will group by theme. The first topic is about competition. What's the plan to improve product innovation and velocity and increase market share? How are you thinking about listing stocks in prediction markets given the success of others. Brian?

Yes. So on this question, I'd say that we've spent a lot of time investing in policy and getting regulatory clarity both in the U.S. and a number of countries around the world. And that's starting to bear fruit, which it's great. It's growing the TAM of crypto. It's making it trusted and regulated. Even as more and more people come into the space, we're able to power a lot of the -- that with our infrastructure services.

But it does mean that lots of new competition is coming in. And so we need to make sure we're executing well. And we've talked since Q2 about this everything exchange vision. We've made really substantial progress toward debt already areas where I think we're best in class, like I mentioned, the DEX integrations where we went from 300 tradable assets to 40,000 tradable assets in Q3. And we were the first to launch the CFTC-regulated U.S. perpetual style futures contracts, which has been growing really well. So there's a lot to like that there.

Now we've been heads down working on the next pieces of that because we think that every asset class is going to come on chain. And our customers are asking for this, too, prediction markets and tokenized stocks and every on-train asset you can imagine. So everything's changed is really central to the next chapter of what we're building and I'm really excited that we'll have more to share on that on December 17 at our product showcase, so please turn into the live stream for that.

And I'd say that Everything Exchange is really a perfect complement to all the other features that we've built into Coinbase including DeFi borrow lend, USDC, Global Payments, Coinbase card, people really love that product base is having really strong momentum. And so I think these are all going to come together to be our goal long term is to be the #1 financial app, and that's what we're working on.

Thanks, Brian. So the second topic is base. Brian, can you elaborate on how you're thinking about a base network token and in particular, how shareholders could be beneficiaries of the distribution? And Alesia, can you talk about the monetization of the base network and how that might evolve over time?

Yes. So I'll start it off. We're still early on exploring a base network token. But the high-level goal is to help bring 1 billion people on chain and just to really grow the developer and create our ecosystem around base. So there's not any specifics that we're going to announce today on the governance or distribution model or the timing of it exactly. But we are going to build this in the open and just continue talking with our customers, investors, regulators to make sure that we get it right. So Alesia, anything you want to add?

I'll just speak about modernization. So on the base chain, we monetize through sequencer fees. And we've talked historically about how we have direct monetization through sequencer fees, but we also monetize indirectly as those who are building apps on base. Often, we'll then incorporate USDC, they will often need to be able to buy other crypto. They may need custody solutions.

And so we do monetize the other products and services by the growth of the overall ecosystem and the growth of on chain developers. What I would share, though, is the base app that we are building that on base we'll have other monetization opportunities. The base app is monetizing through trading fees, it is monetizing through advertising.

And while it's early days, we see opportunities to have revenue profiles that look similar, honestly, to the Coinbase main app in terms of transaction fees, maybe some subscription fees, maybe advertising fees on various different ways that we can monetize in that app.

But we'll talk more about that as that grows over time.

All right. Thank you, both. So we'll now take questions from the research analysts. [Operator Instructions] Our first question comes from Craig Siegenthaler of Bank of America.

Our question is on Echo. So how will Echo help expand your network by making it more easy for crypto companies to raise and invest via private sales or public sales with Solana.

Yes. I can start off and then Emilie, if you want to add anything, that would be great. Yes. I mean, 1 of our -- as I mentioned, we believe that every type of financial service is going to come on chain and cryptos this technology to update the financial system.

And so capital formation is certainly a big piece of that, right? We think that it can be much more efficient, the fees can be reduced, people more around the world can have better access to it. This will just accelerate the economy. So Echo was a really innovative, I think, in a company that we decided to go acquire to get a foothold here.

And we're trying to make it easy for anyone to raise money. And then the beauty of combining it with Coinbase is that -- we have now over $500 billion of assets. We have a large number of retail institutional customers or credit investors that want to invest in unique assets. And so you can just see like the double -- the 2-sided marketplace coming together here in a really powerful way as we think more and more about capital formation and how crypto can update that.

Yes, agreed. We're really excited about it. The management team for Echo has a great nose for what the most compelling companies will be to launch. And so if Echo launches these great companies and tokens and those are successful, it helps us deeply because we're moving up the stack. And where coins are issued before they graduate to the exchange. So it's kind of a vertical integration that we think is quite powerful for the whole ecosystem of Coinbase products.

Let's take our next question from Ken Worthington at JPMorgan.

The pace of announced M&A seems to be rising for Coinbase versus what we may have seen in recent years. How is the more regulatory and political certainty in the U.S. impacting the pace of innovation. And we would expect this pace of innovation to drive coin base to be more active in M&A as we look forward? And then in terms of the innovation that we're seeing, are there certain themes that you are focused on trying to capture as we look forward?

I'll start and then Brian, Alesia feel free to jump in. So to take a step back, we worked really, really hard to get to this place of regulatory clarity and we think that, that just generally provides more opportunities in key bets and more predictability with this type of M&A and these types of investments.

So these companies just have more certainty than they did in an environment where there was regulation by enforcement. When we look to the spectrum of opportunities, we do look a lot to some of the best tech companies of all time and how they were able to use M&A to massively accelerate adoption and so we're very excited about some of the opportunities on the horizon.

In terms of the areas that we're interested in, we're always kind of keying in on the priorities that the company has outlined whether those include trading and payments and these other areas that are very interesting to Coinbase. And then we also try to look ahead as there might be strategic opportunities that present themselves. So we're always on a lookout and when we think -- we always look at buy, build partner invest and then determine which is the right vehicle for us at that moment.

Yes. I'd just say you're right. The pace has picked up. The political environment definitely helps with that. And all of this M&A is really in service of our core focus around trading and payments. So it's been great.

Our next question is from Pete Christiansen at Citi.

And nice execution on a bunch of partnership deals signed in the quarter. I do want to ask about Coinbase operational infrastructure. I mean we've had some really busy trading days in the last quarter. There's been cloud service providers, multiple have had issues this year. I know that Coinbase has spent a lot this year bulking up customer service. How would you assess where Coinbase is in terms of its operating infrastructure today, redundancy, and how are you thinking about investments there going forward? That would be helpful.

Yes. I mean I can start off. Like many companies, we were impacted by AWS outages. PAUSE I think it always raises this question of, should we be pursuing a more robust multi-cloud approach. We already do use multi-clouds and a variety of ways, but we haven't made what would be a substantial investment to make every service in the company redundant to a certain cloud outage.

So it's always a trade-off. Now these clouds are also kind of working hard to build their own redundancy. And so you always have to factor that into other priorities and investments that you could make and look at the cost benefit analysis.

And I would just say in terms of like some of the things we're really excited about as well, we're very invested in automation. Currently, 65% of our customer support interactions are fully automated. We're trying to push that number up rapidly. And then we're also rolling out reasoning LLM agents to automate the majority of compliance investigations in 2026. So there's a lot of really interesting areas for automation over the next several years as well.

Yes. And I guess your question maybe think of actually on October 10, there was also a record level of activity across crypto exchanges. And in that case, we actually operated very well without disruption. And we didn't have any downtime or degraded latency around market data or anything like that. So that was a result of a lot of investments we've made over the last year or 2 in doing load testing and making sure we didn't have any reversions as new software is being developed. Several major exchanges experienced extended outages during that time, and we didn't have any -- and so I was really proud of how that part came to be?

Next question is from Ben Budish at Barclays.

In your shareholder letter, I believe you talked about a new sort of white glove service for the advanced retail trader. Just curious if you could talk about that a little bit more. And is there anything to read in there regarding the state of competition among retail trading. It seems like there are newly listed crypto exchange competitors, other -- I would guess you could say legacy competitors try to expand their offering and be more competitive. So is there anything to read into there? How would you describe the state of competition there? And can you talk a little bit about this service?

Maybe I'll start and then feel free to add on, Brian. Our white glove services been made available to some of our high-value advanced traders. So this is not a service available to all of our retail traders, but to our very specific high-value advanced traders. And it provides some concierge-level support, the personal account manager and really makes commitments around time to resolve the issues, making sure they can trade seamlessly that they don't run into any hiccups with our services.

With regards to our broader retail program there, we are really pleased to have our trading volume exceed overall U.S. spot volume in the quarter. So we're really seeing strong adoption of our products and services, there's more to do there, as Brian said, which is why we are building towards the Everything Exchange to continue to meet our customers where they are and provide broader access to all assets they would like to trade.

Yes, not much to add. I would just say that, in trading. I mean, there are whales that are out there that drive a disproportionate amount of volume. And so it's important for them to have a dedicated relationship manager that can help them resolve an issue, but also it has partially a sales function. So I think it's just a good example of us maturing as a company and recording the best customers.

Let's go now to Owen Lau from Clear Street.

Could you please talk about innovation in coin-based business. It has global payout, I think it enables business to send and receive USDC with or fees. You're also making an announcement with Citi to develop digital asset payment capabilities. I know it's still early here, but I'm wondering what you have heard from the banks and merchants so far about these deal capabilities? And have you started to see more merchants moving into blockchain or even considering moving into blockchain?

Yes. Well, I'll start off. So obviously, we have our first-party business with retail and businesses and institutions, which is growing really well. But I'm also really proud that Coinbase has built out infrastructure that can power other companies. And -- we call that product Coinbase developer platform or CDP. It's -- sometimes people think of it as crypto as a service.

And what's great is that we've been able to close 264 institutions now that are using that product, including large companies like JPMorgan, BlackRock, Citi, P&C, fintechs like Stripe, PayPal, Revolut, [indiscernible]. So I think that this is going to increasingly be an important part of our business. It just allows us to have different revenue streams and participate in the value creation as more and more companies come in to integrate with crypto. That's going to be all banks, all fintechs, all payment service providers, but it's also going to be nonfinancial services related companies.

I mean we're also working with, for instance, Shopify on powering payments for them. So I think it's similar to what Amazon did with AWS. I think this third-party infrastructure can be a powerful business for us over time.

Maybe I could add on here for you, though. We've really been building the various infrastructure layers and are pleased to have a more vertically integrated payments product that we're bringing to market, it starts with Base, which is our Layer 2 solution, USDC and other stablecoins. We've now built out payments APIs. And we're now bringing those forward to our customers via Coinbase Base app and then directly to businesses.

So what we're seeing here is, one, we are a partner of choice. We continue to win mandates from large financial players, fintechs, as Brian shared. But we're also seeing small and medium-sized businesses really come to our platform as we enable them to more efficiently manage their capital and their liquidity through instant settlement via stable coins, while we're earning rewards now on any idle funds that they hold in USDC. So we've seen great early traction with over 1,000 businesses onboarded, and we have a growing wait list.

Let's go next to Devin Ryan at Citizens.

I just want to ask a question about Deribit. Obviously, you haven't had it on the platform for too long, but seems like it's doing well here out of the gate for Coinbase. So just love to kind of think about kind of the integration thus far, what that informs around potential future product development and cross-sell opportunities for Coinbase? Just more broadly, if you can just touch on kind of the scaling plan now that it's fully integrated or part of Coinbase.

So it officially just closed in August, and we onboarded 100 employees in September. So they had record volume in the month of August. Their revenue has been growing. And where we are right now is we're really working to integrate their products seamlessly with our products. So we can bring together spot derivatives and derivatives, meaning both perpetual futures, futures and options, all under one roof.

We, in the quarter, had brought forward for our U.S. customers, spot and derivatives cross-margining, and it enables capital efficiency where our customers really value the ability to get better leverage, better margin on their trading products. And so we think that, that is a future that we can bring forward to options as well. So the goal is going to be integrated for the next few quarters, so we can bring everything under one roof and enable side-by-side trading of these products and services to our institutional clients.

We'll take our next question from Patrick Moley at Piper Sandler.

I just had one on the Everything Exchange. I was wondering if you could update us on the time line or some of the milestones we should be looking out for as you introduce new asset classes to that platform.

Yes. Well, some of them are already live, right? I mentioned the DEX integration, the U.S. style perps. And December '17 is going to be another milestone for us. We're hosting that H2 product event, where we'll be giving an update on everything we've been working on in the second half of this year. So that will be a good one to tune into on the live stream.

Let's go next to James Yaro from Goldman Sachs.

Could you help us think through the impacts of the crypto liquidations on October 10 on markets as well as on the various market participants. Do you see any medium-term ramifications? And are there any lessons learned that you think could improve market function going forward?

