UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from     to     .

Commission file number 001-04321

Coinbase Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-4707224
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Not Applicable(1)	Not Applicable(1)
(Address of Principal Executive Offices)	(Zip Code)

Not Applicable(1)

Registrant's telephone number, including area code

Not Applicable

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.00001 par value per share	COIN	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No   ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒   No   ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

As of May 3, 2022, the number of shares of the registrant's Class A common stock outstanding was 173,706,582 and the number of shares of the registrant's Class B common stock outstanding was 48,310,152.

(1) We are a remote-first company. Accordingly, we do not maintain a headquarters. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, and Securities Exchange Act of 1934, as amended, stockholder communications required to be sent to our principal executive offices may be directed to the email address set forth in our proxy materials and/or identified on our investor relations website.

TABLE OF CONTENTS

	Page
Part I - Financial Information
Item 1. Financial Statements	5
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Operations	6
Condensed Consolidated Statements of Comprehensive (Loss) Income	7
Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity	8
Condensed Consolidated Statements of Cash Flows	9
Notes to Condensed Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3. Quantitative and Qualitative Disclosures About Market Risk	58
Item 4. Controls and Procedures	60
Part II - Other Information
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	132
Item 3. Defaults Upon Senior Securities	133
Item 4. Mine Safety Disclosures	133
Item 5. Other Information	133
Item 6. Exhibits	134
Signatures	135

1

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our future financial performance, including our expectations regarding our net revenue, operating expenses, and our ability to achieve and maintain future profitability;

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

•anticipated trends, growth rates, and challenges in our business, the cryptoeconomy, and in the markets in which we operate;

•market acceptance of our products and services, including our recently launched NFT marketplace;

•beliefs and objectives for future operations;

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

•our ability to develop new products and services and grow our business in response to changing technologies, customer demand, and competitive pressures;

•our expectations concerning relationships with third parties;

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

•our ability to continue to expand internationally;

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

•future acquisitions of or investments in complementary companies, products, services, or technologies and our ability to successfully integrate such companies or assets;

•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

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

•trends in revenue, cost of revenue, and gross margin;

•trends in operating expenses, including Technology and development expenses, Sales and marketing expenses, and General and administrative expenses, and expectations regarding these expenses as a percentage of revenue;

•our key business metrics used to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions;

•increased expenses associated with being a public company; and

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

2

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on any forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in such forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, restructurings, joint ventures, partnerships, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Risk Factors Summary

Consistent with the foregoing, our business is subject to a number of risks and uncertainties, including those risks discussed at length below. These risks include, among others, the following, which we consider our most material risks:

•our operating results have and will significantly fluctuate due to the highly volatile nature of crypto;

•our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected;

•a majority of our net revenue is from transactions in Bitcoin and Ethereum. If demand for either of these crypto assets declines and is not replaced by new demand for other supported crypto assets, our business, operating results, and financial condition could be adversely affected;

•the future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected;

3

•cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition;

•we are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition;

•we operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively;

•we compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against them;

•as we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to inquiries, investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering;

•we are and may continue to be subject to material litigation, including individual and class action lawsuits, as well as inquiries, investigations and enforcement actions by regulators and governmental authorities;

•if we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition;

•a particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition;

•we currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers;

•loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition;

•any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely impact our brand and reputation and our business, operating results, and financial condition;

•our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results, and financial condition; and

•the theft, loss or destruction of private keys required to access any crypto assets held in custody for our own account or for our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Coinbase Global, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value data)

(unaudited)

	March 31,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	6,116,388	$	7,123,478
Restricted cash	27,111		30,951
Customer custodial funds	10,023,385		10,526,233
USDC	179,885		100,096
Accounts and loans receivable, net of allowance	346,048		396,025
Income tax receivable	56,767		61,231
Prepaid expenses and other current assets	191,068		135,849
Total current assets	16,940,652		18,373,863
Crypto assets held	1,333,333		988,193
Lease right-of-use assets	91,431		98,385
Property and equipment, net	65,861		59,230
Goodwill	1,080,176		625,758
Intangible assets, net	219,128		176,689
Other non-current assets	1,164,613		952,307
Total assets	$	20,895,194	$	21,274,425
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Custodial funds due to customers	$	9,742,961	$	10,480,612
Accounts payable	12,650		39,833
Accrued expenses and other current liabilities	647,960		439,559
Crypto asset borrowings	485,564		426,665
Lease liabilities, current	32,688		32,366
Total current liabilities	10,921,823		11,419,035
Lease liabilities, non-current	66,425		74,078
Long-term debt	3,386,865		3,384,795
Other non-current liabilities	23,988		14,828
Total liabilities	14,399,101		14,892,736
Commitments and contingencies (Note 16)
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021; 173,015 and 168,807 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2		2
Class B common stock, $0.00001 par value; 500,000 shares authorized at March 31, 2022 and December 31, 2021; 48,310 and 48,310 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	2,579,216		2,034,658
Accumulated other comprehensive loss	(3,890)		(3,395)
Retained earnings	3,920,765		4,350,424
Total stockholders’ equity	6,496,093		6,381,689
Total liabilities, convertible preferred stock and stockholders’ equity	$	20,895,194	$	21,274,425

