Good afternoon, everyone. I’m grateful for your participation today. My name is Pete Christiansen, and I am part of Citi’s equity research team, specializing in various sectors, including fintech and cryptocurrency. It’s a pleasure to have you all here. I am especially excited to welcome Alesia Haas, the Chief Financial Officer of Coinbase, who will be discussing the latest developments within the company. Before we dive into the conversation, Coinbase has requested that I read a brief safe harbor statement.

During today’s discussion, Coinbase may make forward-looking statements, which are inherently subject to risks and uncertainties. Actual results may differ materially from those stated or implied by these forward-looking statements. Detailed information on risks, uncertainties, and other factors that may affect these results can be found in Coinbase’s SEC filings. Additionally, today’s discussion will include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are available in the shareholder letter on the company’s Investor Relations website. Non-GAAP financial measures should complement, not replace, GAAP measures.

Thank you for your patience with that. Now, I’d like to start by understanding your role, Alesia, as I believe it is uniquely challenging compared to other CFO positions. Managing a business like Coinbase, which operates within the highly volatile crypto market, requires balancing numerous responsibilities—from seizing unique opportunities and navigating regulatory landscapes to meeting the transparency demands of shareholders and stakeholders. It must be fascinating yet demanding. Could you provide us with a glimpse into a day in your life and explain how Coinbase approaches its financial planning process?

Alesia Haas

Absolutely, Pete. It is indeed a dynamic and thrilling role. Emilie, our President and CRO, and I often discuss how working at Coinbase requires constant context switching. You might start the day focused on one task but quickly pivot to address several new challenges. For instance, we could begin with discussions about our expansion into Canada, then shift to our derivatives strategy, followed by policy efforts or user experience enhancements. The pace and variety make it incredibly stimulating.

I spend a significant portion of my time collaborating with my executive team and finance leadership to navigate new information and convert challenges into opportunities. This involves identifying key talent for execution, improving operational efficiency, mitigating risks, and understanding financial impacts—whether it’s absorbing new costs or framing revenue opportunities.

On a granular level, my daily routine involves analyzing our data and metrics since Coinbase is highly data-driven. I dedicate time each week for deep dives with the executive team to address various business issues, roadmap reviews with my team, global governance activities for our regulated subsidiaries worldwide, and interactions with regulators and bank partners. A substantial part of my time is also spent evaluating product opportunities and ensuring that our internal use of crypto products meets our clients’ needs.

We recently celebrated our internal “crypto on-chain summer,” where finance was notably recognized for its engagement with on-chain activities. This internal usage helps us refine our products before they reach our clients.

Pete Christiansen

That sounds remarkably intricate and rewarding. I imagine you must have an extensive array of playbooks and scenarios to navigate this complex environment.

Alesia Haas

Indeed, Pete. When it comes to financial forecasting, we face unique challenges due to the inherent volatility of the crypto market. My previous experience at a hedge fund prepared me well for this role. We start by setting big-picture objectives at both the executive and Board levels. For example, we’ve committed to being adjusted EBITDA positive in all market conditions.

We then engage in extensive scenario planning to project potential revenue outcomes under various macro drivers and black swan events, focusing primarily on downside risks. This helps us prudently manage risk scenarios while striving to maintain positive adjusted EBITDA.

Quarterly updates ensure our scenarios and goals are current, feeding into the outlook we share with investors. While the crypto market has been relatively calm over the past year, we are always prepared to update our forecasts more frequently if significant events occur.

Pete Christiansen

Given the current political climate and regulatory landscape, how do legal and public policy expenditures factor into your financial planning? And what are your thoughts on future fixed cost expansions for Coinbase?

Alesia Haas

Legal and policy expenditures are indeed significant for us right now due to unique election-year dynamics and the potential for regulatory clarity in the U.S. While we have a baseline investment in these areas that will persist across market conditions, we are currently seeing elevated spending driven by these factors.

Globally, as opportunities arise in countries like India or Argentina, we may see similar spikes in spending to drive regulatory clarity that supports product expansion. This spend is always mission-driven and goal-oriented.