I'll start and others can add on. So obviously, the events of October 10 led to some liquidation as folks had to delever to address the sharp sell-off in certain assets. We are really pleased that we did not see significant liquidations on our platform. And as Brian shared earlier, our platforms really withstood the volatility quite well during that window.

In part, that's due to the design of our products and the approach that we've taken to leverage with our products. One of the observations that I would have broadly in the market is today, there's very few of us that are publicly traded that have as much transparency into our operations, our risk management, our balance sheets. And so we do have these risks and throughout the overall ecosystem of operational errors that then lead to deleveraging events.

I think over time, you'll see more and more companies come into a regulatory framework, more and more companies go public. And so this risk will reduce over time because transparency then helps all risks on the more sunlight the better in some of these areas. But I would say that the market rebounded quite nicely from this, and I don't see any systemic losses or any kind of continued fallout from that sell-off.

We'll take our next question from Andrew Jeffrey at William Blair.

I appreciate the question. Brian, I definitely agree with your vision on stablecoins. I wonder if you can sort of dimensionalize for us sort of timing in your mind for more commercial adoption outside of crypto and the role you think Coinbase plays in that cross-border commerce. And whether or not it changes whether or not your economics change with volume as USDC takes off.

Yes. Well, interesting. I mean, I think taking that last part first, I'm not seeing a change in economics yet. I think we're still super early in this, and it's growing really fast. And so it interesting to see how that plays out. I mean we have different ways to monetize it like with base sequencer fees and with USDC, you could, of course, charge directly for the payments themselves.

But I think just zooming out, I mean, Payments are just very clearly the next big use case for crypto. I think it started with trading, payments are really -- are growing enormously now. And I would say just in general, it's a massive market, right? Like cross-border payments or something like $40 trillion in volume annually. B2B is 75% of that, which is an early use case for stablecoins. And we're now seeing about $100 billion in annual stablecoin volume, which is growing rapidly.

So and we're going to keep participating in this space across a number of different areas. We're building payments for businesses. Coinbase businesses are account for small, medium-sized businesses. We're adding various products and services in there around invoices and how to pay contractors and vendors. A lot of it is cross border, but even within country, it's powerful. We had -- since we announced that product just recently, we've had about 1,000 businesses onboarded already. There's another 1,000 on the wait list.

We're also integrating payments into our retail app for Coinbase and into the new base app. So I think that will be powerful. And then we can be one of the -- I think we're really one of the only companies that can start to connect these businesses and consumers together, right, in the 2-sided market and Shopify is an example of that, where we're powering PAUSE USD checkout for their merchants.

And when you're -- these merchants, it's a big deal because they're used to paying 2% to 3% in fees, for people to move money over the Internet. There's no reason that, that needs to exist, I don't think. I mean -- and when you can do it in less than a second, less than $0.01, flat fee regardless of the amount it just has a lot more of the value. You can give some of that back to the consumer. Like in Shopify's case, they're giving 1% back to the people who pay with USDC, but the merchant also saves money. So it's just kind of a win for everyone. And I think that when you lower friction in the economy like that, you see an order of magnitude more activity happening, it can really have a dramatic effect.

So I guess just one other item to touch on in the payment space, which I think is really innovative that we're doing is there's a protocol we came out with is called X402. And what this is, is it's a way to attach a stable point payment to any web request. You may be familiar with 404, which is on the Internet, like it's file not found, right, if you go to a page that doesn't exist.

There's actually another code called 402 in the HTTP spec, which was originally put in there for payment required. Now it was never really implemented in most web browsers because the web browser never became a place where you put in your credit card, you put it into the website itself, not the browser. But anyway, we decided to go ahead and ship this, and it's attracted a lot of attention in the last month or so, partners like CloudFlare and Vercal and Google have started working with this.

It's caused a lot of people to go sign up for Coinbase developer platform to start building these integrations. So it's still early days, but payments happening over the Internet for AI agent payments. That's another big emerging area. We shipped an open source tool kit called agent kit that lets any AI agent put a stablecoin wallet inside it. So we're starting to see a lot of things happen with payments on the Frontier now. And yes, I think this is going to be a big area for crypto and for Coinbase.

Our next question comes from Bo Pei at U.S. Tiger.

In the shareholder letter, you mentioned scaling battery base and incentives in derivatives. Could you quantify how that's affecting takeaway and whether you expect this to help margin expansion in Q4 and 2026.

Bo it's a great question. So we are -- we have scaled back those incentives, and you can see that in the overall institutional growth. We did not attribute out any change in take rate. And it's very difficult to look at take rate for the institutional business given the acquisition of Deribit, given the growth derivatives platform, which is not reported in underlying trading volume. So there's been no change to the overall pricing of any of the products and services in any material way quarter-over-quarter, but there has been a lot of mix shift and just change in the drivers of the total institutional platform.

We are pleased to be able to change the incentives in derivatives because we've seen more liquidity and just more solid sticky organic open interest growth in that platform, which has enabled more profitable growth for our international derivatives business.

Our next question is from Alex Markgraff at KeyBanc Capital Markets.

Alesia, maybe one for you. Just as we think about the many new products and elements of the claim based platform, just hoping we could just sort of step back and maybe you could remind us how you're thinking about managing margins across these various products and platform elements. Any way to sort of frame the vision for contribution margin across these new items?

So we do have a big mix of products and they do monetize separately. And in some cases, we have launched products with the sole growth of retention and acquisition in the case, for example, of the coin-based card. So what we look to do is monetize the overall customer relationship. For example, on the institutional side, we have many of our customers who are now engaged with 3-plus products and services, and we look to the overall customer relationship and the customer economics versus single product economics.

So we're focused on growing overall profits we're focused on how do we drive total adjusted EBITDA growth at the company level. And that is how we think about it versus targeting a specific margin by product at this time.

We'll take our next question from Dan Dolev at Mizuho.

Guys, great results here. I got I guess 2 quick questions. On the take rates, I appreciate you answering on the institutional take rates. Is there any way you can help us think about sort of how this looks a couple of quarters out? And then I have a very, very quick follow-up, if you don't mind.

As we shared before, we don't focus on look that far in our public comments. We are focusing on meeting our customers where they are engaging them with products and services. And we are constantly experimenting with our pricing on the retail side to understand how best our customers engage.

Right now, we're really pleased to see the growth of the Coinbase one subscribers. We introduced the new basic tier last quarter and the basic tier along with Coinbase card is showing a lot of traction. So over time, we anticipate more and more customers will monetize many products and services, and we're reducing the overall reliance on trading fees as a single monetization as it was many years ago.

But we will adjust fees as needed by the market, and that has been our long-standing approach.

We'll go now to Ed Engel from Compass Point.

Alesia, in the past, you've talked about how 2025 was a bit of a reset year just that you capitalize on the better clinical environment. I guess with step-up in fourth quarter OpEx, I'm just kind of thing, are you still ramping up hiring through the end of the year? Or is most of that headcount behind us. I guess I'm just trying to gauge whether this kind of 4Q guidance is a fully baked-in number for some of the reinvestment you made this year?

Great question. So as we shared in my opening comments, the outlook for Q4 on our tech and dev in G&A combined is up roughly $100 million quarter-over-quarter. About half of that step-up in cost is due to the 2 acquisitions we made, one being Deribit, the second being Echo. And then the other half is due to headcount growth. We are still growing headcount in the fourth quarter, although at a much slower rate than we did in the third quarter.

Let's go now to Zach Gun at FT Partners.

I just also wanted to ask on the payment side of things. Historically, when we think about driving adoption of the new payment modality or platform, it takes anywhere from 3% to 5% of overall transaction value incentivizes either consumer or merchant or business switching. So can you just talk about what Coinbase is doing to incentivize adoption of its payments platform.

Yes. I mean, you're right. There are a lot of powerful network effects in payments. So we don't want to be flippant about the challenge of coming into these new markets. Luckily, it's not just one Coinbase -- or one company like Coinbase going up against the powers that be here. I think the beauty of crypto is that these are decentralized open networks, with thousands of companies participating all over the world. So it's a little bit like the Internet going up against some kind of proprietary system, not just one company.

Now that being said -- so lots of people -- I mean there's something like $500 billion of assets that we have on platform. There's a huge number of people around the world now who use crypto that are holding crypto. So we're starting to get into those categories where it can be meaningful. Now it won't be for every type of merchant, right? I mean if you go to like a Starbucks on the corner, maybe that doesn't hit the threshold, but for a certain type of e-commerce category, it could be that a large enough number of people actually -- the only way they want to pay is with crypto. It opens up micro transactions or new international markets where credit card penetration is low.

So we'll see it first take off in areas where people's unmet need is the highest, and then eventually, it will eat into more and more of it just because it's faster and cheaper and more global. But yes, this will take time for sure. And I guess I mentioned this earlier as well, but a lot of times when people think about payments, they think about buying the proverbial cup of coffee on the corner store.

But like the majority of cross-border payments are really like B2B transactions, and that's the area where we're seeing higher adoption for crypto right now. I mean that's just it's growing like gangbusters frankly, because that's just a very underserved part of the market where businesses want to get their money faster, they want to not have -- be exposed to these FX risks. So those are some of the areas that will take off in first and I think eventually get to the majority of all payments.

Let's go next to Joseph Vafi from Canaccord.

Just as a quick side note, just finishing lunch here on the West Coast that I bought with my coin-based 1 card. So thanks for a great product. But just maybe double-click on Deribit here a little bit more. And Alesia, I appreciate the commentary on cross-product margin capability and efficiency there. But as you look forward, the distribution of the Coinbase platform is so big. Do you see this as a big share gain or share creator an option transactions. And then can you just remind us on margin structure on a transaction margin basis how your options and derivatives compared to spot?

All right. So Deribit is already the market leader in options. They had over 75% market share for options. Notably, this is all non-U.S. And so there is path to grow the market for options in the U.S. that is going to be a multi-quarter road map of bringing both the regulatory licenses and product to bear in the U.S., but we think that's a huge opportunity for us.

But more importantly, we believe that bringing these products to trade all under one umbrella will be able to grow overall trading volume on all of our products on our platform. And we've already seen, just by having Deribit closed for a few weeks on our platform, that existing clients have more confidence in the combined balance sheet and now bringing options to the Coinbase balance sheet, they are trading at higher volumes and trading and holding more assets our platform.

So the brand strength, the balance sheet strength that we're able to now put behind Deribit and their strong product and risk management is having outsized benefits to both of. PAUSE And we can follow up with you about the margin differential. Obviously, there's no margin on spot trading. We do offer leverage on those assets, but they're very customized by product. So the -- they look different in each market, and they look different to different customer groups. I don't have a simple way of answering that question for you.

We'll take our final question from Gus Gala at Monash Crispy and heart.

I wanted to talk a little bit about the competitive environment between September and October. September was a fantastic month in terms of outgrowing the market at spot in October seem to reverse that. Just trying to parse out is this competitive pressure, like present in the system, maybe seeing more aggressive pricing competition from peers in terms of promos, incentives peeling away?

Or is it just a mix issue? Just trying to understand what's going on there.

We've always faced competition. We are a platform that has multiple customer types, multiple products. And so we all have faced competition since we've been founded on different products, different customer groups within our portfolio. Our focus and our goal is always to deliver the most trusted and easiest to use products to our customers. And we've been really proud of our continued growth in market share, trading volumes size and scaling up these various product offerings.

So when you think about the competitive pressures in the month of October, there's nothing specific to talk about generally, we are always looking for ways to continue to build and delight our customers.

Yes. I hope we answered your question on that. I was a little distracted because I was tracking the prediction market about what Coinbase will say on their next earnings call. And I just want to add here the words Bitcoin, Etherium, Blockchain, Staking and Web3 to make sure we get those in before the end of the call.

All right well, we've taken all of our questions. That's it for today. Thanks for joining us, and we'll talk to you again next quarter.

Before we end, I just want to invite anybody to join us on our X spaces call next week. And so please follow us on X and Brian and I will be taking additional questions on Monday.

All right. Let's get started here. Good morning. For those who don't know me, I'm James Yaro. I cover brokers, crypto and investment banks at Goldman Sachs Research. With us, we have Brian Armstrong, Chairman, CEO and Founder of Coinbase and Alesia Haas, CFO of Coinbase. Brian founded Coinbase in 2012, and Alesia joined him in 2018, and they built one of the key leading crypto exchange and infrastructure businesses. Thanks so much for joining us.

