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COLLATERALIZED ARRANGEMENTS AND FINANCING
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
COLLATERALIZED ARRANGEMENTS AND FINANCING COLLATERALIZED ARRANGEMENTS AND FINANCING
Loans and related collateral
The Company may lend crypto assets borrowed, crypto assets held for investment, crypto assets held for operations, corporate cash, and corporate USDC to eligible institutional customers through Prime Financing. Prime Financing lending arrangements may have open ended or fixed terms, with the exception of trade finance, where the Company enables customers to instantly invest in crypto assets without pre-funding their trade, which transactions are typically settled in one to three days. Crypto asset and fiat loans are recorded in Loan receivables in the Condensed Consolidated Balance Sheets. USDC loaned to customers does not meet derecognition criteria under ASC 860, Transfers and Servicing (“ASC 860”) as the borrower has an obligation to return the same financial assets (USDC) back to the Company in order to release the collateral pledged for the loan. This constitutes a form of continuing involvement with the USDC transferred and therefore the Company maintains effective control over the USDC. USDC loaned remains recorded in corporate USDC in the Condensed Consolidated Balance Sheets.
The following table summarizes the Company’s Prime Financing lending arrangements (in thousands):
March 31,December 31,
20242023
Loan receivables
Trade finance receivables$122,817 $— 
Fiat loan receivables210,185 171,196 
Crypto asset loan receivables196,141 22,229 
Total loan receivables$529,143 $193,425 
Customer loans not meeting recognition criteria
USDC$268,345 $205,645 
Prime Financing loans are fully collateralized by a customer’s pledged crypto assets, USDC, or fiat, with collateral requirements ranging from 100% to 400% of the fair value of the loan.
The Company adheres to strict internal risk management and liquidation protocols for loan counterparty defaults, including restricting trading and withdrawals and liquidating assets in borrowers’ accounts as contractually permitted. If the value of the borrower’s eligible collateral falls below the required collateral requirement, the customer is obligated to deposit additional collateral up to the required collateral level. The Company continuously and systematically monitors the fair value of the related collateral assets pledged compared to the fair value of the related loan receivable, and requires additional collateral pursuant to the contractual terms of the loan agreements. Due to the collateral requirements the Company applies to its loans, the collateral maintenance process, and collateral being held on its own platform, the Company’s credit exposure is significantly limited and no allowance, write-offs or recoveries were recorded against loans receivable for the periods presented. The Company would recognize credit losses on these loans if there were a collateral shortfall and it is not reasonably expected that the borrower will replenish such a shortfall.
If the Company receives fiat collateral into a Coinbase controlled collateral wallet, the Company records the collateral in Cash and cash equivalents and a corresponding liability in Obligation to return collateral in the Condensed Consolidated Balance Sheets. If the Company receives USDC or crypto assets as collateral with contractual rights to sell, pledge, or rehypothecate the collateral, the Company records the collateral in corporate USDC or Crypto assets held as collateral, respectively, and a corresponding liability in Obligation to return collateral in the Condensed Consolidated Balance Sheets. Obligation to return collateral, if a crypto asset, is accounted for as a hybrid instrument, with a liability host contract that contains an embedded derivative based on the changes in the fair value of the underlying
crypto asset. The remeasurement of the crypto assets held as collateral and the obligation to return collateral are recorded net in Transaction expense.
If the Company does not obtain control or have the right to sell, pledge, or rehypothecate customer collateral, the collateral is recorded in Safeguarding customer crypto assets and Safeguarding customer crypto liabilities if the collateral is USDC or crypto assets and Customer custodial funds and Customer custodial cash obligations if the collateral is fiat, as the collateral is required to be held on the Company’s platform.
The Company’s Crypto assets held as collateral and Obligation to return collateral consisted of the following (in thousands, except units):
March 31, 2024December 31, 2023
UnitsFair ValueUnitsFair Value
Crypto assets held as collateral
Bitcoin(1)
1,495 $106,610 — $— 
Total held as collateral$106,610 $— 
Obligation to return collateral
FiatN/A$208,480 N/A$1,063 
Bitcoin1,495 106,610 — — 
Total obligation to return collateral
$315,090 $1,063 
Customer collateral pledged, not recognized
nm$1,578,643 nm$712,644 
__________________
nm - not meaningful
(1) The cost basis of bitcoin held as collateral as of March 31, 2024 was $75.4 million.