Reflecting on lessons from past cycles, when we went public in 2021 after experiencing several crypto winters, we regretted not investing ahead during downturns. In 2021-2022, we chose to invest through cycles but pivoted in 2023 based on market feedback to be more cost-conscious while still maintaining positive adjusted EBITDA.

Our focus now is on executing effectively while growing thoughtfully. We’ve learned that rapid growth can slow us down due to onboarding new managers and employees. We value scrappiness and efficiency and aim to scale cautiously while aligning dollars with solid revenue-generating opportunities.

Pete Christiansen

It’s fascinating how dynamic this industry is. What can you tell us about the bipartisan support for crypto regulation in the U.S., especially given recent advocacy efforts?

Alesia Haas

Crypto enjoys broad bipartisan support because it resonates across diverse demographics—urban and rural, young and old. Advocacy efforts like StandWithCrypto have highlighted this cross-section of America. Politicians recognize that being pro-crypto can attract votes from this engaged community.

We’ve seen positive impacts from our political contributions and advocacy efforts through Fair Shake Action PAC and StandWithCrypto. These efforts have been influential in primaries and continue to grow in importance as we approach elections.

Despite some efforts to politicize crypto, we remain committed to working with any administration that seeks to bring regulatory clarity to this innovative sector.

Pete Christiansen

Considering upcoming elections, what impact do you foresee from a potential Harris administration on the crypto industry?

Alesia Haas

We’re cautiously optimistic about a Harris administration based on her openness to crypto donations and interest in driving crypto legislation. Regardless of who wins, our goal is clear regulatory policy that supports innovation and consumer protection in the U.S.

Pete Christiansen

Shifting gears to products and services—Base has shown impressive success as an Ethereum Layer 2 solution designed to improve user experience by lowering fees and enhancing scalability. Can you share some insights into its progress and impact?

Alesia Haas

Certainly. Base was developed to bring down transaction costs significantly while enhancing speed. Our goal was to enable micro-use payments by reducing costs to around $0.01 per transaction. Over the last six months, we’ve achieved meaningful cost reductions and seen a 300% increase in transaction volume as a result.

Base serves as a developer platform where new applications can be built on Ethereum’s robust network. We’re focusing on integrating user-friendly interfaces to support these developments further.

Pete Christiansen

What applications or use cases on Base are showing the most promise?

Alesia Haas

We see three main categories gaining traction: stablecoins like USDC for global transactions; social applications like Forecaster for decentralized social networking; and corporate integrations like loyalty programs using crypto tokens.

Each category has unique potential to transform existing systems by leveraging blockchain’s efficiency and transparency.

Pete Christiansen

Turning to derivatives—how should shareholders view Coinbase’s potential as a global derivatives service provider?

Alesia Haas

Derivatives account for about 75% of global crypto trading volume, presenting a significant opportunity for us. We are approaching this market through compliant channels, securing licenses such as the CFTC in the U.S. and MiFID in Europe.

Our focus is on offering robust products that meet global liquidity providers’ needs while leveraging our reputation for trust and transparency.

Pete Christiansen

Lastly, can you touch upon the role of tokenization of real-world assets and how Coinbase plans to capture this opportunity?

Alesia Haas

Tokenization offers efficiency through faster settlement times and lower costs. While regulatory clarity is essential before fully diving into security tokens or other asset classes, we see immense potential in offering these alongside our existing products once regulations are defined.

Our expertise in custodying diverse protocols positions us well for this future growth area.

Pete Christiansen

Thank you so much for your insights today, Alesia. It’s been an enlightening discussion. As we look forward to future developments at Coinbase, what excites you most about the next few quarters?

Alesia Haas

I’m excited about continuing our focus on driving revenue, utility, and regulatory clarity while exploring intersections between crypto and AI technologies. Our long-term goal remains embedding crypto into everyday transactions and bringing 1 billion people on-chain.

Pete Christiansen

Thank you again for joining us today, Alesia. It’s been a pleasure discussing these exciting topics with you.

Alesia Haas

Thank you, Pete. It’s been great sharing our journey with you all today.