Before we get started, I'd like to remind you that read the safe harbor statement. Before we get started, I'd like to remind you that during today's call, the company may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in Coinbase's SEC filings.

Our discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to, but not as a substitute for GAAP measures.

Okay. With that past, let's start with the big picture one. We've seen tremendous regulatory changes this year in Congress as well as across a variety of regulatory agencies, and we're still waiting on the Senate to address the Clarity Act. If we get the Clarity Act finalized, is that all we need to -- from a regulatory perspective to see the world adopt crypto more broadly or -- and start to move more on chain? Or do we need other changes in your view?

Yes. So thanks for having us. And the short answer is yes, if we get the Clarity Act passed, that is a strong foundation for crypto. And just to zoom out and remind everybody, the, GENIUS Act passed earlier this year. This is providing regulatory clarity around stablecoins. The Clarity Act that just got through the House and is now another version of it's being debated in the Senate right now is for market structure, which is all the non-stablecoin crypto assets like Bitcoin, Ethereum, et cetera.

And so the combination of these really creates a foundation that we can build this entire industry on. I think it dramatically increases the total addressable market of crypto. It furthers this idea that we've been saying for a long time, which is that crypto is going to be eating financial services. It's really updating the financial system in all kinds of ways, not just trading, but now payments is the second really big category. We're also seeing capital formation and these other things coming into picture with tokenized equities, and we can talk about that all in a moment.

And so the regulatory picture could not be better from, say, a year ago, right? It's not just that we've gotten legislation now passed with GENIUS and hopefully, Clarity is making good progress here later this year. It's also that the United States has a strategic Bitcoin reserve. The regulators like at the SEC that we're working with are actually embracing this industry instead of trying to curtail it. And we actually have executive orders on a continuous basis coming out that are clarifying these rules that were -- the lack of clarity was being weaponized in the past. And so it couldn't be really a better environment.

And I think where the U.S. is leading, we're seeing the rest of the G20 follow. In the past, we saw Europe had MiCA legislation. There were -- like Singapore had something interesting. There was pockets of the world that were embracing crypto where the prior administration in the U.S. was really kind of fight against it. Now that the U.S. is leaning in, every other G20 country has a little bit of fear of missing out, and they're trying to race to catch up.

And so it's really hard to understate the importance of this regulatory clarity tailwind that we now have in our business. Coinbase is going to be the leader in this as the most trusted brand, but we're also going to provide the infrastructure to power a lot of the companies and banks and payment service providers and fintechs that are now coming in. We can talk a little bit about that later, but that's a big growth area for us.

Excellent. So I do want to touch on all the areas that you're investing. But maybe we could just start with a little bit of the core business, the trading business. How do you think about the growth prospects and activity trends of your 2 key consumer -- customers, which are institutional and retail traders? How would you characterize the level of risk appetite and perhaps activity levels?

Yes. So both institutions and retail are leaning in right now in crypto. And I'll give you a couple of specific examples. I'd say the risk appetite, it's always been there to some degree, but I think they're willing not just to put, say, 1% of their portfolio in crypto now. It's going to like be 5%, 10%, 20%, but it's an important asset class as part of every diversified portfolio now as regulatory clarity emerges. And in some ways, that really reduces the risk.

So a couple of specific examples I'll go through, starting with the institutional side. Crypto derivatives are growing enormously. We saw $1 trillion of crypto derivatives trading on our platform in Q2, a big growth area. We saw all-time highs for custody for institutions. We saw an all-time high for our prime financing business, which is a new area of growth.

We continue to power over 80% of the ETFs in terms of custody. That's Coinbase powering that infrastructure underneath, which is really great. And so lots of adoption on the institutional side. I should mention, we now have over 250 institutions that are using Coinbase infrastructure. That's custody, payments, trading, staking. There's a bundle of services that they can use and power their business. And so that's a big growth area for us.

Now on the retail side, we're similarly seeing a lot of adoption. I'll give you just one or a couple of stats that maybe paint the picture here. The majority of our retail customers are now doing something other than trading on our platform. Trading was the initial use case. The majority of them are now doing some other type of activity with crypto, whether that's payments, earning yield and interest on their assets or rewards. They're doing -- using things like Coinbase Card where they can get 4% back in Bitcoin rewards on Coinbase Card. They're doing staking. They're doing lots of things now.

And so this is -- ties into this theme I mentioned earlier about crypto eating financial services. Retail customers are starting -- and some of them are starting to think about Coinbase as their primary financial account, right, a bank replacement. And I'll talk more about this later, but as we hold more crypto than any other company in the world, like quite a large margin.

And so because we are the most trusted brand, people store their crypto with us, they're willing to use more and more products. Wherever their assets are stored, they're more likely to use the products that are connected into those deposits, and it makes this really nice retention flywheel. It makes the product very sticky.

One or 2 other kind of stats on the retail side in terms of adoption. We also are seeing really good adoption of DeFi lending and borrowing on our platform. So this is another big use case. We have about $1 billion of Bitcoin now pledged as collateral to borrow money on our platform. And so crypto is now updating the borrowing and lending markets.

And the last thing I'll say is we launched this retail product on the self-custodial side called the Base app. We have 1.1 million people on the wait list for this. So there's been a lot of excitement about that product. We'll talk more about what that is later, but these are just some of the stats that help paint the picture of institutional and retail adoption right now.

Really clear there. Maybe just on the competitive backdrop, you talked about capital formation. You alluded to it a second ago. So that's clearly evolving rather fast. We're seeing companies come public. So maybe you could just set the stage for how you see the competitive landscape today and perhaps how it's evolved over the past year?

Yes. Well, okay. So we think crypto is updating all types of financial services. Capital formation could be a lot more efficient, right? When people go to raise money today for an apartment complex or a start-up or a small business or anything that they want to go do, that can be high fees. It can be delays. It can be a lot of back and forth with lawyers. It's a bunch of wire transfers.

And so we're thinking about how we can make this very simple for any of our customers to come in and say, they want to raise money. We help them register a crypto security with the SEC. We can then market it to our large user base of customers that are accredited and institutions. And via USDC, the money can just arrive into their account, right, for a much lower fee.

We could probably do it 1/10 the fee or something like that of how it's happening in traditional ways. And that's a very exciting idea for a lot of businesses and how can we just make that more efficient. This also -- I think existing public companies are going to get their stocks tokenized and be traded on chain as well. And we can talk about that if you'd like as well, how we're actively working toward bringing on-chain securities.

Okay. One of the essential questions -- essential, but important questions that I get is around the value of having the exchange and custody under one roof. Maybe you could just talk about how that supports the Coinbase offering versus others?

Yes. I'll let Alesia jump in.

The [indiscernible] person gets to jump into this one.

Yes.

Okay. Great. It's so funny when you asked that question, James, because we never, as a company, set forth and said we are building a custodian, we are building an exchange. What we really thought about is we are building the next generation of financial products, and we are enabling our customers to buy crypto, to store it safely. These are their instruments to transact in numerous ways.

And what that integration provides is a way to offer simplicity to our customers, speed and efficiency. The historic separation of these products was really driven by regulatory requirements around risk. And that risk just doesn't exist in crypto, i.e., settlement risk. So when you're settling instantaneously on chain, you aren't worried about counterparty risk about, Brian, are you going to show up with your asset if I want to trade with you? Let's create another counterparty in this equation to provide trust.

Trust in crypto is just a very different concept when you're trusting blockchains and math. And so what we are building is next-generation speed, lower cost, more liquidity. And by doing so, we're providing a better product experience to our customers through creating that integration between custody and exchange.

Yes. I think this is just 1 more example of how crypto can update the financial system. And in some cases, there's middlemen who don't need to exist. If there's real-time settlement, maybe that you don't need these middlemen, right? And so it just makes that faster, cheaper, more efficient, better products for customers.

Without the risk.

Yes. Makes sense. Okay. So let's turn to growth. There's a lot of growth. There's a lot of stuff going on in Coinbase right now and across the industry. But I thought what stuck out to me was what you talked about in the last earnings call around the everything exchange. Maybe you could just give us a little more insight, expand a little bit on the vision there?

Yes. So we believe that every asset class is coming on chain and that we have an opportunity to become one of the largest exchanges in the world, not just for crypto, but every asset class. And so that means -- it means crypto, but it also means stocks, it means prediction markets. It means commodities, it means debt, it means...

Content coins.

Content coins, yes, we'll talk about that in a minute. This is a new category that's coming out where there's millions of crypto assets people are going to trade. But we've started this journey already this year where we launched what we call Retail DEX, which is decentralized exchange. And so we went from having a couple of hundred assets on our platform to many thousands. This will eventually be millions.

And it's basically through our brokerage interface, you can route the trade to, in the past, a centralized exchange, which we still do for many assets, but now we can route it to a decentralized exchange. This is -- so it's really kind of grown the number of assets we have on the platform. So that's already live today.

We also launched perpetual futures in the U.S. We'll talk more about that, but perpetual futures are a massive category for trading volume. We just acquired Deribit, which was the leading options trader -- options trading platform in crypto. And so we're adding options into the mix.

And then the 2 big ones that are on the horizon here are tokenized equities and prediction markets. We think these are also big categories that many people are going to want to trade. There's product market fit. I think for prediction markets now where people are treating it as almost like -- it's an asset class you can trade, but it's also kind of an alternative to the news. You can find out what's going to happen in the world. And we're actively integrating all of these into our product.

And so we want Coinbase to be a one-stop shop. You can come and trade any asset class in the world. And this is what our customers tell us when we talk to them, they say, I'd really rather just do all trading on Coinbase because it's faster and cheaper and more efficient. But I really wish you could add this one more thing. And so that's what we're going to do. We're going to bring all these asset classes on chain into the everything exchange.

Okay. So let's dig in on a couple of those that you just touched on. So maybe just starting with the decentralized exchange. I think correct me if I'm wrong, the point there is that you'll be able to have more assets on the platform. But maybe you could expand a little bit on that. Also maybe just touch a little bit on monetization. Obviously...

Yes.

It's a little bit different there. And then maybe also on the derivative side, just update us on your organic aspirations in derivatives, and maybe we can come back to Deribit on a subsequent question.

Yes. Okay. So for the decentralized exchange, I think some people might -- if you're not actively in crypto every day you might say, I don't know, I've heard a Bitcoin and maybe Ethereum and Solana, but what other coins are there, right? Do we really need millions of coins? And I think the thing that started to happen is that people are now creating coins for like every post on social media, right? Every song on Spotify, every video on YouTube, you can quickly see a world here where every piece of digital content is a coin in this new world.

And people are going to have a market for that, and they're trading it, and it's allowing content creators to have a direct relationship with their audience. And this is kind of the frontier of crypto where it's going. And so there's literally -- there's millions of these things coming out every month at this point. And some of them are small. It's kind of like the early days of YouTube or the Internet where a lot of them are silly and they don't make sense, and it looks like a toy or some silly cat video or whatever. But the best content creators also are coming in and the top 1% of content is interesting and unique, and it's what is allowing these content creators to have more direct monetization.

So we are now moving to a model where in the past, every asset that got created had to go through this long laborious process with a bunch of lawyers to get certified and there was an audit for this and that and you had to kind of apply to get listed on these centralized exchanges. We're now moving to a world where an asset like, let's say, a post comes out from someone on social media, a coin is created within 1-second and it's live to trade on Coinbase the next second. It's a little bit more like Google indexing web pages on the Internet. There's just a proliferation of these things happening.

And of course, we want to make sure we have appropriate disclosures on all those. We're doing a lot of good risk monitoring to make sure some of these that they're not scams and things like that. So we want to make sure we're protecting customers, giving them the information to make these decisions. But we're quickly moving to a world where there's going to be millions of these every week, and we want our customers to be able to have access to it. So that's the decentralized exchange part.

I want to stop here just for a second though. There's still huge value to our centralized exchange and the assets that we list there. So uniquely on a centralized exchange, we can provide the fee out to crypto on-ramps. There's lower latency. We have deeper liquidity in some cases. We also can attach other value-added products and services where we can do lending on top of that, we can provide staking. And so we will continue to add assets also to our centralized exchange when they are of sufficient size, when we see demand, when we see the need for the deep liquidity and the lower latency trading.

The decentralized exchanges giving speed to the long tail. And so there's going to be buy a dual strategy of adding assets to our platform. And the goal here, quite candidly, is for customers to not really see the difference. We want these to be very, very easy-to-use experiences, whether you're doing the centralized, but the product itself will just be routing your trade to the appropriate venue for the asset that you're seeking to have access to.