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Coinbase Global, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Revenue:
Net revenue	$	1,164,891	$	1,596,981
Other revenue	1,545		204,131
Total revenue	1,166,436		1,801,112
Operating expenses:
Transaction expense	277,826		234,066
Technology and development	570,664		184,225
Sales and marketing	200,204		117,990
General and administrative	413,578		121,231
Other operating expense, net	258,627		155,887
Total operating expenses	1,720,899		813,399
Operating (loss) income	(554,463)		987,713
Interest expense	22,138		—
Other expense (income), net	32,844		(8,953)
(Loss) income before income taxes	(609,445)		996,666
(Benefit from) provision for income taxes	(179,786)		225,203
Net (loss) income	$	(429,659)	$	771,463
Net (loss) income attributable to common stockholders:
Basic	$	(429,659)	$	301,896
Diluted	$	(429,659)	$	387,719
Net (loss) income per share attributable to common stockholders:
Basic	$	(1.98)	$	3.80
Diluted	$	(1.98)	$	3.05
Weighted-average shares of common stock used to compute net (loss) income per share attributable to common stockholders:
Basic	217,472		79,373
Diluted	217,472		126,996

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Coinbase Global, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Net (loss) income	$	(429,659)	$	771,463
Other comprehensive loss:
Translation adjustment, net of tax	(495)		(4,138)
Comprehensive (loss) income	$	(430,154)	$	767,325

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity

(In thousands)

(unaudited)

	Convertible Preferred Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
				Common Stock
	Shares	Amount		Shares	Amount								Total
Balance at January 1, 2022	—	$	—	217,117	$	2	$	2,034,658	$	(3,395)	$	4,350,424	$	6,381,689
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		1,125	—		18,496		—		—		18,496
Stock-based compensation expense	—	—		—	—		353,538		—		—		353,538
Issuance of equity instruments as consideration for business combinations	—	—		1,663	—		314,356		—		—		314,356
Issuance of common stock upon settlement of Restricted Stock Units (“RSUs”) and restricted common stock, net of shares withheld	—	—		1,420	—		(141,832)		—		—		(141,832)
Comprehensive loss	—	—		—	—		—		(495)		—		(495)
Net loss	—	—		—	—		—		—		(429,659)		(429,659)
Balance at March 31, 2022	—	$	—	221,325	$	2	$	2,579,216	$	(3,890)	$	3,920,765	$	6,496,093
Balance at January 1, 2021	112,878	$	562,467	73,108	$	—	$	231,024	$	6,256	$	726,304	$	963,584
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		7,910	—		39,580		—		—		39,580
Stock-based compensation expense	—	—		—	—		105,376		—		—		105,376
Issuance of equity instruments as consideration in business combination	—	—		3,584	—		417,680		—		—		417,680
Conversion of preferred stock	(471)	(10,430)		471	—		10,430		—		—		10,430
Issuance of shares from exercise of warrants	—	—		412	—		433		—		—		433
Issuance of common stock upon settlement of RSUs	—	—		181	—		—		—		—		—
Comprehensive loss	—	—		—	—		—		(4,138)		—		(4,138)
Net income	—	—		—	—		—		—		771,463		771,463
Balance at March 31, 2021	112,407	$	552,037	85,666	$	—	$	804,523	$	2,118	$	1,497,767	$	2,304,408

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

Coinbase Global, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net (loss) income	$	(429,659)	$	771,463
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Depreciation and amortization	31,580		10,922
Impairment expense	229,129		841
Stock-based compensation expense	352,141		104,628
Provision for transaction losses and doubtful accounts	(4,134)		2,503
Loss on disposal of property and equipment	—		11
Deferred income taxes	(183,183)		36
Unrealized loss (gain) on foreign exchange	7,389		(2,869)
Non-cash lease expense	7,748		9,050
Realized gain on crypto assets	(21,241)		(32,769)
Crypto assets received as revenue	(179,743)		(180,109)
Crypto asset payments for expenses	167,954		154,989
Fair value loss (gain) on derivatives	3,452		(2,800)
Amortization of debt discount and issuance costs	2,097		—
Gain on investments	(607)		(9,257)
Changes in operating assets and liabilities:
USDC	(97,965)		(64,064)
Accounts and loans receivable	45,145		(11,976)
Income taxes, net	3,862		238,486
Other current and non-current assets	(49,083)		(34,587)
Custodial funds due to customers	(738,758)		2,355,138
Accounts payable	(28,398)		614
Lease liabilities	(2,816)		(8,568)
Other current and non-current liabilities	54,976		110,083
Net cash (used in) provided by operating activities	(830,114)		3,411,765
Cash flows from investing activities
Purchase of property and equipment	(1,199)		(18)
Proceeds from sale of property and equipment	—		48
Capitalized internal-use software development costs	(9,082)		(4,388)
Business combination, net of cash acquired	(186,150)		(16,525)
Purchase of investments	(25,771)		(9,203)
Proceeds from settlement of investments	766		—
Purchase of crypto assets held	(871,152)		(553,012)
Disposal of crypto assets held	400,858		545,188
Loans originated	(100,625)		—
Proceeds from repayment of loans	100,764		—
Net cash used in investing activities	(691,591)		(37,910)

