Now it's time to build a system that works for us.

Make me digital. Let me soar.

And for the first time, you can invest in Bitcoin ETFs. The energy around crypto, the number of institutions that wanted to gain access to this space has helped us get to today.

Why crypto is community, community, community. This is really here to stay. It's already happening amongst institutions. I'm watching history be made. Bitcoin is up to $100,000. No matter who wins in the presidential election, it's become very clear. Crypto wins regardless. It's going to be the next version of the stock market, but it's also the next version of the internet. And so that's why it's so important for us to have launched Coin50.

There is a way to update the system, and we're showing you exactly how to do it.

Conference attendees, please welcome to the stage FIA President and CEO, Walt Lucan.

All right, all right. Hopefully people enjoyed the first couple days of Boca, and we have a great final day, really the crescendo of the entire Boca 50 anniversary. Thank you to Coinbase, our sponsor today. Obviously, crypto's hot, Coinbase is hot, and the branded hot sauce is hot. So the DeFi, Diablo hat, we appreciate you doing that as well. But synonymous with crypto, So Coinbase is the largest cryptocurrency exchange in the United States where everybody can use, buy, sell, store, and trade digital currencies. And today we have Coinbase Vice President for Institutional Product, Greg Tussar, to introduce our keynote speakers. So invite Greg to the stage.

Good morning, everyone. I love that video. It really captures the excitement and the moment in crypto. As Walt said, I'm Greg Tussar, I'm responsible for the institutional business at Coinbase. space, and it's been a really, really eventful few years in the space with everything from regulatory battles to the moments like the launch of ETFs and the rise of stable coins and a whole host of things that bring us to this moment where, you know, for the first time we have legislation passing through Congress that gives us our much sought for regulatory clarity in a really exciting time ahead. We've talked about 24-7 new things that are possible in a regulatory environment that supports innovation. And, you know, I think in many ways this could be one of the most sort of consequential years in the world of digital assets in the coming, you know, 12 or 24 months. And so we thank you very much for joining us for our first Coinbase keynote breakfast. And we're grateful to have two guests this morning who are going to help us do a tour of the horizon of all of these things, what's ahead in the coming year. Owen Lau, who is Executive Director and Senior Analyst at Oppenheimer, and our own Alicia Haas, Chief Financial Officer and seasoned voice in the world of crypto. And please join me in welcoming Owen and Alicia to the stage. Thank you.

All right. All right. Thank you very much. So before we get started, I would like to, I have a safe harbor statement to read for Coinbase. So I would like to remind you that during today's chat, Alicia may make forward-looking statements. Actual results may vary materially from today's statements due to risk, uncertainties, and other factors that are described in the SEC filings. Our discussion today may include references to non-GAAP financial measures and the reconciliation of non-GAAP financial measures is available in the company's latest shareholder letter. So first of all, thank you very much Alicia. Thank you for having this, doing this fireside check with us. Maybe let's start off with a more interesting question, which is the crypto summit in Washington last week. So we saw that there are lots of development in the White House, in the new administration. We had the first ever White House Crypto Summit last Friday. To kick things off, could you please give us a better sense for the conversation around crypto in the White House these days?

Absolutely. So first, thank you for having me. Thank you for coming to this morning. I could not be more shocked, quite candidly, because the speed of change, the commitment to crypto that is coming out of this administration is the best blessing that we could have hoped for for our industry. There was the first White House summit last week. It was joined by the president, by key members of his cabinet, by Brian Armstrong, our CEO, and by other industry leaders. And they had a robust discussion. And the tone was positive. The tone was on innovation. the tone was on growth we are on offense we are on offense as a country and we are on offense as a company so coming out we got a strategic bitcoin reserve this will not be a cost to taxpayers there's a commitment to never sell bitcoin this bitcoin will come from confiscated bitcoin that the u.s government has obtained through various enforcement actions we also got and this is a commitment to stop choke point 2.0 which was debanking of crypto companies and many banks had not been able to work in crypto and the president made a commitment to remove reputational risk as a condition or a precondition to not bank crypto so we now think we'll be able to partner more deeply with banks and drive these on and off ramps and third and I think probably the most important is the president said that he would like to see both the stablecoin bill and a market structure bill by the August recess. This means that we could get legislation this year. So incredibly productive, incredible energy.

