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INVESTMENTS AND FAIR VALUE MEASUREMENT

3 Months Ended

Mar. 31, 2024

NOTE 5: INVESTMENTS AND FAIR VALUE MEASUREMENT

Investments

Available-for-sale

As of December 31, 2023 and March 31, 2024, we had $500 million of available-for-sale time deposits classified as cash equivalents on the unaudited condensed consolidated balance sheets. These investments had a maturity of three months or less at the time of purchase, and an aggregate market value equal to amortized cost. Refer to Fair Value of Financial Instruments below for further details.

Held-to-maturity

The following tables summarize our held-to-maturity investments:


	December 31, 2023
(in millions)	Amortized Cost		Allowance for Credit Losses		Unrealized Gains		Unrealized Losses		Fair Value
Debt securities:
Corporate debt securities	$	205	$	—	$	—	$	(1)	$	204
U.S. Treasury securities	202		—		—		—		202
U.S. government agency securities	42		—		—		—		42
Certificates of deposit	34		—		—		—		34
Commercial paper	3		—		—		—		3
Total held-to-maturity investments	$	486	$	—	$	—	$	(1)	$	485


	March 31, 2024
(in millions)	Amortized Cost		Allowance for Credit Losses		Unrealized Gains		Unrealized Losses		Fair Value
Debt securities:
U.S. Treasury securities	$	338	$	—	$	—	$	—	$	338
Corporate debt securities	158		—		—		(1)		157
U.S. government agency securities	9		—		—		—		9
Total held-to-maturity investments	$	505	$	—	$	—	$	(1)	$	504

There were no sales of held-to-maturity investments during the three months ended March 31, 2024.

The table below presents the amortized cost and fair value of held-to-maturity investments by contractual maturity; the maximum maturity is two years:


	December 31, 2023
(in millions)	Within 1 Year		1 to 2 Years		Total
Amortized cost
Debt securities:
Corporate debt securities	$	153	$	52	$	205
U.S. Treasury securities	184		18		202
U.S. government agency securities	39		3		42
Certificates of deposit	34		—		34
Commercial paper	3		—		3
Total held-to-maturity investments	$	413	$	73	$	486

Fair value
Debt securities:
Corporate debt securities	$	152	$	52	$	204
U.S. Treasury securities	184		18		202
U.S. government agency securities	39		3		42
Certificates of deposit	34		—		34
Commercial paper	3		—		3
Total held-to-maturity investments	$	412	$	73	$	485


	March 31, 2024
(in millions)	Within 1 Year		1 to 2 Years		Total
Amortized cost
Debt securities:
U.S. Treasury securities	$	330	$	8	$	338
Corporate debt securities	158		—		158
U.S. government agency securities	7		2		9
Total held-to-maturity investments	$	495	$	10	$	505

Fair value
Debt securities:
U.S. Treasury securities	$	330	$	8	$	338
Corporate debt securities	157		—		157
U.S. government agency securities	7		2		9
Total held-to-maturity investments	$	494	$	10	$	504

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows:


	December 31, 2023
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	$	—	$	500	$	—	$	500
Money market funds	146		—		—		146
Deposits with clearing organizations:
U.S. Treasury securities	50		—		—		50
Other current assets:
Stablecoin	20		—		—		20
Equity securities - securities owned	10		—		—		10
Other non-current assets:
Money market funds - escrow account	2		—		—		2
Asset related to user cryptocurrencies safeguarding obligation	—		14,708		—		14,708
User-held fractional shares	1,592		—		—		1,592
Total financial assets	$	1,820	$	15,208	$	—	$	17,028

Liabilities
Accounts payable and accrued expenses:
User cryptocurrencies safeguarding obligation	$	—	$	14,708	$	—	$	14,708
Fractional shares repurchase obligations	1,592		—		—		1,592
Total financial liabilities	$	1,592	$	14,708	$	—	$	16,300


	March 31, 2024
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Time deposits	$	—	$	500	$	—	$	500
Money market funds	99		—		—		99
U.S. Treasury securities	13		—		—		13
Cash, cash equivalents, and securities segregated under federal and other regulations:
U.S. Treasury securities	792		—		—		792
Deposits with clearing organizations:
U.S. Treasury securities(1)	150		—		—		150
Other current assets:
Stablecoin	101		—		—		101
Equity securities - securities owned	11		—		—		11
Other non-current assets:
Money market funds - escrow account	2		—		—		2
Asset related to user cryptocurrencies safeguarding obligation	—		26,223		—		26,223
User-held fractional shares	1,975		—		—		1,975
Total financial assets	$	3,143	$	26,723	$	—	$	29,866

Liabilities
User cryptocurrencies safeguarding obligation	$	—	$	26,223	$	—	$	26,223
Fractional shares repurchase obligations	1,975		—		—		1,975
Total financial liabilities	$	1,975	$	26,223	$	—	$	28,198

____________________________

(1) As of March 31, 2024, $150 million of our U.S. Treasury securities were pledged to a clearing organization to meet margin requirements for our security lending program.

The fair value for certain financial instruments that are not required to be measured or reported at fair value was presented on our unaudited condensed consolidated balance sheets as follows:


	December 31, 2023
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Held-to-maturity investments:
Corporate debt securities	$	—	$	204	$	—	$	204
U.S. Treasury securities	202		—		—		202
U.S. government agency securities	—		42		—		42
Certificates of deposit	—		34		—		34
Commercial paper	—		3		—		3
Total held-to-maturity investments	$	202	$	283	$	—	$	485


	March 31, 2024
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Held-to-maturity investments:
U.S. Treasury securities	$	338	$	—	$	—	$	338
Corporate debt securities	—		157		—		157
U.S. government agency securities	—		9		—		9
Total held-to-maturity investments	$	338	$	166	$	—	$	504

The fair values used for held-to-maturity investments are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems. Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided.

During the three months ended March 31, 2024, we did not have any transfers in or out of Level 3 assets or liabilities.

Safeguarded user cryptocurrencies

Safeguarded user cryptocurrencies were as follows:


	December 31,		March 31,
(in millions)	2023		2024
Bitcoin (BTC)	$	6,149	$	10,309
Dogecoin (DOGE)	3,319		7,365
Ethereum (ETH)	3,761		5,629
Other	1,479		2,920
Total user cryptocurrencies safeguarding obligation and corresponding asset	$	14,708	$	26,223

The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of December 31, 2023 and March 31, 2024.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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