Yes. That's exactly right. And the mono -- you asked about the monetization. I mean, it's really similar across both. I mean from a brokerage point of view, the fee is actually the same, right, whether it's routing to the centralized exchange or the decentralized exchange. So I think the monetization will be similar, but anything you want to add on that?

Just to be very specific, the trading fee is the same for centralized. We also have a spread for decentralized. There is no spread.

Yes.

So basically, the exchange fee you keep centralized and decentralized it stays with the DEX.

That's right.

Okay. Perfect. Sorry, I know I threw a lot of you that question, but maybe just on the organic derivatives aspirations across product, geography.

On the derivative side?

Yes.

The organic piece?

Yes.

Yes. Well, okay, so just to zoom out on the derivative side, 75% of all crypto trading volume is in derivatives, a little bit like in traditional financial services, there's a majority of trading volume there. 90% of that is unfortunately offshore outside the U.S. And that's a relic of the past regulatory environment that was hostile in the U.S. until recently. That's now changing.

And so Coinbase is actually the first U.S. regulated exchange to launch perpetual style futures contracts in the U.S., we launched it just recently. It's growing very nicely. I mentioned the $1 trillion of volume in Q2, which is a really great start. And so on the organic adoption side, we're seeing really strong growth. And then on the inorganic side, we acquired the #1 options platform for crypto and Deribit. And so we're now integrating that into the exchange as well.

And so on the exchange, you'll be able to do spot trading, derivatives, futures, every type of trading strategy will be there in one. And there's -- we believe there are certain synergies to that. People who are trading futures want to hedge with options. And so by bringing these all together, it's every asset class, but it's also every trading strategy with spot and futures and derivatives and options.

And so we're bringing those all together into this everything exchange, which we think will be really powerful. I mean the liquidity to get more liquidity and doing -- Coinbase is kind of the only company doing this in a trusted compliant way. It took off initially offshore and folks were kind of playing fast and loose with the rules. We did it the right way with regulatory clarity and the right licenses, and it's now coming onshore in the U.S. in a regulated way.

We're also adding margin on top. And so it will provide customers the unique ability to trade cross margin across all of these asset classes, whether it's spot, futures and options. So we are building the types of assets underneath, but then the layers of value-added products on top of those asset classes.

Okay. So maybe one more. This market -- the derives markets, and maybe that's also happened in traditional markets where you're seeing more retail options, 0DTE, for example, taking off. So maybe you could just talk about why futures came first and your aspirations for options. I imagine that perhaps the reason -- one of the reasons you would want to have derivatives because they have an options business and you could roll that out in the U.S., but is that a potential as well?

Yes, I think perpetual futures was just a better product. And so it wasn't allowed initially in the U.S. Traders really latched on to it. It was a true innovation that happened, I think, first in crypto. And so it got enormous volume overseas. We went and did the legwork in D.C. and with the regulators to get option -- perpetual style contracts approved in the U.S. Now we're seeing that finally come to the U.S. So I think that it was -- it was just prohibited from a regulatory point of view. We had to kind of do a lot of education and policy work in the U.S. to get it allowed here.

It still makes up the majority of global trading, the perpetual futures and derivatives is the international market. Options is roughly 3% of the total market. However, it is still a critical add-on product. So this is giving us the ability to add on additional product and capability in the spirit of the Everything Exchange. And then Deribit as an acquisition specifically, we shared an outlook within our Q2 -- when we closed the acquisition. It generated about $30 million of transaction revenue in the month of July.

Now we're not -- we didn't close it until mid-August. And so when you look at our Q3 financials, we'll only have revenue from mid-August through September. But just to give you an indication of the size and scale that it has the potential for. And then we'll see about $10 million of OpEx added within the third quarter.

And so we think this is a very attractive financial platform for us to add. And as Brian said, there's synergies, there's adding the ability for cross margin. So we think this really will accelerate our overall growth in derivatives, both outside the U.S., but also eventually in the U.S. because we have an ambition to bring options to the U.S. over time.

Yes. It was a very accretive acquisition, $30 million of revenue in July and about $10 million of OpEx. And so -- yes, that was...

In the quarter.

Yes, that was a great addition to that.

Excellent. Okay. So let's turn to all the other areas. We only got the trading thus far, and you have so many other things going on. Let's talk about tokenized equities, the buildup. There are a lot of players who are trying to build up some version of that. Maybe just your thoughts preliminarily on how you might structure your offering. And I guess the important question of do you plan to allow customers to take their assets off your platform, maybe day 1 and maybe over time? And then what about on the regulatory side, do we need from the SEC to have that in the U.S.

Yes. So tokenized equities are really exciting. We've been working closely with the SEC task force on this, and a number of people are interested in this, but really no one has launched tokenized equities yet. It's going to -- a lot of it is going to come down to execution.

Just to share a little bit about why we're excited about it. There's a lot of people overseas and wealthy people sometimes can get brokerage accounts overseas, but there's a large segment of the world that wants access to this that doesn't really have easy access. So I think there's a big international expansion component to it. There's the ability to launch new types of markets like perpetual futures with tokenized equities. 24/7 trading can become even more common, fractions of shares. There's interesting novel governance things that may happen over time.

So we don't know exactly how this will play out, but our hunch is that there's a large complementary or unmet demand for tokenized equities. Similarly to how with stablecoins, people -- sometimes -- a few years back, people said, well, if you tokenize the U.S. dollar, don't we already have digital payments, like what's the point of it? And it's turned out stablecoins have become this massive market. We think that something really powerful could happen with tokenized equities as well.

So we're in the process of building this now, and we're working with traditional broker-dealers to get it off the ground and have access to trading, but we're also building the ability to mint and burn these tokens that are backed by a share of that stock that will be a custodian of. And you asked about whether they will be allowed on and off the platform. I mean, yes, that is the goal. These should be crypto tokens just like USDC or Ethereum or Bitcoin, and it's important that they participate on these open protocols in a global way. So we'd like to enable that.

So that's a little bit about where this is going and why we're excited about it. I think that tokenized equities could be a really big category, and it's just one more piece of the everything exchange, crypto updating the financial system.

Great. Okay. So another thing that I think you've been very focused on recently, and we've seen some announcements around these partnerships. And so if I were to summarize, it seems like you're providing various forms of infrastructure solutions to these non-crypto native companies. Why do these brand name companies choose Coinbase in your view? And do you think that if -- as they become more acquainted with crypto and the ecosystem, will they eventually bring things in-house or they stay with Coinbase?

Yes. So I think they're choosing Coinbase because we're the most trusted brand. And we're storing more crypto than any other company in the world. That's a really the strong signal of trust, cybersecurity -- we've been having to build this infrastructure ourselves over the last 12, 13 years to power our own products. And so just like Amazon did with AWS, we've decided to make this infrastructure available to other companies as well. And they've really embraced it.

So I mentioned earlier, we've got over 250 institutions that are now integrating -- have already actually integrated into this crypto-as-a-service infrastructure that we've built. These are companies like PNC Bank, JPMorgan, BlackRock. It's also fintech companies like PayPal and Stripe. And so they're coming to Coinbase when they want crypto custody, trading, payments, staking, financing on chain. It's a one-stop shop where they can have this bundle of different crypto services.

And through one company that is also a public company with a strong balance sheet and it's going to be around for the long-term. I think we have a right to win many of these deals versus smaller start-ups. I mean how is JPMorgan or BlackRock going to sort of bet their custody infrastructure on a small start-up, right? They want to work with the largest, most trusted company in crypto.

So I think we've got a real shot to make that the winning infrastructure platform indefinitely. And it allows Coinbase to not only -- with our first-party products, we can become the best place for people to go have their primary financial account. But we -- ultimately, to update the financial system, we need thousands of companies all over the world to integrate into this new economy. And so that allows Coinbase to play in that value chain for these thousands of companies all over the world.

Okay. So one other area, which is just your aspirations in lending. You touched on a few different areas where you're growing your lending book, whether it's margin, whether it's prime brokerage. Maybe you could just talk about your aspirations there and the capital intensity, obviously, is one element of lending. So how do you think about that?

But do you want to start on this one, or should...

Sure. I -- we do it in 2 flavors. So for our institutional customers, we are lending directly off our balance sheet and trading on margin, being able to offer what we call trade finance, i.e., giving our institutions the ability to instantly buy crypto, yet have their cash payments settle hours, days later. These are all important parts to facilitate trading for institutional customers.

We had over $1 billion of average loans in the second quarter. So we are seeing that scale nicely. And in part, we raised additional capital through the convert this quarter to give more financing capability to our business to continue to grow that.

Our ambition, though, is to build that into a 2-sided order book, i.e., enable our institutions to opt into lending their own assets and rehypothecate those institutions capital for additional institutional lending. So we consider our own corporate balance sheet bootstrapping the growth of the overall institutional financing business.

By contrast, going over to the consumer side, what we're doing there is really leaning into decentralized finance and the protocols that are enabling consumer lending. So the wonderful thing that we did last quarter was we partnered with Morpho. Morpho is a decentralized lender on Base, and we have plugged that into our retail app, enabling our retail customers to take the Bitcoin that they had within our platform and lock that into the Morpho smart contract and receive USDC loan proceeds. And so we are facilitating lending through DeFi. This comes with a number of disclosures. This is not lending on our platform. This comes with risk of the Morpho protocol and lending itself, but these are all secured collateralized loans within their protocol.

So think about, again, our platform is connecting the best of both first-party solutions and third-party solutions and being sort of an introducer to the lending protocols. And that's how we're growing loans through for customers on the retail side.

That now has about $1 billion of Bitcoin...

Yes.

Pledged as collateral into that and just launched earlier this year...

Earlier this year.

Yes, it's been growing really fast.

Excellent. So there's so many areas of growth, but I do want to touch on just a few other areas of the P&L given this is an investor conference.

And actually, if I can say, I mean, I think the big picture here people should take away is that we're having -- we have multiple revenue streams now that are coming into Clarity, right? Like it started with trading, we saw the rapid adoption of stablecoins and staking. We're now seeing financing as a nice line item, right, custody and Coinbase Card and like the Coinbase -- these infrastructure services I mentioned, right? So we're seeing a diversified set of revenue streams that's really allowing us to be more predictable than just what we would see from trading fees alone.

Makes sense. Okay. So last earnings call, you indicated this will be a heavy investment year. Makes sense with all this growth. You did also do the convertible raise, suggesting the investment will continue. Maybe just help us think through the longer-term investment spend, how this has changed given how the opportunity has evolved and beyond just the next quarter?

We've committed to be EBITDA positive in all market environments. And so when we think about setting our expense goals over the year, we're looking at what the revenue opportunities are, looking at what our growth opportunities are and our unique abilities to add products.

2025 did lend itself to be a significant investment year because we saw the regulatory tailwinds that Brian spoke to earlier, because we saw the opportunity for stablecoin growth, because we saw the opportunity for this product expansion as well, and we said this on other earnings calls. The playbook that we had for international growth, we saw the countries that we launched in 2023, generating revenue that then covered their direct expense. So it gave us confidence to then open up the next cohort of countries and start building the foundation for additional international growth. So all of that fact pattern lent itself to 2025 being a significant investment year.

We do not give outlooks on expenses over a long period of time because we're building our business to be nimble and to be able to adapt and adjust to the market conditions that we find ourselves in. We did take the hard lessons in 2022, 2023, where scaling too quickly with the volatility of crypto led to some outcomes we would choose to avoid going forward.

So we're very thoughtful about building fixed expense versus variable, making sure that we have playbooks to ensure that we can continue with our profitability targets. And then the other thing I would just say, James, is that while 2025 was a big investment year, Brian shared publicly at the start of the year, we look to add 1,000 heads in the U.S. that is big growth. And historically, when we've taken significant growth, we want to digest it for a while. So at this point in time, we wouldn't see 2026 being at the same level, although if the markets continue with the nice tailwinds we see, we will continue to grow, but maybe not at that same pace.

Very clear. Okay. So there are so many other questions I have, but we only have 2 minutes. So I just want to, Brian, give you the chance to touch sort of on all the things and sum it up. You have a lot of irons in the fire. What do you think investors are underappreciating about the Coinbase opportunity set? Anything big that we haven't touched on?