So let's dive a little bit on the legislation part. So what is the outlook for this year, for these two bills?

All right, we are anticipating two bills. First is the stablecoin bill and the stablecoin bill we expect to go to the Senate Banking Committee as early as tomorrow, Thursday. What this will provide is clarity on reserves, clarity on disclosures, clarity on who can issue a stablecoin and we believe this is the condition precedent for payments. We can talk about the innovation that we think comes from this legislation in a little bit. The second bill then that we anticipate going for president signature later this year is a market structure bill. And the market structure bill will do a few important things. It will ensure that we have a taxonomy for crypto assets. It'll give clarity as to what is overseen by the SEC, by the CFTC, what is a stablecoin, which will be a payment instrument, and then maybe what is something else, maybe a collectible, maybe NFTs, maybe it'll be new types of assets that we'll define. But we'll create asset taxonomy, which has long been a challenge in crypto. The next thing that this will do is it will give spot authority to the CFTC for crypto commodity trading. This has been a gap that there isn't been a regulator for spot commodity trading in crypto. This will enable consumer protection, enable a regulatory regime that we think will drive more interest in this space, i.e. will help institutions and corporates put more capital into crypto because there'll be a clear regulatory framework. So these are the two bills that we think are of critical importance that will be passed hopefully this year. This is one of the forward-looking statements that I can't control. I think it's important to note, but we have just been impressed with the speed and the commitment of the entire administration.

There's a good possibility for this year.

Let's hope for that. It'll be a win if we get these bills this year.

So you get the tailwind from White House. You get the tailwind from the Congress so far. How about with the regulators, which is the third pillar? Recently, you just got a huge win against the SEC. Could you please talk about your conversation with the SEC and also the CFTC?

It's equally been a 180. Both the CFTC and the SEC could not be more interested now in working with industry and driving forward new rules within each of their areas and driving innovation in America. We are excited that they are moving with speed. I cannot tell you we think we want to move with speed they're moving even faster than we are so I'll start with the SEC and the SEC has a crypto task force we actually had an opportunity to meet with the crypto task force last week the agenda is public on the SEC's website and we went to speak to them about two topics one around security tokens and market structure around security tokens how do you security tokens and register with the SEC what is that path to registration that concept that we've talked about now for many years that there wasn't actually a path we now think that we can build a path to registration and we also talked about staking with the ETFs how can we enable the ETFs to offer staking and how can they participate in securing those underlying protocols so healthy conversation and again we are just impressed with the knowledge the expertise at the SEC they understand these issues deeply and last thing I would comment is the open transparency that they want to bring the invitation to come discuss what we experienced for the last four years was requests for information coinbase please send us xyz we would send thank you no reciprocal dialogue we are now having reciprocal dialogue we are brainstorming we are talking about what we need in order to bring forth this innovation and i couldn't be more excited switching now to the cftc um greg chusar who you just met had an opportunity to meet with acting commissioner fam last week in a roundtable setting. And similarly, the CFTC is also looking to drive innovation in their space. Things that we talked about, things that Coinbase broadly talked about, I was not there. We're bringing 24-7 trading to crypto futures. And we've announced, I think as Greg has shared with you earlier, that we are going to bring forth both a Bitcoin and Ethereum 24-7 product. This is completely within the CFTC's control to do this and so we can work with them on bringing forth that product. We also discussed can we hold stable coins as collateral. This would enable much more efficient markets because would be would match the 24-7 nature of spot crypto within a 24-7 nature of the derivative and then a stable coin which can move 24-7 and is not limited by banking hours. So this would drive just speed efficiency and enable better risk management for folks who are participating in trading in crypto derivatives. The last and the thing that we think is the most important here is the opportunity to bring forth perpetual futures to U.S. retail customers. And this is a product that generates the majority of international trading. It is a very deep and liquid market outside the U.S., but not in the U.S. And so those are the three topics. But again, constructive dialogue, open for engagement. The other area that that we need to get, we need legislation from Congress to get the CFTC to have spot authority, but on the derivative side, there's deep innovation at this point in time.