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

Coinbase Global, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Cash flows from financing activities
Issuance of common stock upon exercise of stock options, net of repurchases	16,891		59,387
Taxes paid related to net share settlement of equity awards	(141,832)		—
Proceeds received under the Employee Stock Purchase Plan	8,975		—
Issuance of shares from exercise of warrants	—		433
Proceeds from short-term borrowings	149,400		—
Repayment of short-term borrowings	(20,000)		—
Net cash provided by financing activities	13,434		59,820
Net (decrease) increase in cash, cash equivalents, and restricted cash	(1,508,271)		3,433,675
Effect of exchange rates on cash	(5,507)		16,231
Cash, cash equivalents, and restricted cash, beginning of period	17,680,662		4,856,029
Cash, cash equivalents, and restricted cash, end of period	$	16,166,884	$	8,305,935
Cash, cash equivalents, and restricted cash consisted of the following:
Cash and cash equivalents	$	6,116,388	$	1,983,318
Restricted cash	27,111		30,841
Customer custodial funds	10,023,385		6,291,776
Total cash, cash equivalents, and restricted cash	$	16,166,884	$	8,305,935
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	190	$	—
Cash paid during the period for income taxes	$	1,980	$	—
Operating cash outflows for amounts included in the measurement of operating lease liabilities	$	3,771	$	7,490
Supplemental schedule of non-cash investing and financing activities
Unsettled purchases of property and equipment	$	234	$	—
Right-of-use assets obtained in exchange for operating lease obligations	$	1,050	$	13,072
Non-cash consideration paid for business combinations	$	324,925	$	—
Purchase of crypto assets and investments with non-cash consideration	$	12,875	$	885
Crypto assets borrowed	$	249,764	$	9,158
Crypto assets borrowed repaid with crypto assets	$	317,039	$	16,437

The accompanying notes are an integral part of these condensed consolidated financial statements.

10

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.    NATURE OF OPERATIONS

Coinbase, Inc. was founded in 2012. In April 2014, in connection with a corporate reorganization, Coinbase, Inc. became a wholly-owned subsidiary of Coinbase Global, Inc. (together with its consolidated subsidiaries, the “Company”).

The Company operates globally and is a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. The Company offers retail users the primary financial account for the cryptoeconomy, institutions a state of the art marketplace with a deep pool of liquidity for transacting in crypto assets, and ecosystem partners technology and services that enable them to build crypto-based applications and securely accept crypto assets as payment.

The Company is a remote-first company. Accordingly, the Company does not maintain a headquarters.

On April 14, 2021, the Company completed the direct listing of its Class A common stock on the Nasdaq Global Select Market (the “Direct Listing”).

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The accompanying condensed consolidated financial statements of the Company are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), on the same basis as the audited consolidated financial statements, and in management’s opinion, reflect all adjustments, consisting only of normal, recurring adjustments, that are necessary for the fair statement of the Company’s condensed consolidated balance sheet as of March 31, 2022, condensed consolidated results of operations for the three months ended March 31, 2022 and March 31, 2021, and condensed consolidated statements of cash flows for the three months ended March 31, 2022 and March 31, 2021. The unaudited condensed consolidated results of operations for the three months ended March 31, 2022 and March 31, 2021 are not necessarily indicative of the results to be expected for the full year or any other period.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022 (the “Annual Report”).

These condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company’s subsidiaries are entities in which the Company holds, directly or indirectly, more than 50% of the voting rights or where it exercises control. Certain subsidiaries of the Company have a basis of presentation different from GAAP. For the purposes of these unaudited condensed consolidated financial statements, the basis of presentation of such subsidiaries is converted to GAAP. All intercompany accounts and transactions have been eliminated in consolidation.

There were no changes to the significant accounting policies or recent accounting pronouncements that were disclosed in Note 2. Summary of Significant Accounting Policies to the audited consolidated financial statements included in the Annual Report, other than as discussed below.

Reclassifications

Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported condensed consolidated net income.

11

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Use of estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.

Significant estimates and assumptions include the determination of the recognition, measurement, and valuation of current and deferred income taxes; the fair value of stock-based awards issued; the useful lives of long-lived assets; the impairment of long-lived assets; the Company’s incremental borrowing rate; the fair value of assets acquired and liabilities assumed in business combinations, including contingent consideration arrangements; the fair value of derivatives and related hedges; the fair value of long-term debt; assessing the likelihood of adverse outcomes from claims and disputes; and loss provisions.

Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties. To the extent that there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities.

Concentration of credit risk

The Company’s Cash and cash equivalents, Restricted cash, Customer custodial funds, and Accounts and loans receivable are potentially subject to concentration of credit risk. Cash and cash equivalents, Restricted cash, and Customer custodial funds are placed with financial institutions which are of high credit quality. The Company invests Cash and cash equivalents, and Customer custodial accounts primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $250,000. The Company also holds cash at crypto trading venues and performs a regular assessment of these crypto trading venues as part of its risk management process.

The Company held $179.9 million and $100.1 million of USD Coin (“USDC”) as of March 31, 2022 and December 31, 2021, respectively. The issuer has stated that underlying U.S. dollar denominated assets are held on behalf of USDC holders in U.S. regulated financial institutions.

As of March 31, 2022 and December 31, 2021, the Company had no customers who accounted for more than 10% of the Company’s Accounts and loans receivable. As of March 31, 2022 and December 31, 2021, the Company had no payment processors or bank partners representing more than 10% of Accounts and loans receivable.

During the three months ended March 31, 2022 and March 31, 2021, no customer accounted for more than 10% of total revenue.

Derivative contracts

Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. Derivative contracts are recognized as either assets or liabilities in the condensed consolidated balance sheets at fair value, with changes in fair value recognized in Other operating expense, net.

12

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company enters into arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of crypto assets in the future. These are hybrid instruments, consisting of a debt host contract that is initially measured at the fair value of the underlying crypto assets and is subsequently carried at amortized cost, and an embedded forward feature based on the changes in the fair value of the underlying crypto asset. The embedded forward is bifurcated from the host contract, and is subsequently measured at fair value.

Derivatives designated as hedges

The Company applies hedge accounting to certain derivatives executed for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. The Company uses fair value hedges primarily to hedge the fair value exposure of crypto asset prices. For qualifying fair value hedges, the changes in the fair value of the derivative and the fair value of the hedged item, the crypto assets, are recognized in current-period earnings in Other operating expense, net in the condensed consolidated statements of operations. Derivative amounts affecting earnings are recognized in the same line item as the earnings effect of the hedged item.

Recent accounting pronouncements

Recently adopted accounting pronouncements

On October 28, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends Accounting Standards Codification 805 (“ASC 805”) to require acquiring entities to apply Topic 606 - Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities in a business combination. The Company early adopted the standard on January 1, 2022. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting pronouncements pending adoption

On March 31, 2022, the SEC issued Staff Accounting Bulletin No. 121 (“SAB 121”). SAB 121 sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets, and recognize an associated asset for the crypto assets held for users. Both the liability and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its platform users, with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance in SAB 121 is effective for interim or annual periods ending after June 15, 2022, with retrospective application as of the beginning of the fiscal year to which the interim or annual period relates. As of March 31, 2022, the Company had approximately $246 billion of customer crypto assets. The Company is currently evaluating the impact of adopting the guidance. The amount reported upon adoption may be materially different than the amount as of March 31, 2022 due to fluctuations in crypto asset market prices and the notional amount of customer crypto assets held on the Company’s platform.

13

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3.    ACQUISITIONS

2022 Acquisitions

Unbound Security, Inc.

On January 4, 2022, the Company completed the acquisition of Unbound Security, Inc. (“Unbound”) by acquiring all issued and outstanding shares of capital stock and stock options of Unbound. Unbound is a pioneer in a number of cryptographic security technologies, which the Company believes will play a key role in the Company’s product and security roadmap.

In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination under the acquisition method. The purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date with the excess recorded as goodwill, none of which is expected to be deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, synergies, and the use of purchased technology to develop future products and technologies. The final allocation of purchase consideration to assets and liabilities remains in process as the Company continues to evaluate certain balances, estimates, and assumptions during the measurement period (up to one year from the acquisition date). Any changes in the fair value of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

The total consideration transferred in the acquisition was $258.0 million, consisting of the following (in thousands):

Cash	$	151,424
Cash payable	126
Class A common stock of the Company	103,977
RSUs for shares of the Company’s Class A common stock	2,457
Total purchase consideration	$	257,984

Included in the purchase consideration are $21.7 million in cash and 85,324 shares of the Company’s Class A common stock that are subject to an indemnity holdback. These cash amounts and shares will be released 18 months after the closing date of the transaction.

