Coinbase Global Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Pete Christiansen - Citigroup - Analyst : All right. Thanks. I do want to start off with, I think, understanding your role because I think your role is incredibly unique from that of other CFOs, I think, anywhere. And to be honest, it's difficult for us to think of a more dynamic CFO role than that required of Coinbase. Balancing and managing the business to inherent volatility of the crypto market and it cycles, capitalizing on unique opportunities and navigating for this technology with regulators and policymakers, meeting transparency demands of shareholders and stakeholders like you have a lot of tasks and a lot of things that you need to juggle. I think it would be really interesting for investors to maybe get a sense of from a day in a life perspective, can you walk us through where you're spending most of your time these days? And maybe if you can talk about how Coinbase goes about its financial planning process.

Question: Pete Christiansen - Citigroup - Analyst : So, your R&D as well, sounds like.

Question: Pete Christiansen - Citigroup - Analyst : That's amazing. And I'd imagine you'd have an expensive encyclopedia of playbooks and scenarios and things that --

Question: Pete Christiansen - Citigroup - Analyst : Legal, public policy spend, how much is that -- you're through a unique time. So, I'm sure it's a big portion of your spending base right now. Let's say that goes away to some degree in the near future. Like what's the next phase of fixed cost expansion for Coinbase? Is it more people, more developers that kind of thing? And maybe I just want to add on to that, what were some of the lessons we learned from the last cycle? I know --

Question: Pete Christiansen - Citigroup - Analyst : Also like how Brian used to talk about -- there's a point where there's a lot of mercenaries in this industry now focusing on machinery and maybe it was something that was kind of required of a washout that needed to happen.

Question: Pete Christiansen - Citigroup - Analyst : Absolutely. But at the same token, now investors now know that you could put up a 60% margin in a particular quarter and generate so much free cash flow in a healthier cycle. So maybe we all learned something along the way. I do want to talk about the political environment a bit here to the extent that you can certainly look I know it's all of us. I've become an armchair attorney, a legal expert as well last year. But looking past the President. Actually, let's get that one. Let's talk about bipartisanship. Examples come to mind. Coinbase referral of SAB 121, passage FiT21, Americans prominent Democrats to the Harris campaign and such. Can you discuss the significance of these? And do you see any meaningful examples of coming biparsonship coming together to further crypto regulation in the United States.

Question: Pete Christiansen - Citigroup - Analyst : Well, if I think about like fair shake, stand with crypto, actually, I think it's the largest single-issue super-pack right now, which is pretty impressive. Maybe to point to some examples how politicians, particularly those who are going through their own election season, how are they perceiving the impact from those platforms? And do you think it is a difference maker? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, COIN.OQ - Coinbase Global Inc at Citi Global TMT Conference

Question: Pete Christiansen - Citigroup - Analyst : I hate to ask this question, but just would love to hear your view on how a potential Harris administration might fare for the industry. Anything that you've gleaned from -- I mean, I think the party hasn't rolled out all of their policy agenda yet. But any sense you're hearing.

Question: Pete Christiansen - Citigroup - Analyst : It's going to be a very interesting couple of weeks here. It will be fun. (inaudible)

Question: Pete Christiansen - Citigroup - Analyst : No, that was great. That was super helpful. I do want to talk about some products and services here. There's been a lot of focus on base and the success there has been really impressive. For those of you in the audience who are unfamiliar, Ethereum is the dominant Smart contract platform, substantial network effect and base is a Ethereum layer 2 designed to improve the UX for Ethereum users by substantially lowering fees and improving scalability. So, I think the initial goal with base was to bring more users on chain, to bolster the crypto ecosystem as a whole. Can you just talk about some of the successes there and what are some of the trends that you're seeing? A big part of that was lowering the costs here. So maybe if we can weave that in don't commodity product.

Question: Pete Christiansen - Citigroup - Analyst : Maybe you could talk about some of those breakthrough applications. I mean forecaster comes up often. What are some of the use cases and applications you think are going to get the most traction or do you see a chance of a killer app.

Question: Pete Christiansen - Citigroup - Analyst : That's exciting. There's so many more products to talk about. So hopefully, we can get to a lot of them.

Question: Pete Christiansen - Citigroup - Analyst : A lot of on chain kind of activities. But when you think about off chain applications, can Coinbase play a part in that movement. You hear about a travel management company that's trying to pass on sustainability credits to an end user through making sure the planes fueled with sustainable fuel, something like that. These are a lot of private of kind of off chain things.

Question: Pete Christiansen - Citigroup - Analyst : I think that's fair. Absolutely. Let's chat a little bit about derivatives. It's been a growing topic on calls. How should shareholders think about the opportunity there for Coinbase. Also challenges to scale this business and particularly bringing these transactions on chain. But how should we think about the opportunities and the challenges to scale Coinbase to being a global derivative service provider.

Question: Pete Christiansen - Citigroup - Analyst : Is there a natural reason as you get these licenses and build up these storefronts internationally? Is there something that attracts that user who's conducting their business on another platform to come to Coinbase? Is there a natural tie-in there or a differentiator per se.

Question: Pete Christiansen - Citigroup - Analyst : And I imagine balance sheet as well.

Question: Pete Christiansen - Citigroup - Analyst : That's interesting. I do want to talk about tokenization. And we've seen increasing activity there, certainly. But the tokenization of what they call real-world assets and I know you guys don't like that term, but if you could see your perspective on tokenization and what's the next leg of that? And how does Coinbase capture that opportunity?

Question: Pete Christiansen - Citigroup - Analyst : Right. So, is that your customer is using a tokenized product? Or Coinbase being an exchange mechanism for these products? Like what is Coinbase's hand in, let's say, we get to the point where this is regulated and.

Question: Pete Christiansen - Citigroup - Analyst : That's fair. Fair comment. Stable coins. Supply continues to grow globally, surely indicative of increasing awareness and the use cases that go along with that. Maybe you can walk through some of the differences that you're seeing in major stable coins today, client transparency, use case perspective, why is Coinbase use USDC.

Question: Pete Christiansen - Citigroup - Analyst : It surely is exciting. I mean, the use cases are very attractive, certainly an area that we're spending a lot of time looking at. We're running up on time here. So, I do want to thank you again for coming. It's just a fascinating conversation. But I do want to wrap up with just a general kind of -- obviously, we have a lot of politics going on in the next couple of weeks, but maybe you could discuss what are you most excited about maybe in the next two quarters, three quarters, maybe the next year to 1 year, 3 years, those two things. How do you think people -- investors' perceptions of Coinbase could change?

Question: Pete Christiansen - Citigroup - Analyst : That's, you're absolutely right. And the AI thing is something super interesting, not perhaps what AI can do for crypto, but what crypto or blockchain can do for AI is very, very interesting. Alesia, thank you so much. I wish we had more time. But thank you again for coming. Great discussion.