CUSTOMER ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

The following table presents customers’ cash and crypto positions (in thousands):


	June 30,		December 31,
	2023		2022
Customer custodial funds	$	3,848,078	$	5,041,119
Customer crypto assets	124,243,587		75,413,188
Total customer assets	$	128,091,665	$	80,454,307

Customer custodial cash liabilities	$	3,848,078	$	4,829,587
Customer crypto liabilities	124,243,587		75,413,188
Total customer liabilities	$	128,091,665	$	80,242,775

The Company safeguards crypto assets for customers in digital wallets and portions of cryptographic keys necessary to access crypto assets on the Company’s platform. The Company safeguards these assets and/or keys and is obligated to safeguard them from loss, theft, or other misuse. The Company records customer crypto assets as well as corresponding customer crypto liabilities, in accordance with recently adopted guidance, SAB 121. The Company maintains a record of all assets in digital wallets held on the Company’s platform as well as the full or a portion of private keys including backup keys, which are maintained on behalf of customers. For crypto assets where the Company does not maintain a private key or the ability to recover a customer’s private key or their crypto assets, these balances are not recorded, as there is no related safeguarding obligation in accordance with SAB 121. The Company records the assets and liabilities, on the initial recognition and at each reporting date, at the fair value of the crypto assets which it safeguards for its customers.

The Company has committed to securely store all crypto assets and cryptographic keys (or portions thereof) it holds on behalf of customers, and the value of these assets have been recorded as customer crypto liabilities and corresponding customer crypto assets. As such, the Company may be liable to its customers for losses arising from theft or loss of private keys. The Company has no reason to believe it will incur any expense associated with such potential liability because (i) it has no known or historical experience of claims to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of crypto assets on its platform, and (iii) it has established security around private key management to minimize the risk of theft or loss. The Company has adopted a number of measures to safeguard crypto assets it secures including, but not limited to, holding customer crypto assets on a 1:1 basis and strategically storing custodied assets offline using the Company’s cold storage process. The Company also does not reuse or rehypothecate customer crypto assets nor grant security interests in customer crypto assets, in each case unless required by law or expressly agreed to by the customer. Any loss or theft would impact the measurement of the customer crypto assets. During the six months ended June 30, 2023 and year ended December 31, 2022, no losses have been incurred in connection with customer crypto assets.

As of June 30, 2023 and December 31, 2022, customer crypto assets and customer crypto liabilities safeguarded for related parties were $5.2 billion and $3.5 billion, respectively. As of June 30, 2023 and December 31, 2022, customer custodial cash liabilities due to related party customers were $11.5 million and $14.2 million, respectively.

The following table sets forth the fair value of customer crypto assets, as shown on the condensed consolidated balance sheets, as customer crypto assets and customer crypto liabilities (in billions):


	June 30, 2023				December 31, 2022
	Fair Value		Percentage of Total(1)		Fair Value		Percentage of Total(1)
Bitcoin	$	60.7	48.9	%	$	32.5	43.1	%
Ethereum(2)	33.5		27.0	%	20.8		27.6	%
USDC	1.5		1.2	%	1.1		1.4	%
Other crypto assets	28.5		22.9	%	21.0		27.9	%
Total customer crypto assets	$	124.2	100.0	%	$	75.4	100.0	%

__________________

(1)As of June 30, 2023 and December 31, 2022, no assets other than Bitcoin and Ethereum individually represented more than 5% of total customer crypto assets.

(2)As of June 30, 2023 and December 31, 2022, Ethereum included $7.0 billion and $3.0 billion, respectively, of staked Ethereum.

See Note 14. Fair Value Measurements, for additional details regarding the customer crypto assets and customer crypto liabilities.