14

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The results of operations and the fair values of the assets acquired and liabilities assumed have been included in the condensed consolidated financial statements from the date of acquisition. The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

Cash and cash equivalents	$	10,560
Restricted cash	573
Accounts and loans receivable, net of allowance	4,981
Prepaid expenses and other current assets	4,182
Lease right-of-use assets	1,059
Property and equipment, net	1,248
Goodwill	222,732
Intangible assets	28,500
Other non-current assets	3,476
Total assets	277,311
Accounts payable	719
Accrued expenses and other current liabilities	11,325
Lease liabilities	1,059
Other non-current liabilities	6,224
Total liabilities	19,327
Net assets acquired	$	257,984

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years data):

	Fair Value		Useful Life at Acquisition (in years)
Developed technology	$	15,700	1 - 5
In-process research and development ("IPR&D")	2,500		N/A
Customer relationships	10,300		2

The intangible assets will be amortized on a straight-line basis over their respective useful lives to Technology and development expenses for developed technology and General and administrative expenses for customer relationships. Amortization of the IPR&D will be recognized in Technology and development expenses once the research and development is placed into service as internally developed software. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to development costs and profit, costs to recreate customer relationships, market participation profit, and opportunity cost.

Total acquisition costs of $3.0 million were incurred in relation to the acquisition, which were recognized as an expense and included in General and administrative expenses in the condensed consolidated statements of operations.

The impact of this acquisition was not considered significant to the Company’s condensed consolidated financial statements for the current period presented and pro forma financial information has not been provided.

15

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

FairXchange, Inc.

On February 1, 2022, the Company completed the acquisition of FairXchange, Inc. (“FairX”) by acquiring all issued and outstanding shares of capital stock, stock options and warrants of FairX. FairX is a derivatives exchange which is registered with the U.S. Commodity Futures Trading Commission as a designated contract market (“DCM”) and the Company believes it will be a key stepping stone on the Company’s path to offer crypto derivatives to retail and institutional customers in the United States.

In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination under the acquisition method. The purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date with the excess recorded as goodwill, none of which is expected to be deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, market presence, synergies, and the use of purchased technology to develop future products and technologies. The final allocation of purchase consideration to assets and liabilities remains in process as the Company continues to evaluate certain balances, estimates, and assumptions during the measurement period (up to one year from the acquisition date). Any changes in the fair value of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

The total consideration transferred in the acquisition was $275.1 million, consisting of the following (in thousands):

Cash	$	56,726
Cash payable	10,442
Class A common stock of the Company - issued	174,229
Class A common stock of the Company - to be issued	33,693
Total purchase consideration	$	275,090

The aggregate purchase consideration includes 170,397 shares of the Company’s Class A common stock to be issued after the respective acquisition date. The fair value of these shares on the acquisition date is included in Additional paid-in capital. Additionally, included in the purchase consideration are $4.7 million in cash and 83,035 shares of the Company’s Class A common stock that are subject to an indemnity holdback. These cash amounts and shares will be released 15 months after the closing date of the transaction.

16

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The results of operations and the fair values of the assets acquired and liabilities assumed have been included in the condensed consolidated financial statements from the date of acquisition. The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):

Cash and cash equivalents	$	10,867
Accounts and loans receivable, net of allowance	411
Prepaid expenses and other current assets	20
Intangible assets	41,000
Goodwill	231,685
Other non-current assets	8,295
Total assets	292,278
Accounts payable	472
Accrued expenses and other current liabilities	5,796
Other non-current liabilities	10,920
Total liabilities	17,188
Net assets acquired	$	275,090

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years data):

	Fair Value		Useful Life at Acquisition (in years)
DCM License	$	26,900	Indefinite
Developed technology	10,700		5
Trading relationships	3,400		3

The developed technology and trading relationships will be amortized on a straight-line basis over their respective useful lives to Technology and development expenses for developed technology and General and administrative for trading relationships. The DCM license has an indefinite useful life and will not be amortized. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to forecasted revenues and expenses, development costs and profit, costs to recreate trading relationships, market participation profit, and opportunity cost.

Total acquisition costs of $1.1 million were incurred related to the acquisition, which were recognized as an expense and included in General and administrative expenses in the condensed consolidated statements of operations.

The impact of this acquisition was not considered significant to the Company’s condensed consolidated financial statements for the current period presented and pro forma financial information has not been provided.

17

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2021 Acquisitions

Bison Trails

On February 8, 2021, the Company completed the acquisition of Bison Trails Co. (“Bison Trails”) by acquiring all issued and outstanding common stock and stock options of Bison Trails. Bison Trails is a platform-as-a-service company that provides a suite of easy-to-use blockchain infrastructure products and services on multiple networks to custodians, exchanges and funds.

Prior to the acquisition, the Company held a minority ownership stake in Bison Trails, which was accounted for as a cost method investment. In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination achieved in stages under the acquisition method. Accordingly, the cost method investment was remeasured to fair value as of the acquisition date. The Company considered multiple factors in determining the fair value of the previously held cost method investment, including the price negotiated with the selling shareholders and current trading multiples for comparable companies. Based on this analysis, the Company recognized an $8.8 million gain on remeasurement, which was recorded in Other expense (income), net in the condensed consolidated statement of operations on the acquisition date.

The purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date with the excess recorded as goodwill, none of which is expected to be deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, market presence, synergies, and the use of purchased technology to develop future products and technologies.