The following table summarizes the reconciliation of Crypto assets held as collateral for the three months ended March 31, 2024 (in thousands):
January 1, 2024
Cumulative Adjustment
Collateral Received
Collateral Returned
Gains(1)
Losses(1)
March 31, 2024
Crypto assets held as collateral$— $— $90,798 $(15,374)$31,186 $— $106,610 
__________________
(1)No cumulative realized gains or losses occurred during the period.
Borrowings and related collateral
To facilitate Prime Financing, the Company may borrow crypto assets from third parties and records the associated liability in Crypto asset borrowings in the Condensed Consolidated Balance Sheets. Crypto asset borrowings that have not been loaned out are recorded in Crypto assets borrowed. Crypto asset borrowings are accounted for as hybrid instruments, with a liability host contract that contains an embedded derivative based on the changes in the fair value of the underlying crypto asset. See Note 13. Derivatives for additional information. As of March 31, 2024 and December 31, 2023, the weighted average annual fees on these borrowings were 2.3% and 2.0%, respectively. See Note 13. Derivatives, for additional details regarding Crypto asset borrowings.
The following table summarizes the units, cost basis, and fair value of crypto assets borrowed (in thousands, except units) and the associated crypto asset borrowings:
March 31, 2024December 31, 2023
UnitsCost BasisFair ValueCarrying Value
Crypto assets borrowed
Bitcoin2,688 $112,099 $191,573 $36,368 
Ethereum1,122 2,214 4,093 3,720 
Solana55,575 5,198 11,247 3,516 
Other crypto assets(1)
nm14,247 24,435 1,608 
Total borrowed
$133,758 $231,348 $45,212 
Crypto asset borrowings
Bitcoin3,040 $128,417 $216,703 $50,679 
Ethereum5,601 10,655 20,420 7,059 
Solana55,575 5,198 11,247 3,513 
Other crypto assets(1)
nm14,248 24,435 1,729 
Total borrowings
$158,518 $272,805 $62,980 
__________________
nm - not meaningful
(1)Includes various other crypto assets balances, none of which individually represented more than 5% of total crypto assets borrowed and crypto asset borrowings.

The following table summarizes the reconciliation of Crypto assets borrowed for the three months ended March 31, 2024 (in thousands):
Additions
Dispositions
January 1, 2024
Crypto Borrowings Originated
Crypto Loans Repaid
Crypto Borrowings Repaid
Crypto Loans Originated
Gains(1)
Losses(1)
March 31, 2024
Crypto assets borrowed$45,212 $191,436 $285,254 $(77,451)$(301,168)$88,352 $(287)$231,348 
__________________
(1)No cumulative realized gains or losses occurred during the period.
Under the terms of the Company’s borrowing arrangements, the Company may be required to maintain a collateral to loan ratio and pledge fiat, USDC, or crypto assets for crypto asset borrowings. If the lender has the right to use the collateral, or if the collateral is fiat, the Company records the collateral pledged as a right to receive the collateral within Other current assets in the Condensed Consolidated Balance Sheets. USDC pledged as collateral to lenders, where the lender does not have the right to sell, pledge or rehypothecate, is not recorded as assets pledged as collateral as the pledged USDC does not meet the derecognition criteria under ASC 860. This collateral continues to be recorded in USDC in the Condensed Consolidated Balance Sheets.
The Company’s corporate assets pledged as collateral against crypto borrowings consisted of the following (in thousands, except units):
March 31, 2024December 31, 2023
UnitsFair ValueUnitsFair Value
Assets pledged as collateral
USDC
73,096,425 $73,096 51,879,705 $51,880 
FiatN/A— N/A1,191 
Total pledged as collateral
$73,096 $53,071 
Assets pledged as collateral not meeting derecognition criteria
USDC
221,827,262 $221,827 29,577,339 $29,577