Yes. And we didn't even get a chance to chat about the Base app, which is really setting on the frontier for retail adoption. And that's our self-custodial wallet where we now are introducing all this functionality to make it easier to decentralized social media and messaging third-party apps into one easy-to-use experience. We think that will take it from tens of millions of people using self-custodial wallets to hopefully 1 billion someday.

But -- yes, to answer your question, if I zoom out, what's the big picture I think investors should take away about Coinbase. Number one, we're seeing regulatory clarity emerge in the U.S., and that means it's going to emerge in the rest of the G20. This dramatically increases the TAM of crypto. And I think Coinbase is going to be the leader in that as the most trusted brand, okay?

The second thing I would say is that we now have a diversified set of revenue streams. It's no longer just primarily a trading business. We have these other revenue streams, which are material, and it allows us to be a more predictable business in how we operate.

The third and maybe the most important is that, we are storing more crypto than any other company in the world. And so I think assets under custody is actually a really core part of our strategy because -- because we're the most trusted, people are willing to store their assets with us. What that means is that when it comes time to use crypto for trading, payments or to get a loan or to use Coinbase Card or anything, they're going to use the product where their assets already reside, right?

The more products that we can connect into those deposits, the stickier the product is, the better the user retention, the better our pricing power, right? So this is a durable advantage for us over the long-term. We have far more crypto under custody than any other company out there in the space, and I believe that's going to be a durable advantage for us.

Excellent. Well, with that, we're out of time. Thank you so much, Brian. Thank you so much, Alesia.

Thank you.

Thanks.

Thinking about this last year, the conversation was very different.

Isn't it anything?

What a year of difference can make, right. Before we get started, though, I'm going to read a safe harbor statement on behalf of Coinbase. I'd like to remind you that during today's session, the company may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in Coinbase's SEC filings.

Our discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most direct comparable GAAP financial measures are provided in the shareholder letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to, but not as a substitute for GAAP measures. I should have this memorized by now anyway.

Thank you for reading this.

No worries, no worries. But great to have you back. It's like where do I begin? I think the first thing I'd love to touch upon and get your perspective on is the renaissance that has been -- that the sector has been undergoing in recent months. We've had tons of capital markets activity BC investments have rebounded back to pre-crypto winter levels.

And it's funny, when we talk to some of these companies, a lot of it has been, hey, Coinbase has been public. They've had this competitive advantage by being a public company by having publicly filed financials, CEO, CFO attestation, that kind of thing. So it's really a legitimacy thing that we need to become public so we can compete against them.

Do you agree with that thesis? And I would love to hear your perspective on how you think the chess pieces have been moving recently.

Such a great area to dive into. Well, it's great to be back. So thank you so much for inviting me this year. It has been a complete sea change in market conditions, but let's reflect back. So reflecting back, I absolutely believe that transparency and disclosures have been needed in crypto and were beneficial to us as a company. And so we got there through our disclosures by becoming a public company.

We added to our disclosures. And if I look back at 2022, 2023, when we had the FTX bankruptcy, when we saw a lot of concern about counterparty risk and overleverage, having financial statements public that were audited, that had a controls attestation was absolutely calming to our investors and our customers who could look at the balance sheet risks and understand the counterparty risk that they were taking.

So I do think it augmented our most trusted brand, and I think it has given us an edge specifically for institutional clients as well as for partners who look at that balance sheet strength and our profitability and our ability to manage through the cycle.

But I don't think it's just being public alone that gives us a competitive edge. And I think that it is going to be beneficial now with more companies going public to add to the transparency in the space and give customers the ability to compare and contrast and to underwrite and compare business models as being an end of one public company, pros and cons to that also.

But I think that the key here is transparency is always positive. I think that regulatory environment has become a huge catalyst for growth. And not only have we seen it unlock the capital markets stores, but more importantly, much more importantly, it unlocks the product innovation doors and getting to the place where we now can have meaningful conversations with regulators to open up the prospect of tokenized equities, to open up the prospect of bringing perps to the U.S. perpetual style future derivatives, which we've already done.

These have been the real sea changes that we see as adding value to our customers. And we're on offense on product now. It will bring more market participants in, but we've been doing this for 12 years, and we are excited about our infrastructure tech stack and our ability to bring these innovative products to market.

That certainly makes a lot of sense. I can recall conversations you talk to regulators and give them all your ideas and then the next day they would see you. It's a lot easier these days for sure.

We're collaborative now.

That's great to hear. Any views on how you think some of the chess pieces are moving? Obviously, Circle was a very successful IPO and as well as bullish and there's more coming, and you could judge by the bags under my eyes, there's even more coming. So you're going to have a lot more public names to be compared against and things like that. Any views on how you think the industry as a whole just evolves from this or benefits from some of this?

Look, I think that the market was closed to many crypto companies and they had no ability to get out while we were under the regulatory environment that we were in. So I definitely think many companies see the window open and are racing to run through that open window for fear that, that window may not be open for long.

I think that customers have been able to get information through operational due diligence for a long time. And I think we're really pleased with our ability to compete and to become a platform of choice for many large corporates. You can see that through our ETF custody relationships. You can see that through other business deals that we've announced.

And so I don't think that being public or private is going to change the playing field that materially. I think it will give those companies access to capital and liquidity. But more importantly, I think it will just give investors the ability to be more informed on market dynamics, understand the right questions to ask, better insights into how to value, and so we'll get to probably more rational valuations with more and more companies in the market.

That's very fair. Very fair. Thank you for that. I do want to spend a little bit of time on retail. And Brian has pointed out at the recent Crypto Summit that you guys held, which is a great event. 50 million Americans own crypto today. So there's certainly runway to grow. And there's also several of these hybrid more "full suite offerings" out there that are getting more competitive by offering crypto.

I'd just love to hear what's Coinbase's strategy to drive the incremental new user to its platform? And versus some of these others, including some of the full suite broker-dealers out there. And how do you feel that Coinbase One, the subscription program and the card that's coming soon? How do you view these partnerships playing a role in your new user growth strategy?

Yes. Thanks for that. So it all goes back to our strategy of being the most trusted and easiest to use crypto platform. From there, what we want to be is the platform where we offer everything. Every asset is available. You can think of us as a one-stop shop to find the asset that you're seeking to transact in that asset, to be able to do any of the economic transactions that are available in crypto.

So whether that's staking, whether that's pledging it for financing, we want to be the full service offering. So it's a combination of trust, I think what's really important to me here is to think about crypto as bare instruments. And so we are offering a full infrastructure stack. We can custody assets. We custody more than 2x our nearest competitor.

We have over $400 billion of assets that we safely store on our platform. It's about 12% of total crypto market cap. That is 2x any other centralized player. Offerings custody in traditional securities looks very different than offering crypto custody because of the bare nature of the asset. And it's not a bare instrument in the sense that I can lock it up like gold and a vault and I only have to access it once every 2 years.

No, this is like a 24/7 trading asset, but I also have to provide on-chain liquidity and make sure I can execute. This is a really differentiated technical infrastructure stack that we offer. So we offer the custody, we offer the wallets. We offer a protocol within base. We have a partnership on USDC as a stablecoin. So we have a full vertical stack.

That, along with offering the breadth of assets, provides us a really unique advantage of being able to compete in this marketplace because we can monetize at different levels of the stack. We can attract with different value propositions. We can think about a future of cross margin, for example, when we provide spot and future side-by-side or spot future options, tokenized equities.

So I think that we are building a very differentiated platform through the full stack approach. But it all comes back down to that brand and most trusted easy to use. And so then when I talk about retail specifically, absolutely, Coinbase One plays a big role here. Partnerships play a big role here. Coinbase One is a subscription program that provides our retail users added benefits to benefit of the breadth of our product offering.

So it provides differentiated rewards rates on USDC, better staking rewards rates, lower trading fees in exchange for this recurring, more repeatable subscription revenue line. We're seeing really nice growth. And as we have broadened that to international users, as we offer different price tiers, we're seeing continued traction and growth of that product.

Partnerships additionally are unique ways to bring new customers to our platform that come through a very attractive customer acquisition cost differentiated from the standard growth and incentives that we offer through paid promotions, et cetera. So we're seeing really nice traction and pleased to see us be really a platform and partner of choice of large institutions looking to provide crypto at their end customers, which then benefits other products and services on our platform.

Does the competitive strategy come down to liquidity? Is that really the heart of it, where -- whoever has the most liquidity wins?

On the exchange for sure. So every product has key attributes of what makes it win. Liquidity, I think, is definitely key for the exchange. And can you offer the deepest, most liquid trading pairs and so the best pricing on the brokerage. It's network effect then with USDC. It's network effect with base. You have the most market participants to create 2-sided marketplaces that really want to adopt a unified product, interoperable product experiences on base, on USDC, using the base app, et cetera. So it's a combination of liquidity and network effect.

I do want to talk about DEX trading.

Okay.

I think it's super interesting.

Do everybody know what DEX means here?

Well, it's...

You want to...

I could do it, too.

I can do that. Do you want to ask -- DEX is decentralized exchange versus centralized exchange. These are protocols that offer a matching engine for people to trade various assets and trading pairs in an on-chain manner.

Correct. And one of the...

Glad I got it right.

One of the more popular ones is like a unit swap, something like that.

Hyper liquid today.

Correct. But how should -- and DEX volume has been growing significantly faster than centralized volume industry-wide. How should we think about this integration potentially impacting the financial statements of Coinbase?

Yes, let's start with, yes, it's been growing, and it is a key reason why we're integrating Dexus into our centralized exchange. So why are Dexus growing? Dexus are growing because they offer users access to what I consider the long tail of crypto. These are the meme coins. These are the new assets that are issued, where they can spin up order books instantaneously.

So for example, when the Trump coin was launched over the holidays, instantly, that was on the DEX. There are steps for Coinbase to be able to offer assets on our centralized exchange. We do robust legal analysis, compliance views. We make sure that we can do on change tracing for compliance monitoring, et cetera.

So the DEX moves with speed. It often has lower barriers to entry. People have self-custody wants, so there's no KYC, and that has created a lot of adoption, especially when you look for the high-vol, long-tail assets. People have a lot of interest in those.

So we want to give our customers access to all of that. We also want to give them access to the centralized exchange because that provides incremental benefits. So centralized exchanges typically have lower latency. You can get better pricing because of the deep liquidity that are offered on them. You can create the fiat to crypto on ramps, you can connect to banking partners and create the bridge between the traditional finance and the on-chain worlds.

We can offer product experiences that are differentiated, we can offer staking with rewards. We can have USDC rewards. We can create the integration between custody and trading for you to be able to sweep into a more highly secure -- so there's differentiated benefits by centralized exchange.

So we are absolutely adding assets to our centralized exchange, but we want to provide the long tail as well and be able to move with speed, such that we become the everything exchange. When you think of a new asset, you just have to come to claim base. You don't have to source that asset out in the ecosystem. And so that will get us into economics for the ability to be a one-stop shop. We do offer the same trading fee on the decentralized exchange that we do on our centralized. There's no spread on decentralized, but there is the same trading fee.

That's helpful. Thank you. A big topic of late is certainly the CLARITY Act, which passed the house now is in the Senate for -- and hopefully, we'll have some news on that coming weeks.

Hopefully.

I think the biggest question that we're getting from investors is what happens after CLARITY. And I guess there's this view that this is big U.S. institutional investor unlock that CLARITY prompts, hopefully. I'd love to hear your view of at least your expectations on how you think the U.S. institutional world behaves after CLARITY. Is it something that you see gradual adoption in growth? Or do you have hedge funds banging out the door right now, getting ready doing prework? How should we think about this?

So regulatory clarity is the #1 reason that we hear of institutional investors sitting on the sidelines. Now plenty of hedge funds have already jumped into crypto. But the folks who haven't jumped in are the banks, are the traditional RIAs. So there's a lot of capital that is sitting and waiting for the regulatory clarity to emerge.

Like anything, I don't think this is like a big bang like instantaneously, they're all ready to trade. I think everybody has been waiting for regulatory clarity. And then post regulatory clarity, they will continue to assess how do I want to offer crypto to my customers? How do I want to build it into my portfolio strategies, which partners do I want to work with, et cetera? How do I want to build the pipes?

So I do think it will be a slower ramp to growth, but I absolutely think it will be another sea change of unlock of growth similar to how the ETFs grew, similar to how you're seeing the treasury companies create growth today. It will be another kind of catalyst of growth. I think where we are going to see the most benefit from this is through our product crypto as a service.