Got it, so we cover lots of landscape in the U.S. How about international, right? Crypto, it's a global phenomenon, it's international. Could you please talk about the evolution of the regulation or regulatory framework outside the U.S.?

It's been a lot less dramatic. international markets have put forth regulation we have Mika in the EU we have vast licenses which are virtual assets service provider licenses in a number of international markets so we just announced yesterday we obtained a new license in India which will enable us to start building products for the Indian market earlier this year we announced that we had obtained a vast license in Argentina so these markets it's much more orderly they put forth a license requirement we marched through the process to get our license so we can compliantly offer products in those markets and we're pleased that we are now going to continue our international expansion with our proven playbook so we have the first step of obtaining these new licenses in new markets and we'll continue to roll out products and services and build banking partnerships build the product and localize so we are seeing international growth we also are pursuing our Mika license in Europe this will be the first comprehensive of legislation that we have adopted globally and feel that that's progressing really well. Stablecoin has already gone in effect under MECA and we're just pleased that USDC is already MECA compliant and is the largest MECA compliant stablecoin in Europe.

So India, Europe, Argentina, those are key markets.

Key growth markets for us in 2025.

Got it. So we talked a lot about the regulations already. I know you are more excited about product development but Before that, I got a lot of questions from investors about competition, right? Given that we may have or we are having more regulatory clarity, I think the consensus here is more and more players, even transfer companies will come to this space. How do you think about that? And like, how do you think about a competitive landscape to evolve over time?

Welcome. Come join us. I cannot wait for there to be hundreds of companies and hundreds of investors and more people in this space. This is the next technology generation. We are going from off-chain to online to on-chain, and we want everyone to come participate in this new technology and asset class. So welcome. We believe this is TAM expansion. We believe this will unlock new products and services, new use cases that we haven't thought of before. This is not cannibalization. We saw when we launched Bitcoin and Ethereum ETFs earlier this year, those ETFs just drove more spot trading volume. It was everybody wins, more money, more dollars coming into this asset class. And we believe with this regulatory clarity, with these innovations, we're just going to bring more assets on chain. We're going to create more opportunities. So we are thrilled.

Not worried about that.

So come on in.

Welcome. And then another interesting kind of conversation I had with investors about what other innovation you can have for these technology. When you look at your product roadmap, your business strategy, what are the implications when you have more clear roots?

I think in particular, what products or opportunities do you think you can move into more aggressively? all right i was going to cover three topics this is not a limited list i think that this will grow over time but the three areas that i think we'll see more innovation this year first talk about derivatives we talked a little bit about recent meetings with the cftc we think that we can bring non-us products to u.s customers and that will just bring more level playing fields around the globe quite candidly and bring more customers into crypto so trading in derivatives. Two, with innovation on legislation with the SEC, we think we'll be able to tokenize securities. We think we'll be able to bring forward security trading on chain in 2025. This would be amazing. And then third, with stablecoin legislation, we think this will drive payments. And so I think just clarity on well-defining a stablecoin, well-defining what the underlying reserves, the accounting and tax considerations, this will enable corporates to use stablecoins for payments. One of the challenges today is stablecoins still are an intangible asset. I think getting it to be a cash and cash equivalent becomes much more ubiquitous. It's just another dollar on a new technology. So those are the three areas of innovation I think that we'll see more closely unlocked as we go through the year.

So the first one, let's dive into derivatives. Let's talk more about that. And I think crypto derivatives account for the majority of the digital asset trading globally, but not much happened or happening in the U.S. How is Coinbase looking to capture more of these volume and opportunities?