The total consideration transferred in the acquisition was $457.3 million, consisting of the following (in thousands):

Common stock of the Company	$	389,314
Previously held interest on acquisition date	10,863
Cash	28,726
Replacement of Bison Trails options	28,365
Total purchase consideration	$	457,268

Included in the purchase consideration are 496,434 shares of the Company’s Class A common stock that are subject to an indemnity holdback. These shares will be released 18 months after the closing date of the transaction.

18

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The results of operations and the fair values of the assets acquired and liabilities assumed have been included in the condensed consolidated financial statements as of the date of acquisition. The following table summarizes the estimated fair values of assets acquired and liabilities assumed using a cost-based approach (in thousands):

Cash and cash equivalents	$	12,201
Crypto assets held	5,177
Accounts and loans receivable, net of allowance	2,323
Prepaid expenses and other current assets	122
Intangible assets	39,100
Goodwill	404,167
Other non-current assets	1,221
Lease right-of-use assets	808
Total assets	465,119
Accounts payable	526
Accrued expenses and other current liabilities	1,920
Lease liabilities	808
Other non-current liabilities	4,597
Total liabilities	7,851
Net assets acquired	$	457,268

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years data):

	Fair Value		Useful Life at Acquisition (in years)
Developed technology	$	36,000	3
IPR&D	1,200		N/A
User base	1,900		3

The intangible assets will be amortized on a straight-line basis over their respective useful lives to Technology and development expenses for developed technology and General and administrative expenses for user base. Amortization of the IPR&D will be recognized in Technology and development expenses once the research and development is placed into service as internally developed software. Management applied significant judgement in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to development costs and profit, costs to recreate customer relationships, market participation profit, and opportunity cost.

Total acquisition costs of $3.7 million were incurred related to the acquisition, which were recognized as an expense and included in General and administrative expenses in the condensed consolidated statements of operations.

The impact of this acquisition was not considered significant to the Company’s condensed consolidated financial statements and pro forma financial information has not been provided.

19

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

4.    REVENUE

Revenue recognition

The Company determines revenue recognition from contracts with customers through the following steps:

•identification of the contract, or contracts, with the customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of the revenue when, or as, the Company satisfies a performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company primarily generates revenue through transaction fees charged on the platform.

The following table presents revenue of the Company disaggregated by revenue source (in thousands):

	Three Months Ended March 31,
	2022		2021
Net revenue
Transaction revenue
Retail, net	$	965,841	$	1,455,171
Institutional, net	47,195		85,409
Total transaction revenue	1,013,036		1,540,580
Subscription and services revenue
Blockchain rewards	81,895		9,251
Custodial fee revenue	31,694		23,451
Earn campaign revenue	5,906		11,111
Interest income	10,454		3,320
Other subscription and services revenue	21,906		9,268
Total subscription and services revenue	151,855		56,401
Total net revenue	1,164,891		1,596,981
Other revenue
Crypto asset sales revenue	569		203,799
Corporate interest and other income	976		332
Total other revenue	1,545		204,131
Total revenue	$	1,166,436	$	1,801,112

20

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Transaction revenue

Retail transaction revenue represents transaction fees earned from customers that are primarily individuals, while institutional transaction revenue represents transaction fees earned from institutional customers, such as hedge funds, family offices, principal trading firms, and financial institutions on the institutional platform. Institutional clients can trade via the Company’s trading platform or utilize Coinbase Prime services depending on their needs. High-frequency trading firms, such as market makers and principal traders, benefit from lower latency by connecting through the trading platform, while corporations and family offices can access an integrated suite of investment services through Coinbase Prime.

The Company’s service is comprised of a single performance obligation to provide a crypto asset matching service when customers buy, sell, or convert crypto assets on the platform. That is, the Company is an agent in transactions between customers and presents revenue for the fees earned on a net basis.

Judgment is required in determining whether the Company is the principal or the agent in transactions between customers. The Company evaluates the presentation of revenue on a gross or net basis based on whether it controls the crypto asset provided before it is transferred to the customer (gross) or whether it acts as an agent by arranging for other customers on the platform to provide the crypto asset to the customer (net). The Company does not control the crypto asset being provided before it is transferred to the buyer, does not have inventory risk related to the crypto asset, and is not responsible for the fulfillment of the crypto asset. The Company also does not set the price for the crypto asset as the price is a market rate established by users of the platform. As a result, the Company acts as an agent in facilitating the ability for a customer to purchase crypto assets from another customer.

The Company considers its performance obligation satisfied, and recognizes revenue, at the point in time the transaction is processed. Contracts with customers are usually open-ended and can be terminated by either party without a termination penalty. Therefore, contracts are defined at the transaction level and do not extend beyond the service already provided.