So we are already enabling 250 companies to build crypto offerings for their end customers. by building on a white label solution through our product. So we can be a sub-custodian, we can provide liquidity through our exchange. We can help route trades through our prime broker and do that all on a basis for banks, fintechs, other corporates to build on top and offer to their end customers. And I think CLARITY will unlock a lot of that potential growth for us.

So 2026, we may hear about new partnerships, new integrations, that kind of thing.

I sure hope so.

Yes.

The other thing I want to just share here is we are absolutely pleased to see the progress with the SEC and the CFTC as well. And so they are not sitting idly and waiting for Congress to act. But what the CLARITY Act provides us is then law. It makes that even the progress that we may see during the SEC right now, it won't be reversed if we've seen an administrative change in 3 years. And so it's critical that we get through Congress, even though we may actually move with more speed through the financial regulators.

I think we were having a conversation with somebody at the FDIC at one point, and this was post genius and they're saying, that's one thing I have to think about. The agencies are going to be writing rules for the next 10 years on this stuff. I mean yes, there is an unlock, but it's still going to be an evolving thing over the coming years.

Absolutely. But we're really pleased with the speed that they are also operating with right now.

Fantastic to hear that. And these partnerships, obviously, I do want to touch upon that a bit. You announced the integration with Chase, which is super interesting. I heard they're an okay bank, they're not the best.

I kind of wish we had a city announcement to share on this stage. Somebody talking about --

We can talk later. But you can extend the premise to the partnership with Amex and the new card that's coming out soon, the partnership with Shopify, Stripe, PNC Bank. How should how should investors think about Coinbase's philosophy towards building new partnerships? And how important is this to the broader growth algorithm?

Sure. I hope that when you hear all those names, it just underpins that we are the partner of choice that we've built institutional grade products and services that can serve some of the largest corporates here in the United States and globally. Partnerships are critical to our growth. I think that it unlocks a few things for us.

I would put it in 3 buckets. One is product innovation. So partnering with Amex gives us the ability to offer a credit card where we can give crypto points back to our users and just creates more utility and value for our users. So product unlocks.

Two, there is customer experience benefits. So with Chase, the good example is for mutual customers, it now creates better connectivity between their Chase experience and their Coinbase experience. Points can be redeemed for crypto, they can use that credit card to buy crypto, just a more cohesive better experience for shared users.

Third then is access to new customers. Shopify is a good example here, where Shopify enabling crypto payments via USDC on base to their merchants unlocks a new channel of growth for us. So grows potentially user base to get the overall crypto ecosystem continuing to expand. So that's really the theme of many of the partnerships, product innovation, customer experience, new customer growth.

And then on top of this, as I mentioned previously, we are really the white label partner of choice for many other customers to build crypto offerings on our platform. And so that's where we have over 250 names, which is the PayPals, the BlackRocks, PNC is here, for example. They are using our technology and our infrastructure, whether it's custodied, our exchange or trading services to end up offering that to their end customers. And so all of these, I think, will be a big catalyst for growth for us in the future.

What's interesting when you announced the Amex partnership and the Coinbase One version, is it's a perfect partner because membership has its privileges, right? And I remember the tag, I'm old enough to remember that tagline.

I -- and we get the question from investors, I'm sure it's a little bit of both, but it seems like it's a revenue diversification play by hoping to get more of your MTUs on a subscription plan, but it's also a membership acquisition or user acquisition play as well. I mean, do you think about it?

I think of it in both ways. We think of this as attractive customer acquisition for the Coinbase One membership to shift more and more of our revenues to a more repeatable recurring pattern because the card is only available to those who have a Coinbase One membership. So it will create stickiness to that revenue stream and acquisition.

But also importantly, it then drives the buying a bit point on our platform. It creates more and more people holding crypto assets in their wallet. And when you pull crypto acids, you're more likely to explore new crypto assets your more likely to explore, okay, I own bitcoin, maybe I'll buy Ethereum, maybe I'll stake Ethereum and then we can monetize in multiple different ways. And so we think that this will just unlock more and more crypto owners.

Certainly, we know this in fintech credit is a great user acquisition tool, but you have to be very careful, obviously. I mean, how do you -- can you just think about some of the -- discuss some of the thoughtfulness you put into building that product and managing things like credit loss and fraud and things like that?

I think it's important here that this is a marketing and distribution partnership that we are not underwriting the credit on our platforms. This will not be a balance sheet risk to us nor a fraud or credit loss.

Okay. That's super helpful. Do want to talk to you a little bit about some of the treasury plays that they've certainly gotten a lot of attention this year. How is Coinbase playing a role in this space? And do you see treasury plays becoming a large part of Coinbase institutional business over time?

Yes. I think that we're pleased to see the growth of treasury companies. It's definitely the flavor du jour of 2025 right now. So for those who don't know, the treasury companies are, for all intents and purposes, securitization vehicles where they are offering investors exposure to underlying crypto assets, but via the form of equity or preferred or convertible debt.

And so they're raising capital and using that capital to go and buy crypto and then pulling that crypto on their balance sheet. So in many ways, it's just another form of investment, just like the ETFs were another form of investment, giving investment exposure to an underlying asset. What we see, and I think the benefit is, is bringing, again, new capital into the space because there are definitely funds out there that do not have the mandate to invest in crypto commodities. They couldn't invest in ETFs.

And so now providing exposure via an equity by a convert via preferred, it's bringing in new capital into the space. We benefit because, by and large, again, we are the custodian standing behind those treasury companies. They are buying the spot on our platform in many cases. They are financing those purchases. And so we are seeing the growth of our custody business, our prime financing and institutional transaction volume via the growth of these crypto treasury companies.

I do want to talk about base. In previous life, I used to cover the smartphone industry in the early days.

Nice.

And we used to change ...

Do we go back that far?

We do have a pump pilot actually. It's --

I do too.

It was great for Solitaire. I think about it. But we used to track when there's multiple operating systems, how many developers are in each. So I kind of think of Base and some of these other chains that are coming out with some of your competitors and partners a little bit in that vein.

Yes.

So -- and recently, we've observed a really sharp increase in Base transactions and addresses in recent months. I suspect that in part because of some of the new partnerships that you've signed for sure. But if you could just walk us through what are some of the key behaviors and trends that you're tracking on Base and how should investors think about the potential for increased activity over the next few years?

All right. We are really excited about Base. Base is the fastest-growing Layer 2 solution. And as we launched it, you're exactly right. Our sole focus was on attracting great developers to Base. Because, as I mentioned, network effects earlier, more developers, we can connect them with our Coinbase retail base.

We can build applications and it creates an ecosystem. So we are absolutely focused on developer growth. And we've seen breakout developers and break out apps on base. From there, right now, our main focus is on transactions. And our goal is to be growing a number of transactions at the lowest speed, the lowest cost possible. And so one of the key announcements we made in Q2 was our initial goal for base was 1 second, $0.01 transactions. And we've been pleased to move on from 1 second $0.01 to milliseconds, millicents.

I mean, so these are now incredibly fast, incredibly cheap global transactions, and that is driving the cycle of developers than choosing and selecting base to build. So that is the protocol. That is what you need to look at for the base protocol. But we just also announced -- and this is early Q3, so we're not going to go to deep into it because as I put this in a category of our venture product for us is the Base app. So we've now built our own application on top of the Base protocol.

And what the app is doing is it's combining trading, so you can buy and sell crypto, you can make payments. It also puts social. It's also integrating third-party apps. And so it's broad in Zora. It's broad in Forecaster. These are social apps, very much like an X or like a TikTok or an Instagram in the case of Zora, online social.

And the magic moment -- and then you also have decentralized identity, we have messaging in there. So it's a full service on chain application. And Brian talked about the magic moment on our earnings call that we're really seeing and customers are on the wait list. This isn't beta, like this is early days, but customers are having this magic moment of posting content, that content becomes coined essentially. So it's a tradable asset like an NFT and people buy it.

And buying it, they're not buying it to trade it. They're just buying it to basically give a tip to be like, "I love that content, like coin you of those research reports." Like we can buy your research and like all of a sudden, then you see that money go directly to your wallet. And we have users around the world being like, "Oh my gosh, I earned $500 or in $2,000."

And I'm -- I've never earned a dollar before for social content. And so this is the magic moment. And when we start to think about the Base app over time, again, venture new, I want to put all those caveats on it, the focus will be on users. And we'll look at that as monetizing by eyeballs and users and engagement on that platform.

Seems really exciting. And I'm sure there's a ton of innovation that you're seeing on the platform there and some new ideas and things like that.

What I would say is the speed for engineers to develop on chain with AI is development at a pace that is mind blowing.

I do need to touch upon AI. We touched upon it a little bit last year. And I completely recognize it is early days. But in my view, it's not what AI can do for crypto, what crypto can do for AI. Maybe perhaps as a governance tool. We hear about these AI hallucinations and things like that. And it makes sense that a decentralized ledger that's immutable could solve a lot of these issues.

There are natural companions.

I'd love to hear what are some of your early thoughts on AI, crypto perhaps serving AI?

Yes. The early experiments right now, we're investing here in our ventures portfolio. The area that we're focused on innovating for the Coinbase side of things right now are really through enabling agents to have wallets because one of the big frictions with AI is can the AI agents pay and they cannot pay with a traditional bank account, they can pay with a wallet.

And so creating we have a venture product called x402, which is enabling AI bots to use crypto wallets to our commerce product to facilitate payments on behalf of users. And so this is where we think the first traction will be. Over time, I agree. It's the how do we put content on chains, so what's immutable so we can then trace back to sources of origin that we all have trust in, et cetera.

That's super interesting. Obviously, stablecoins have been a mega hot topic this year. But I don't want to talk about stablecoins. We already covered it.

We've covered that?

I want to talk about the tokenization of everything.

I know we've hit a whole new like all-time high market cap with the SEC, but let's -- stablecoins is still on fire.

I want to talk about the tokenization of everything.

Yes, also exciting.

The next area that I think we're getting calls on all the time is certainly tokenized equities. You're hearing about private equity. You could tokenize everything. And there's been press reports that indicate that Coinbase has been seeking SEC approval to potentially offer tokenized equities. How is Coinbase thinking about the potential in the tokenized RWA real-world assets opportunity? And why might Coinbase be the right venue to really --

Why should we win? Yes. Okay. This is the frontier. You see a new headline every week with somebody doing something in the space, but nobody has unlocked true equities on shame to behave in the way that we think is beneficial and like on-chain native. On-chain native is on-chain dividends, on chain boating and governance, like the ability to hold that in your self-hosted wallet, trade 24/7. That is the vision and the experience that we seek to offer on-chain securities.

And that requires working with the SEC, working through new rules to enable this market because the current rules for securities trading are archaic. They were written at a time before we had immutable ledgers, which is all good. But this is a very constructive SCC, where now we're working with what does it mean to offer a security on-chain in 2025 for the next chapter.

So working on the regulatory front here working on the product experience. But our ambition is to bring every asset on-chain and make it on-chain native and unlock the benefits of what an on-chain tradable asset means less settlement risk, 24/7 trading, more clarity and transparency, broader distribution to people to be able to trade in their self-host well to hold their own securities. It's like going back to like the 30s or we hold physical securities on our wallet. Now you'll just hold tokenized versions of those in your wallet.

And why we think that we are suited to win here is a few things. One is we have a 2-sided marketplace where we have institutions, we have commercial customers, and we have a big retail distribution base. We have deep liquid markets. We are excellent at offering exchanges. We have a spot exchange. We have derivatives exchanges.

We are uniquely enabled here. And then I think the opening and magic that will be, we believe that we can offer a very differentiated experience through bringing all of these products side by side, to be able to be the everything exchange in trading spot, derivatives, futures, options, equities, predictions all in one place and being that unified new tech stack experience for that, we think will really be a competitive offering that we'll be excited about.

A lot of 24/7 equities trading --

It's kind of exhausting.

I think it scares everybody in the team.

I can understand that.

The only thing I ask is please now earnings call at 2:00 a.m.

You and me both.

But no, that's certainly a great theme right now that we're just getting tons of interest in.

But the AI bots will come in, where they'll work overnight for everybody.

I can use that. That would be helpful. Investment balancing is always a topic. We're in a fun period right now, which we know is not always the case. But also just as you said before, this unlock is really on the product innovation side. So now with the bevy of opportunities that you have before you, scaling derivatives with the integration of Deribit and the closing of that deal, hopefully shortly.

Close.

