Coinbase Global Inc at Goldman Sachs U.S. Financial Services Conference Summary

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

Question: Will Nance - Goldman Sachs - Analyst : <_ALACRA_META_ABSTRACT>Alesia, thank you for being here. Obviously, it's an exciting time. Maybe I thought we'd with a start big picture today. There's been a lot of moving pieces in the digital assets industry recently. How are you thinking about 2025 from a strategic perspective and are there anything that might change in terms of priorities next year relative to 2024?

Question: Will Nance - Goldman Sachs - Analyst : So I guess it's difficult -- and I want to come back to the product roadmap a little bit in a second, but maybe we'll just stick on some of the recent events in the market. It's difficult to ignore the strength in the crypto markets recently following the election. It would be great to hear maybe if you could compare and contrast this recent bull market that we've been into some of the prior cycles that the company has seen.

Question: Will Nance - Goldman Sachs - Analyst : And just to clarify on the comments on the outlook there being at the high end, so I guess you have guidance on subscription services revenue, high end of that, you don't guide to trading, high end of sales and marketing. Any other commentary on the expenses and maybe we'll get into the reaction function on investment spending a little bit later but --

Question: Will Nance - Goldman Sachs - Analyst : And we'll come back to the investment spending, but just before we move on, I wanted to touch on the regulatory backdrop a little bit more. You could probably spend the entire session on this. We'll try to compact it to three minutes. But if we start broadly, how do you see the regulatory environment evolving from here and how do you think this will shape the growth of the ecosystem particularly in the US?

Question: Will Nance - Goldman Sachs - Analyst : Maybe on the institutional business specifically, I know the institutional community is one area where the regulatory uncertainty has been kind of tougher to get your arms around than maybe in the retail space. Do you see that changing and do you think that could bring another influx of capital on the institutional side with regulatory clarity?

Question: Will Nance - Goldman Sachs - Analyst : So maybe we can talk about the product roadmap and how that might change under the new administration. I imagine that there's some activities that have actually been actively curtailed over the last four years and then maybe there's other products that you've held off on releasing because of the regulatory backdrop. I was wondering if you can maybe speak to each of these and talk about what we could see coming out of Coinbase over the next couple of years.

Question: Will Nance - Goldman Sachs - Analyst : That'd be great. Do you think we could see a tokenized coin-based stock in the future?

Question: Will Nance - Goldman Sachs - Analyst : Great. You mentioned stablecoins briefly. The new administration has newly recommitted to supporting the US dollars reserve currency status internationally. I'm wondering if you can talk about the role that crypto plays in that conversation and the intersection between stablecoins, crypto and monetary policy.

Question: Will Nance - Goldman Sachs - Analyst : I also wanted to hit on ventures. I think one of the things that Coinbase has been vocal about for the past few years is how the regulatory environment has stifled innovation for the start-up community. I think as Brian has said numerous times, it's hard to graduate college, create a start-up and then immediately get sued by the SEC and have to explain to your family. Could you talk about Coinbase's venture portfolio and maybe the outlook for potentially leaning in more on the venture side under a new administration?

Question: Will Nance - Goldman Sachs - Analyst : I mean I always think about USDC as being the best example of that. It's like such a differentiated partnership. It'd be difficult for anyone else to replicate it and it kind of stems from your place in the ecosystem. On the competitive front, I think the company has been fairly consistent over the years. Having a welcoming stance towards more competition, more new entrants in the space. How do you think the regulatory environment will influence competition and the potential for more people getting into this space?

Question: Will Nance - Goldman Sachs - Analyst : I mean I want to spend a little time on that because the -- I get the question a lot and we're starting to hear some of those 2021 questions about crypto is here, how do we think about this company doing what Coinbase is doing? Something that analogously does what you do in the fiat markets. So maybe you can talk about maybe we have the necessary but not quite sufficient conditions for incumbents to enter this space. Talk about the technical hurdles and implementing kind of crypto native technology. How much different is a crypto exchange from an equities exchange for instance?

Question: Will Nance - Goldman Sachs - Analyst : It's a great example. You mentioned ETFs. I think as of the third quarter, the company served as custodian for I think 17 of the 20 crypto ETFs. That includes an additional nine Ethereum ETFs. So it'd be great to hear the role that you expect ETFs to play going forward and we also heard some announcements around the planned XRP ETF. We'll probably see more I would gather. So it'd be great to hear on the role that you expect this to play in the maturation of the ecosystem.

Question: Will Nance - Goldman Sachs - Analyst : This may feel a bit like Groundhog's Day, but I'm going to ask the fee rate question.

Question: Will Nance - Goldman Sachs - Analyst : So it's a longer term one, but also a bit of a tactical one. I think in the third quarter, the consumer fee rate was about 142 basis points. I think the implied take rate from earnings in October was roughly flat and that was before the significant increase in volumes that we saw in the aftermath of the election. So I was wondering if there's anything you can share about the mix of volumes and how that's evolved as we've seen volume scale more recently and then just maybe how you think about fee rates longer term?

Question: Will Nance - Goldman Sachs - Analyst : From the competitive conversation we just had, it seems like we're still far -- a bit a bit away as off from the commoditization part. Just a quick follow up on that, I think on the most recent call, you called out the impact of some changes on stablecoin pricing pairs and that impact in the retail fee rate. Could you expand a bit on some of the dynamics there? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 11, 2024 / 4:20AM, COIN.OQ - Coinbase Global Inc at Goldman Sachs U.S. Financial Services Conference

Question: Will Nance - Goldman Sachs - Analyst : You continue to call out some of the international opportunities which I think included traction with both Coinbase One and USDC Rewards. Maybe you could talk a little bit about what you're seeing internationally and the broader opportunity beyond the US borders.

Question: Will Nance - Goldman Sachs - Analyst : I wanted to touch on derivatives a little bit. Over the past few years, the company is focused on standing up both the US and international-based derivatives platform. I think most recently, the company added margin futures for Doge and SHIB and a number of additional assets becoming the first US Exchange to expand beyond Ethereum and Bitcoin. So how are you thinking about the longer-term opportunities that derivatives present and how do you see that evolving as part of the business?

Question: Will Nance - Goldman Sachs - Analyst : So we're at a point where USDC balances are now nearing about $40 billion. I believe most investors are aware of the close relationship that Coinbase has with Circle. Maybe you could just touch on some of the puts and takes and how you think about the interest income line over the next year.

Question: Will Nance - Goldman Sachs - Analyst : I wanted to hit on investment spending. In an environment where daily volumes are averaging roughly 2x what they were for most of this year, how do you expect that to impact the pace of investment spending? You touched on the sales and marketing point earlier.

Question: Will Nance - Goldman Sachs - Analyst : And I guess that brings us to capital allocation. The business has been very cash generative since you guys have made that pivot to consistent profitability through the cycle. How are you thinking about the kind of build versus buy versus more capital return weighing that against the $1 billion share repurchase you recently received Board approval for?

Question: Will Nance - Goldman Sachs - Analyst : Just in the last minute here, I think one thing Coinbase has done really well in the past is taking advantage of the funding environment during bull markets. With the business being so much more consistently cash generative through the cycle, has anything changed about the thought process around defensive capital raises relative to 2021 when I think Coinbase raised a couple of converts and debt offerings?

Question: Will Nance - Goldman Sachs - Analyst : Very good. Well, I think that takes us some time, but Alesia, thank you so much for joining us today.