The Company charges a fee at the transaction level. The transaction price, represented by the trading fee, is calculated based on volume and varies depending on payment type and the value of the transaction. Crypto asset purchase or sale transactions executed by a customer on the Company’s platform is based on tiered pricing that is driven primarily by transaction volume processed for a specific historical period. The Company has concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume. The transaction fee is collected from the customer at the time the transaction is executed. In certain instances, the transaction fee can be collected in crypto assets, with revenue measured based on the amount of crypto assets received and the fair value of the crypto assets at the time of the transaction.

The transaction price includes estimates for reductions in revenue from transaction fee reversals that may not be recovered from customers. Such reversals occur when the customer disputes a transaction processed on their credit card or their bank account for a variety of reasons and seeks to have the charge reversed after the Company has processed the transaction. These amounts are estimated based upon the most likely amount of consideration to which the Company will be entitled. All estimates are based on historical experience and the Company’s best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. All estimates of variable consideration are reassessed periodically. The total transaction price is allocated to the single performance obligation. While the Company recognizes transaction fee reversals as a reduction of net revenue, crypto asset losses related to those same transaction reversals are included in Transaction expense.

21

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Blockchain rewards

The Company generates revenues in crypto assets through various blockchain protocols. These blockchain protocols, or the participants that form the protocol networks, reward users for performing various activities on the blockchain, such as participating in proof-of-stake networks and other consensus algorithms. The Company considers itself the principal in transactions with the blockchain networks, and therefore presents such blockchain rewards earned on a gross basis. Blockchain rewards are primarily comprised of Staking revenue in which the Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network using the staking validators that it controls. In exchange for participating in the consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network. Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number of tokens received and the fair value of the token at contract inception. Blockchain services offered as part of Coinbase Cloud’s blockchain infrastructure solutions are included in Other subscription and services revenue.

Custodial fee revenue

The Company provides a dedicated secure cold storage solution to customers and earns a fee, which is based on a contractual percentage of the daily value of assets under custody. The fee is collected on a monthly basis. These contracts typically have one performance obligation which is provided and satisfied over the term of the contracts as customers simultaneously receive and consume the benefits of the services. The contract may be terminated by a customer at any time, without incurring a penalty. Customers are billed on the last day of the month during which services were provided, with the amounts being due within thirty days of receipt of the invoice. Accounts receivable from customers for Custodial fee revenue, net of allowance, were $15.8 million and $22.4 million as of March 31, 2022 and December 31, 2021, respectively. The allowance recognized against these fees was not material for any of the periods presented.

Earn campaign revenue

The Company provides a platform for crypto asset issuers, the customer, to engage with the Company’s retail users and teach them about new crypto assets through the use of educational tools, videos, and tutorials. In exchange for completing a task, such as watching the video or downloading an application, retail users may be eligible to receive crypto assets from the crypto asset issuer. The Company is the agent with respect to the delivery of the crypto assets. The Company earns a commission from the crypto asset issuer based on the amount of crypto assets that are distributed to users.

Interest income and corporate interest and other income

The Company holds customer custodial funds and cash and cash equivalents at certain third-party banks which earn interest. The Company also earns interest income under a revenue sharing arrangement and on loans granted to retail and institutional users. Interest income is calculated using the interest method and is not within the scope of Topic 606 – Revenue from Contracts with Customers. Interest earned on customer custodial funds, revenue sharing, and loans is included in Interest income within Subscription and services revenue. Interest earned on cash and cash equivalents is included in Corporate interest and other income, within Other revenue.

Other subscription and services revenue

Other subscription and services revenue primarily includes revenue from Coinbase Cloud, which includes staking application, delegation, and infrastructure services, as well as revenue from subscription licenses. Generally, these contracts with customers contain one performance obligation, may have variable and non-cash consideration, and are satisfied at a point in time or over the period that services are provided.

22

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other revenue

Other revenue includes the sale of crypto assets and Corporate interest and other income. Periodically, as an accommodation to customers, the Company may fulfill customer transactions using the Company’s own crypto assets held for operating purposes. The Company has custody and control of the crypto assets prior to the sale to the customer and records revenue at the point in time when the sale to the customer is processed. Accordingly, the Company records the total value of the sale in Other revenue and the cost of the crypto assets in Other operating expense, net within the condensed consolidated statements of operations. The cost of crypto assets used in fulfilling customer transactions was $0.4 million and $186.3 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

Related party transactions

Certain of the Company’s directors, executive officers, and principal owners, including immediate family members, are users of the Company’s platform. The Company recognized revenue with related parties of $5.0 million and $5.3 million for the three months ended March 31, 2022 and March 31, 2021, respectively. As of March 31, 2022 and December 31, 2021, amounts receivable from related parties was $3.3 million and $4.5 million, respectively. As of March 31, 2022, Custodial funds due to related party customers was $85.8 million. As of December 31, 2021, Custodial funds due to related party customers was immaterial.

