Coinbase Global Inc.

The negative outlook reflects uncertainties about the duration of the crypto market "winter" in the aftermath of FTX collapse, and Coinbase's ability to operate efficiently by managing operating expenses prudently. It also reflects the potential for further market share deterioration amid competitive challenges and heightened regulatory risk. We could lower the ratings by at least one notch over the next 12 months if: Sustained weak earnings and cash burn lead to weaker financial metrics than we anticipated; The company's market share deteriorates materially compared with peers; or Increased regulation and oversight prove disruptive for the company's business model. We could revise the outlook to stable if we see signs of a sustained improvement in trading volumes on Coinbase's platform without

...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. Competitive risks have increased for Coinbase. Coinbase's global trading volume market share has declined this year, given the shift in trading volumes away from the U.S. (because of an uncertain regulatory landscape) where Coinbase is more concentrated, as well as a decline in engagement from its U.S. retail customer base, where the company has a leading market position. We believe recent pricing actions by competitors (reduction in Bitcoin trading fees to zero worldwide by Binance) could increase the risk of fee compression in its retail channel (which generated 75% of the company's total revenues in the first nine months of 2022). We believe that because of market share erosion and a higher risk of margin compression, cyclical variations (peak-to-trough changes in revenue, EBITDA, and EBITDA...

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