So, of total crypto trading, about 75% of trading is in derivatives. Of that 75%, less than 5% is in the United States. So this is really a non-US phenomenon and non-US volume that we see with the things I talked about previously 24-7 products perpetual futures in the US collateral in the USDC or other stable coins that meet stable coin definitions in the future we think these things will unlock US trading this is our deep market we are a US company we are looking to expand internationally we're absolutely growing our international share but we think this will really unlock growth for our customers both our retail institutions the other thing I would comment on is this regulatory clarity I do believe that customers

would like to work with a more trusted regulated platform currently the market works with many players around the world with not clear regulations and not clear protections for investors and so I think that our brand being a trusted brand being a compliant brand will be able to attract many customers to our platform when we can meet the same products that they would like to trade in other platforms got it um maybe my final question is the on-chain future right um i think you talk about the uh how to make these online transactions to on-chain maybe the uh the on-chain is the new online that kind of movement um how do you think about what's next for these blockchain technology I mean right now we have to dream big and think about the use cases and and stuff like that I guess the question is how do you you know like think about the future of this technology absolutely so we're building new rails these protocols are new rails and previously we've seen a lot of innovation at the user interface level but now we're innovating from the rail on up and so the first thing and the important things that we've done over the last few years, is work on capacity.

So transactions would be moving very slow on Ethereum. Like Bitcoin and Ethereum proved you can send peer-to-peer payments, but they were slow. When you got a lot of transaction volume, it became expensive, it became slow. And so we had to build layer twos. With base now, we've been able to scale it so it's under a penny, under a second. This is important kind of progress. It's like going from dial-up to broadband, right? We used to dial up with modems and it was slow and clunky. that you could get online, but it wasn't a great user experience. Very similar analogies to getting on chain. So scale and kind of the base products, can they move with the same speed? Can they move with lower cost than alternative rails? So now that we have foundations, we need to get more assets on chain. So opening up use cases, opening up customers, more assets on chain, whether these are security tokens, whether these are T-bills on chain, whether these are different assets that people want to transact with, So getting on-chain, growing on-chain will bring more assets. One of the stats that Brian likes to talk about is the percent of GDP that's executing or transacting on crypto rails, and it's about a half a percent today. We have an ambitious goal to 100x that to 50%. So we want to move more and more transactions on-chain, so stablecoins can be a big part Securities on-chain can be a big part of this, so getting more assets on-chain. the next pillar of growth to get on chain then is we need to make developing on chain easy to do so for engineers who are getting into this space how do we give them developer tools and we have a whole series of tools that we're building like base like agent toolkit as an example like our developer platform to just make it easy for these engineers to build amazing applications on chain and third and this is within our own product suite we just need to make crypto easier to use and every year that goes by i believe we are getting there but i was the most vocal kind of like huh two or three years ago when we had our first kind of defy summer on chain summer on base and we had to have like employee sessions to teach everybody okay buy your ethereum bridge it to base okay now you've got your ethereum on base now let's go buy an NFT? Okay, here's how to do it. Hand-holding. Too hard. I couldn't explain it to my mom. Too hard. And we need to create magical journeys for customers. We need to create one-click experiences. We need to push the technology below the surface, much like we push the internet below the surface, where you just kind of click on the Wi-Fi and it just pops on and it works. We need crypto to be the same way. It needs to just work. And so this is something that we're really investing in within in our own product suite to make it easy to use. A good example of this, this year, we announced that you can take loans on Morpho. And so you take your Bitcoin that's in your Coinbase wallet on our product, on our main app, and with very few clicks, you can say, I would like to lend that out and get, or sorry, enable, use that as my collateral to borrow USDC. So that becomes collateral, you got USDC, it's seamless. There's a lot going on under the hood to provide that experience, to move on-chain to off-chain to find this lender, but these are the experiences that we want to make easier to use. And I actually believe that getting legislation makes crypto easier to use because that builds trust. And I think easy to use and trust have long been the Coinbase brand values. We believe we've earned that trust with our customers by securely storing their crypto now for over a decade. Bringing regulation in these markets will give people more confidence that there's trust that there's overseers of each of these platforms and how to interact and those tenants more assets more developers easy to use this is what we will bring people on chain we welcome you all to get on chain please talk to any of us we would love to help you and we see many corporates new customers doing pilots on chain and looking about how crypto will work for their business do they have remittances do they have the need to own bitcoin on their balance sheet and put in a hedge lots of conversations going on we're really excited for everyone very excited about the technology yes all right i think we should

give a round of applause to coinbase cfo alicia thank you very much thank you very much thanks a