Close? That's great to hear. You're building a foothold overseas. So there's the international opportunity there. So you have a lot going on right now. How are you thinking about balancing expense management versus product, new product development prioritization there versus profitability? It's a lot to balance.

It is. So we made a commitment 2 years ago that we will be EBITDA positive in all market conditions, and we are abiding by that commitment. And so we have not changed our approach quite candidly. We look at every year to be a, can we sustain a crypto downturn and still deliver our financial commitments. And if we do that, what can we invest? What is the potential expense envelope?

And then we divide that expense envelope into core strategic adventures. We always have dollars going to new things. So that is why we're putting dollars to tokenized securities, why we're putting dollars to growth of international. So we are opening up new markets as an example. But we are very, very keen to keep our eye on how we invest in variable costs such that if we need to reduce them because any change in the revenue opportunities available to us, we can do so in a rapid way.

This is an investment year. We have committed to hiring a lot this year because we do see all these opportunities. But like the Deribit opportunity, that's a highly profitable business that we're going to be able to add and continue to then use that to drive even more growth in derivatives. So I think we're being pretty strategic and prudent in where we're putting our dollars to work.

The growth there is amazing.

We have 75% market share in options. It's a pretty phenomenal deal.

And I think triple-digit growth, I think last quarter, at least in volume it's amazing. I'm very excited to see that fold into the model.

I guess last question. You've made a number of investments in start-ups in recent years. I'd just love to hear you characterize where Coinbase Ventures is today, maybe versus where it was a couple of years ago? And are you seeing more venture partners adding new investments there as well?

So starting in 2018, Emilie Choi, who's our President and Co-COO, she brought forth the idea that we really needed to have an investment arm. And it was a brilliant idea and a great contribution by her because it has enabled us to really see what's going on in the ecosystem, really build a portfolio of customers, build a portfolio of business development partnerships, see where customers are excited who've seen unique growth.

And we've continued to invest in this space to really just grow this ecosystem. We knew that we could never be the sole company in this space. The big change between then and now is our check size has gotten bigger to measure it with our own size and balance sheet. The companies in the space are more mature. So there's more opportunity for follow-ons and creating follow-on investments, especially where we can do a business development deal along the side.

But we continue to be excited to put capital to work here. It's important for everyone to know that we market -- we hold this on our balance sheet at cost. So with the exception of Circle, which then went public that is mark-to-market, like the majority of these investments are held at cost. And so that doesn't reflect the true fair value of what we think this portfolio is.

But we think it provides unique opportunities for us. And the areas that we're focused on today, a lot in stablecoin and stablecoin infrastructure. Lot in DeFi, a lot of new things and application layers. And lastly, the intersection of AI and crypto.

Fantastic. Wow, we hit it on the nose. Perfect timing. Alesia, thank you so much. Always great to have you. Thank you, Alesia Haas.

Thank you.

Okay. Our next section is with Coinbase. First of all, thank you, everyone, for joining this section. For those of you who don't know me, my name is Owen Lau. I cover information services, exchanges and blockchain at Oppenheimer.

Before we get started, I have a safe harbor statement for Coinbase. I would like to remind you that during today's call, the company may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other facts that could cause these results to differ is included in Coinbase's SEC filings.

Our discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to, but not as a substitute for the GAAP measures.

All right. So let's talk about Coinbase. So Coinbase is well known to be a crypto exchange, but actually about 40% of the revenue come from nontrading such as stablecoin, interest income, staking and custody. Coinbase has also been launching new products such as the Base app, perpetual futures, tokenized securities, prediction markets and payments. The company is about to close the Deribit deal, which will further expand the product offering internationally. And today, we are excited to have CFO, Alesia Haas, to talk about all these. So thank you very much for your time, Alesia.

Thank you, Owen. Delighted to be here.

Great. So to kick things off, lots of things happening across the crypto space within Coinbase as well, and you reported earnings around 2 weeks ago. There's a steady drumbeat of regulatory and product news flow. Can we maybe start by just having you outline what's top of mind for you today? Can you frame your priorities for investors here who may be less familiar with your story?

Absolutely. And I just think it's so interesting to look back at what a difference it has been over the last year since I was with you last in this forum. So the biggest change has been that we are now sitting in the most pro-crypto Congress and President, White House administration that we've ever had. And this has led to great strides towards regulatory clarity, including recently enacted stablecoin legislation, which was the Genius Act.

So with this regulatory backdrop, our focus is on building. And as Brian shared in our most recent earnings call, we're really focused on driving growth in our core businesses. So first, we're growth in trading. As Owen said, about 40% of our revenue comes from subscription services and about 60% in the last recent quarter with our trading businesses. So we've long believed that every asset class will move on chain, i.e., we'll become a tokenized asset. And we believe the time is now.

Now we're at this point where our customers are asking for this. The regulatory environment is ready to have these talks about what does it mean to bring assets on chain and the technology is ready. We have now seen scaling in the technology that we can do fast, cheap global transactions. So the time is now. So our long-term vision has always been to build the everything exchange, where people can trade all different types of assets in one place on crypto rails.

We started this journey with spot trading, crypto commodity spot trading. We started to be the simplest place to buy Bitcoin. As of Q2, we offered over 300 assets for spot trading. Just last week, we began to expand access now to millions of crypto assets, so you can come on the Coinbase main app and gain access to the entire universe of crypto spot trading. And we did this by integrating DEX trading into the Coinbase app.

In the last year, we started to build beyond spot trading, where we now offer a growing suite of derivatives products, and we can talk more about those. And in the coming quarters, our goal is to broaden out that asset class to more asset types available on Coinbase. So crypto spots, you have derivatives and then we'll move on and on. Beyond trading then, our goals are to grow a payment stack. So we see payments as the next big use case in crypto and see opportunities ahead since stablecoin payments are faster, cheaper and global.

The last focus area of ours is to be a trusted partner of the ecosystem. So we are leveraging our deep experience in building crypto infrastructure to power the next wave of businesses. Over 240 businesses are using Crypto-as-a-Service capabilities to power their own crypto needs. So we've announced in the quarter companies like PNC. Previously, we talked about BlackRock, Stripe, PayPal and more are building on our infrastructure layers to offer their own crypto services to their clients. I think it's important to note here that many of these initiatives like payments, bringing more assets on chain, these are net new. These could take us many quarters, but this is the vision that we're working hard to realize and the potential that we see.

Got it. And then I do want to talk about the dynamics between trading volume and revenue. And I got some questions about that, maybe there's some confusion. I think Coinbase raised fees for some stablecoin pairs earlier this year. It looks like it impacted your trading volume since then. Could you please talk about the decision for that move and the trade-off -- I think more importantly, the trade-off between volume and revenue so that investors understand your decision?

Absolutely. So previously, prior in Q1, for example, we had very low or no fees at all on Stable Pair trades. And as a result, what we saw was some traders were bringing large amounts of Tether to our platform, converting it to USDC and then converting it to fiat. So effectively, we were becoming the off-ramp back into fiat for Tether. They were using our infrastructure for free and taking advantage of this arbitrage opportunity.

So ultimately, we decided to optimize here for trading revenue over volume, and that led us to increase fees on these large volume Stable Pair trades. And it effectively ended that arbitrage activity on the Coinbase platform. So it's a very specific problem that we were seeing that we added these fees for to create some friction in that trading pattern.

Got it. And then maybe move on to derivative volume for both U.S. and also internationally for Coinbase. I think the number was pretty strong in the second quarter, even though the spot volume came down. Could you please talk about the driver of that strength in derivatives.

Absolutely. So as I mentioned in my opening comments, derivatives have been a key focus area for us, and we've been investing a lot over the last year to grow our market share in this space. So in addition to just growing share because this is 75% of global trading volume, so it is a well-established market outside the U.S., we've also been a pioneer for new products here in the United States.

So for example, we became the first U.S. regulated futures exchange to offer 24/7 futures for Bitcoin, Ethereum, Solana and XRP. And we launched a perpetual style future contract to U.S. retail customers, the first of its kind. And globally, perpetual futures are what dominates global crypto derivatives trading.

As far as the second quarter, you're right, we saw a nice performance in Q2. We saw $1 trillion of total notional volume traded, which was up from $800 billion in Q1. So it was growth quarter-over-quarter, where we did see a decline in spot volumes. And we also reached an all-time high in open interest, which is over $1 billion as of the end of Q2. So our focus is on growth right now. We are providing incentives for select customers. This is important to get -- attract sustainable capital to the platform and to really build into that global share.

And that we're also expanding the product. We're offering more contracts, more collateral types. And this is going to be the focus of us over the next period of time. I think it's really important to note that we are paying incentive and rebates for a lot of the derivatives platform, and they offset revenue, but are largely also booked to our transaction expenses. And as a result, we don't see material revenue from derivatives yet, but we're really pleased to see the market share growth and think that over time, this can be a much larger part of our financial picture.

Got it. I want to echo what you just said, Alesia, because I remember over the last few years, we keep talking about regulations and policy. It's not like we don't care right now. We will dive into these questions, but at least we can talk more about product launches. So let's talk about regulation and policy. So President Trump just signed the Genius Act into law last month. I think it's a long overdue clarity that the industry is asking for.

And the next one is the CLARITY Act, right, which passed the House during the crypto week. I think it's more important for Coinbase and the whole industry for this act. What do you think about the time line of it getting passed in the Senate and getting into law?

Absolutely. So just to touch on GENIUS briefly. It was a monumental achievement. It's the first crypto law in the United States being passed into law, and we're really excited because we saw major bipartisan support for this bill. And it's the first step on the road to make the U.S. the crypto capital of the world. But as you know, the job isn't finished, and we're really excited for the progress that we're seeing with CLARITY.

So the Senate now needs to work through their own process. We expect the 2 committees, banking and agriculture to mark up these bills in September. And we hear that Chairman, Scott, wants to go to the floor in October. So this is where -- this is outside of our control. It's difficult to predict certainty about when it comes to for time. But we do see the President seeking this moving forward quickly. He has asked for this to come to the floor for a vote. He has asked this to come to his desk for a bill. So we remain optimistic that we'll see CLARITY pass into law by the end of the year. But the timing is uncertain at this time.

Got it. Got it. Okay. And then another question about regulatory clarity. It looks like it is also emerging outside the U.S. as well. Could you please give us an update on your international expansion because of that? Like you listed -- I think you listed international expansion as one of your key priorities this year. How is that going? Any notable milestone that we should be aware of?

So we remain very focused on international expansion as a strategic priority, and we're making good progress. So in this period of regulatory clarity, you're right, much of our focus this year had been to secure our MiCA license, which we are pleased to announce that we have secured a MiCA license in Luxembourg, and this provides the foundation to build in a regulatory window in Europe. This will provide efficiency as we no longer need to get country-by-country registration.

Previously, we had to go secure VASP licenses, Virtual Asset Service Provider licenses in each of the EU markets. Now post MiCA, we can then market, we can grow our products with one regulatory regime. So really, this has been a large focus of us at this time, laying the foundations, complying with the new regulations, getting prepared for 2026 when this goes into effect.

Similarly, we've been planting seeds for the next cohort of countries. We've really built a successful playbook now for international expansion. So for example, the 2023 market launches where we went into Singapore, Brazil, Canada, Australia, we now see each of those countries generating revenue in excess of their direct operating costs. So we're starting to plant the seeds for the 2025 cohort. And the first step is then securing the requisite licenses in those markets. So we're pleased to have secured a license in Argentina, and we're now busy focusing on the next step, which is securing bank partnerships, building localized products. And similarly, we registered with FIU in India and are making good progress there. But I don't expect these to be material contributions to our revenue for a few years.

Got it. And then another hot topic is stablecoin. It seems to be the biggest near-term beneficiaries from the regulatory clarity, we are seeing like emerging in the U.S. and also overseas. I mean we know Coinbase has a deep relationship with Circle. How should we think about the opportunity and potential for stablecoin market cap growth that's been unlocked following GENIUS and MiCA.

So we're really pleased that USDC is going to be a compliant recognized payment stablecoin under GENIUS and was the first stablecoin and the largest stablecoin to be compliant as well. So this gives us an opportunity in each of those markets, as you said. So first, we just applaud lawmakers for outlining clear frameworks. This will bring transparency, safety, clarity to this rapidly growing market. And this is what many participants have been waiting for.