Revenue by geographic location

In the table below are the revenues disaggregated by geography, based on domicile of the client or booking location, as applicable (in thousands):

	Three Months Ended March 31,
	2022		2021
United States	$	955,833	$	1,465,436
Rest of the World(1)	210,603		335,676
Total revenue	$	1,166,436	$	1,801,112

__________________

(1)No other individual country accounted for more than 10% of total revenue

5.    ACCOUNTS AND LOANS RECEIVABLE, NET OF ALLOWANCE

Accounts and loans receivable, net of allowance consisted of the following (in thousands):

	March 31,		December 31,
	2022		2021
In-transit customer receivables	$	63,510	$	102,720
Trade finance receivables	5,995		1,865
Custodial fee revenue receivable	18,039		23,727
Loans receivable(1)	218,322		218,461
Interest and other receivables(2)	60,599		73,803
Allowance for doubtful accounts(3)	(20,417)		(24,551)
Total accounts and loans receivable, net of allowance	$	346,048	$	396,025

__________________

(1)The fair value of collateral held as security exceeded the outstanding loans receivable as of March 31, 2022 and December 31, 2021, so no allowance was recorded.

(2)Includes Accounts receivables denominated in crypto assets of $27.1 million and $26.4 million as of March 31, 2022 and December 31, 2021, respectively. Includes Crypto asset futures of $2.4 million and $0 as of March 31, 2022 and December 31, 2021, respectively.

(3)Includes provision for transaction losses of $9.2 million and $16.8 million as of March 31, 2022 and December 31, 2021, respectively.

23

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Loans receivable

The Company grants loans to retail users and institutions. As of March 31, 2022 and December 31, 2021, the Company had granted loans with an outstanding balance of $218.3 million and $218.5 million, respectively. The related interest receivable on the loans as of March 31, 2022 and December 31, 2021, was $1.3 million and $1.3 million, respectively.

The amounts loaned are collateralized with the crypto assets held by the borrower in their crypto asset wallet on the Company’s platform. The Company does not have the right to use such collateral unless the borrower defaults on the loans. The Company’s credit exposure is significantly limited and no allowance was recorded against these loans receivable. Loans receivable are measured at amortized cost. The carrying value of the loans approximates their fair value. As of March 31, 2022 and December 31, 2021, there were no loans receivable past due.

6.    GOODWILL, INTANGIBLE ASSETS, NET AND CRYPTO ASSETS HELD

Goodwill

The following table reflects the changes in the carrying amount of goodwill (in thousands):

	Three Months Ended March 31, 2022		Year Ended December 31, 2021
Balance, beginning of period	$	625,758	$	77,212
Additions due to business combinations	454,418		548,546
Balance, end of period	$	1,080,176	$	625,758

There was no impairment recognized against goodwill at the beginning or end of the periods presented.

Intangible assets, net

Intangible assets, net consisted of the following (in thousands, except years data):

As of March 31, 2022	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Weighted Average Remaining Useful Life (in years)
Amortizing intangible assets
Acquired developed technology	$	127,308	$	(46,128)	$	81,180	2.66
User base	2,997		(1,302)		1,695		1.50
Customer relationships	89,791		(32,725)		57,066		3.18
Non-compete agreement	2,402		(1,281)		1,121		2.34
Assembled workforce	60,800		(17,416)		43,384		1.19
Trade Relationships	3,400		(189)		3,211		2.84
In-process research and development(1)	4,321		—		4,321		N/A
Indefinite-lived intangible assets
Domain name	250		—		250		N/A
Licenses	26,900		—		26,900		N/A
Total	$	318,169	$	(99,041)	$	219,128

__________________

(1)Amortization begins once the technology is placed in service. IPR&D is expected to have a useful life of three years.

24

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of December 31, 2021	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Weighted Average Remaining Useful Life (in years)
Amortizing intangible assets
Acquired developed technology	$	100,908	$	(34,865)	$	66,043	1.97
User base	2,997		(1,020)		1,977		1.75
Customer relationships	79,491		(27,789)		51,702		3.68
Non-compete agreement	2,402		(1,161)		1,241		2.58
Assembled workforce	60,800		(8,324)		52,476		1.43
In-process research and development(1)	3,000		—		3,000		N/A
Indefinite-lived intangible assets
Domain name	250		—		250		N/A
Total	$	249,848	$	(73,159)	$	176,689

__________________

(1)Amortization begins once the technology is placed in service. IPR&D is expected to have a useful life of three years.

Amortization expense of intangible assets was $25.9 million and $6.9 million for the three months ended March 31, 2022 and March 31, 2021 respectively. The Company estimates that there is no significant residual value related to its amortizing intangible assets. During the three months ended March 31, 2022, the Company recorded impairment charges of $1.2 million related to its intangible assets, excluding Crypto assets held. The Company did not have any impairment charges in the three months ended March 31, 2021. Impairment expense is included in Other operating expense, net in the condensed consolidated statements of operations.

The expected future amortization expense for intangible assets other than IPR&D as of March 31, 2022 is as follows (in thousands):

2022 (for the remainder of)	$	78,507
2023	69,814
2024