CUSTOMER ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2023

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

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


	September 30,		December 31,
	2023		2022
Customer custodial funds	$	3,474,489	$	5,041,119
Safeguarding customer crypto assets	114,291,909		75,413,188
Total customer assets	$	117,766,398	$	80,454,307

Customer custodial cash liabilities	$	3,474,489	$	4,829,587
Safeguarding customer crypto liabilities	114,291,909		75,413,188
Total customer liabilities	$	117,766,398	$	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 safeguarding customer crypto assets and liabilities, in accordance with Staff Accounting Bulletin 121 (“SAB 121”). The Company maintains a record of all crypto 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 customer can transact without the involvement of the Company or 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 safeguarding customer crypto 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 customer crypto assets and cryptographic keys (or portions thereof) it holds on behalf of customers, and the value of these assets have been recorded as safeguarding customer crypto liabilities and corresponding safeguarding 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 institutional customer. Any loss or theft would impact the measurement of the customer crypto assets. During the nine months ended September 30, 2023 and year ended December 31, 2022, no losses have been incurred in connection with safeguarded customer crypto assets.

The following table sets forth the fair values of safeguarded customer crypto assets that were greater than 10% of the total safeguarded customer crypto assets recorded for the applicable period, as shown on the condensed consolidated balance sheets (in billions):


	September 30, 2023				December 31, 2022
	Fair Value		Percentage of Total(1)		Fair Value		Percentage of Total(1)
Bitcoin	$	55.7	48.7	%	$	32.5	43.1	%
Ethereum(2)	29.5		25.8	%	20.8		27.6	%
Other crypto assets	29.1		25.5	%	22.1		29.3	%
Total safeguarding customer crypto assets	$	114.3	100.0	%	$	75.4	100.0	%

__________________

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

(2)As of September 30, 2023 and December 31, 2022, Ethereum included $7.1 billion and $3.0 billion, respectively, of staked Ethereum.

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