They are waiting for comfort that these are payment -- stablecoins are assets that they can transact with, that they can use for commerce. It is hard to proceed with growth in commerce when you're dealing with an intangible asset, which is what stablecoins and crypto have largely been classified as, up until this point. So the opportunity is now here. And what we've seen though is significant market cap growth over $250 billion despite the lack of clarity. And so now with this in place, we anticipate seeing broader adoption for use cases like payments, collateral and settlement in the broader financial ecosystem, and we're excited to support that growth.

Got it. And then like another narrative coming up because of that, conversation is, in fact, many well-known companies are expressing interest in this space and creating their own stablecoin and et cetera, and things like that. What do you think -- why can -- or how does USDC can win in this space versus like many other alternatives out there?

I think you've seen this commonly over time with new technology as you first see fragmentation and then you see consolidation. And I think that USDC was built for this moment of regulatory clarity. It stands apart today as the only scaled broadly adopted U.S. dollar stablecoin that operates at the highest standards for regulatory compliance, reserve management and transparency. You've seen that it's been embedded in many DeFi protocols. It is widely used by global market makers to enable their trading strategies at various exchanges.

And what I think is important here are that network effects are important. The first use case for stablecoins were within the crypto markets as the stablecoin matched the 24/7 markets that crypto trades in. That was the use case. Now we can move on to new use cases, payments, collateral, et cetera. And I think that what we will need to see here is the network effects, the distribution partners. And I think what many U.S. entrants underestimate is the compliance lift, the interoperability requirements and the distribution that's needed to get the stablecoins at scale. So USDC is supported natively across 24 blockchains and growing. It is the stablecoin of choice for on-chain activity, notably DeFi. And it is one of the primary stablecoins embedded in crypto trading flows. And so we are excited that it can make its next tentacle into the payment space.

And then going back to your partnership maybe related to payment space. You signed a partnership like recently with both JPMorgan Chase and PNC, very large banks in the U.S. Do you expect to sign more similar deals with other banks going forward? How should we think about that?

I think this speaks to our platform being the trusted partner. We have more than a decade of experience building these tools. We have more than a decade of experience in safely storing bare instruments. We've invested in custody, in trading, in financing, stablecoins, base as a protocol, staking and more. So we have the underlying infrastructure. We have a full stack infrastructure. And as a result and the investments that we've made in compliance and security, we've been selected by more than 240 institutions that utilize our Coinbase infrastructure in some way today.

Think of this as an a la carte menu of use. You can come to us to subcustody, you can trade on our platform, on our deeply liquid exchange, we can be a staking subprovider for you. We can do these products and augment many other financial institutions as they want to create crypto products and services for their customers. And I think this is so important because customers are asking for access to crypto. You can see that in other companies' decisions to then partner with us.

And so the partnerships that we've announced, JPMorgan, PNC that you cited, they're just great examples of providing more access to more people to enable them to trade, to secure, to hold crypto. So that is our goal. These are one step to just continue to build bridges to more and more people, build out the market, build out the product offerings because we believe, over time, you'll see just the transition of transactions moving on chain, and we look to be an important part of that.

Yes. I like that one -- just one step to build the bridges and more to come, more to come. And another announcement was related to with Shopify, another great relationship, and other large merchants out there. Is Coinbase actively signing merchant partners to drive USDC adoption? Will you partner with a merchant acquirer like to do it or Coinbase would do it on its own?

So thematically, it's the same answer that I just said with regards to JPMorgan and PNC. This ladders up to then us being a trusted partner for the next wave of businesses getting into crypto. So whether companies are getting into crypto because they want to enable their customers to trade or they want their customers to enable payments on crypto rails, we are a platform of choice. And this is an opportunity just like we're signing up new partnerships on the trading and custody side, we are looking to actively sign up partners on the payment side, and Shopify is a great example of that.

This is a major milestone because it will enable 1 million merchants in their network to accept USDC payments. And we are partnering with them for merchant distribution here. We collaborated with them on a novel on-chain commerce payment protocol that Shopify offers that will enable their merchants to use USDC directly. So we're leveraging their existing distribution. This will be rolled out later this year. It is very early, early days, Owen.

And I want to just comment here that no single partnership is going to be a material growth driver. But I think what we need to focus here is that we are the platform of choice and each of these partnerships that we made will embed crypto more deeply in the overall ecosystem for trading, for payments, for global use cases. And that growth of the overall market is what will drive Coinbase revenue growth over time.

Got it. That's super helpful. Another hot topic is tokenization. I'm pretty sure you are being asked this question a million times already. But it looks like Coinbase is interested to get into this. Could you please talk about Coinbase's ambition in tokenization? Which asset classes do you want to tokenize, and how will Coinbase approach this?

It has always been our vision that we will tokenize every asset possible and bring assets on chain. I think many of those who might be listening know that Coinbase tried very hard when we went public in 2021 to go public via token. And it wasn't ready yet. The infrastructure market structure was not there. This is what door is opening now. We start to see regulatory clarity emerging such that we can bring more asset types on chain.

So as I said in my opening, we now think consumers, we think technology, we think the regulatory environment are all ready for this evolution. So tokenization will be the bridge that connects the global financial system and capital with blockchain rails. And we believe we have a number of strengths that we will be able to bring these products to market. So we have globally compliant distribution across retail institutions. We have experience building trusted infrastructure. And we have a track record of innovation in markets, both on and off chain. So we are building on the frontier here. And this is important.

This is going to be a multi-quarter journey because we are building this frontier where both technology needs to progress and the regulatory market structure environment needs to progress. But we envision a role for tokenization of wrapped assets, real-world assets, some people might call them, but that could be anything from real estate funds to other types of assets. We think that assets will also be natively issued on chain going forward. I envision a future. We just did a convert offering last week. Why couldn't that convert have been an on-chain asset, new assets, new tranches of single-class equities.

And we look forward to bringing the best of innovation that's already occurred on chain to traditional asset classes. So we don't have the details ready to share yet, but we are innovating, we are building, we are exploring and experimenting here. But think about a world where it's all on chain, voting on chain, governance on chain, dividends on chain, that is a vision of the world that we see us moving to over time. It will take work. This is not a short-term vision, but bringing all of these assets on chain in a tokenized way to enable 24/7 global markets is a vision that we have.

Got it. So I know you're still in the early process. You don't want to talk about like the detail too much at this point. But I mean, like from a philosophical standpoint, it looks like offering tokenized equities and bonds to non-U.S. investors 24/7 has a stronger value proposition, like what do you think about offering this to U.S. investors? I mean it's already very crowded space, convenient to trade U.S. equities, right, within existing ecosystem. What's the thought process for the management team?

It's a great question. So first, make no mistake, our ambition is for these products to grow global, as you said. And I do agree there is more friction globally, and there's less friction in the U.S. We believe that tokenized securities offer a number of benefits to the global customer. One, international capital, so TAM expansion for U.S.-listed equities. There's important liquidity and risk management opportunities here, instant settlement, 24-hour trading. The instant settlement can really reduce settlement risk in the system. There's also increased functionality, decentralized finance for traditional securities, for example. So in the U.S. specifically, the benefits to risk management can be an unlock.

And then when I look at the opportunity, you would -- I think that you're right, many people at one could say, well, gosh, there's no friction in the U.S., this is a problem solved, this isn't needed, but we were first to market 24/7 futures and perpetuals to the U.S. for Bitcoin and Ethereum. And I think this early example here illustrates the opportunity for traders in the U.S. because our weekend volumes have been stronger than expected, and it's predominantly driven by retail trading. And we have seen in the early days, some weekends meet or exceed our weekly daily trading volumes. So these are things that we think can be unlocked.

And I think people also were somewhat perplexed that stablecoins would see the adoption that they saw as well. People thought U.S. dollars were broadly available. There was no need for a 24/7 dollar, and we've seen the growth of that as well. So sometimes with skepticism, there's still a huge opportunity, and I think that we are going for that opportunity. Again, early days, early days, but this is the direction of travel.

I like that. I like that the early days, and there's still some skepticism, which present opportunity. Another topic, which is actually my recent favorite topic is the Base app, like so-called the super app, that's my term, not your term. You announced the Base app last month. I listened to the call. Could you please talk about Coinbase's vision of the super app?

Are you off the waitlist yet, Owen? Do you have the Base app?

I am not off the waitlist. I rest assured, I am still on the waitlist.

You're on the waitlist, all right, soon. I am also very excited about the Base app. So what is the Base app? So I think it's important to start with we have the base protocol in the chain, and we've talked a lot about this with investors that we are building a layer 2 solution to offer faster, cheaper transactions. And our goal is to have developers build applications on top of base.

Well, now what we've done is we built an application on top of base, which is the Base app. And so the Base app is an everything app. And it brings together a social network. It brings together payments, trading, messaging, decentralized identity and also app discovery. It's a place where you can gain access to other on-chain apps. You can get access to an AI bot that helps you with your crypto investment decisions. You can play games. There's an on-chain social. There's on-chain messaging. It puts it all in one place.

And what Brian shared on our earnings call was the magic moment that a lot of people experienced and he experienced is you make your posts on Farcaster within the Base app and then people can coin those and buy those and you can gain instant proceeds from the content that you provide. Those proceeds go directly into your wallet and then can be used to buy crypto, to make payments, to invest, to save. This is now global.

And as we roll this out for people, they are going to have this experience about the everything app to really deeply engage in the crypto ecosystem. You own your own content. You can earn money for posting, not just likes, and you get paid as people engage with you. So we're really excited. But again, early, early days, people will get off the waitlist in the coming months, and we then will share updates in future earnings calls.

Looking forward to it. I'm looking forward to it, Alesia. And then maybe let's turn our focus to capital allocation. Coinbase has a very strong balance sheet. I think we have around a rough number, USD 10 billion of resources. How should investors think about your capital allocation strategy? I mean, given your share price, would you mainly focus allocating capital to organic growth and M&A?

We do have a strong balance sheet. So you're right, in Q2, we had USD 9.3 billion of resources, and then we had $1.8 billion of crypto investments. But importantly, since earnings, we completed a $3 billion convert bond offering. Half is due in 2029 and half is due in 2032. So we do have a strong and an even stronger balance sheet since our Q2 earnings.

But it's important to note that we have a fair number of capital commitments. So we have working capital that includes the regulatory capital requirements for our various legal entities around the world. We self-insure, and so we have a bucket of risk capital to protect our balance sheet against risks and unknown unknowns. And then we also invest.

So we have a prime financing book that we are lending money to institutional clients on a fully secured basis. As we shared in our Q2 call, we saw all-time highs for the average loan balance was over $1 billion in the second quarter, and we see increasing demand for that. So beyond these uses, though, we also see the opportunity to grow the business, both organically and inorganically. Because we're committed to generate positive adjusted EBITDA in all operating environments, we believe our revenue will cover the majority of our organic costs. And so we do think our balance sheet can help drive inorganic or acquisitions for us. So this will become a big focus of our capital allocation. However, that will be all opportunistic. I don't have anything to announce today.

Got it. And looking forward to it as well. So to wrap, we have covered a number of different products today, many of which are new. As we round out the rest of 2025 and going into 2026, right, we talk about payments, tokenization and derivatives, which of these opportunities has you the most excited about? Which one do you think could become a more material contributor to the business the soonest?

We don't pick our favorite children at Coinbase. So it goes back to the 3 priorities I outlined at the beginning. First, growing our trade business. This means spot derivatives and the long-term vision of becoming the everything exchange in the U.S. and globally. Second, our full stack payments product offering as we think payments is quickly emerging as the next big use case in crypto, and we're thrilled to be at the forefront in driving innovation here.

And lastly, just continuing to cement Coinbase as the trusted partner. From our ETF position to Crypto-as-a-Service and the recent strategic partnership announcements, we believe that we can leverage our platform and help grow overall crypto adoption and become cemented as a key infrastructure provider. So our plate is quite full.

I think it's important to note that we've always been a company that prioritizes product innovation. We make venture bets. We push forward. Not all of these products will succeed, and we are okay to make bets and try things and then quickly make decisions to shut them down if we don't see growth. So we are investing in a broad portfolio to continue to grow the diversity of our revenues, the stability of our revenues as we move away from speculative trading as one of the primary use cases in crypto. And we're really excited to watch these products grow over time, even if it will take a few quarters to have the full potential of them in our P&L.

Got it. I think we are about time. Again, thank you, Alesia, for your time. Always good to see you, by the way. It's just always good to see you. And thank you all for joining us today as well.

Thanks for having me.

Thank you. All right. Have a good day. Bye-bye.