Coinbase Global Inc.

The stable outlook reflects our expectation that, over the next 12 months, Coinbase will operate with net debt to EBITDA of less than 1.5x while maintaining strong liquidity. The stable outlook also indicates our expectation that Coinbase will continue to grow its nontransaction revenue and maintain its reputation as a leading custodian of crypto assets. We could lower our ratings on Coinbase over the next year if net debt to EBITDA increases above 1.5x because of a large cash or debt financed acquisition, or if an unexpected operational risk event significantly damages the franchise. We could also lower the rating if increased regulation and oversight prove disruptive for its business model, or if credit risk grows much faster than we

...Coinbase Global Inc. is one of the largest crypto exchanges in the U.S. and in the world. Coinbase ranks in the top five crypto exchanges globally and is the largest in the U.S. by traded volume. Coinbase is heavily reliant on retail transaction revenue, exacerbating earnings volatility. Retail transaction revenue represented 88% of total net revenue in the first nine months of 2021. Further, retail engagement can fluctuate significantly depending on crypto asset prices and volatility, resulting in significant volatility in earnings. Although not imminent, we believe the company could face margin compression in its retail channel as the industry matures and players (including centralized and decentralized cryptocurrency exchanges, financial technology, and brokerage firms) compete for market share. Significant liquidity provides ample financial flexibility. We view favorably the company's financial policy to maintain strong liquidity to navigate the business through crypto market price...

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