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So we've already started rolling out something called the Coinbase Tax Center. | neutral |
And basically, this is a single portal where customers can just download that 1 form at the end of the year. | neutral |
If you're using Coinbase products today, let's say, Coinbase Commerce and you buy the crypto on Coinbase, we can help track all of that for you, so you don't have to worry about it. | neutral |
Now in the future, I would love to see the crypto industry actually even develop some kind of common standards, so between different companies, it's actually interoperable. | neutral |
So like if you bought the crypto somewhere else, then you move it here, you spend it there, like there's a way to do information sharing behind the scenes. | neutral |
And so there might be more that we can do on that in the future. | neutral |
But I think the Coinbase Tax Center we're rolling out is going to be a huge step in the right direction and make it "just work" for people who are on Coinbase products at least. | positive |
Secondly, you asked about cost basis and profitability, the gain/loss type summary. | neutral |
And this is a feature that we also feel is important. | neutral |
We've been working on it for a while. | neutral |
So by Q1, in time for tax season, you should see a support for that rollout. | positive |
So a question from [Tony P.] who asked about competition. | neutral |
How do you think about the competitive landscape? | neutral |
And who or what do you view as Coinbase's largest competitive threat? | negative |
We think it's a very positive development when companies enter the crypto economy because we think it creates more innovation in the space, and we think that the TAM potential is kind of limitless here. | positive |
On the more traditional side, there are companies like PayPal and Square and Robinhood and traditional financial institutions who are entering. | neutral |
And we believe that that's a huge validation of the whole space. | positive |
In many cases, we're actually collaborating with those companies and exploring ways to partner. | positive |
And we've talked about our differentiation point relative to those companies as being crypto-native. | positive |
We can offer features and assets more scalably because we have a crypto-native bench. | positive |
On the other side of the spectrum, you have lots of other crypto-native companies that are out there that we admire and their pace of innovation is kind of breathtaking. | neutral |
And we also view them, in many cases, as partners or collaborators, but also we look to them for inspiration in terms of what is resonating with crypto-native users. | neutral |
In many cases, those companies are not regulated and we can offer more usable, more regulated versions of those products to customers. | positive |
Customers, as we talked about, choose us for trust, ease of use, safety and security of our services. | positive |
I think that, ultimately, the way that you should think about Coinbase in this market is we are kind of the best of both worlds in terms of we are the regulated player, we are the trustworthy player that makes things as usable as possible for our many customers. | positive |
And then we also are crypto-native, and we are able to offer many more assets and many more crypto-native features such as Staking, Rewards, Borrow, Earn, because of our exclusive focus on crypto. | positive |
So we'll take one more question from today before going to some live questions from the analysts. | neutral |
Our last one here is from [Nova Y. and Jason M.] who asked about international plans. | neutral |
How do you think about the product and future road map internationally, notably across South Asia and South America? | neutral |
And additionally, Harshita Rawat from Sanford Bernstein asked if we could provide an update on recent launches in both Japan and Germany. | neutral |
Our platform is now available in more than 100 companies globally today, and this is very much consistent with our mission to increase economic freedom in the world. | positive |
We believe, to fulfill that mission, we have to have as deep global and broad global reach as possible. | neutral |
So we're working to build products with a ship international by default mindset. | neutral |
Crypto is very global, so our product capabilities need to be as well. | neutral |
We obviously note that the adoption curve is different across different geographies, and so we're mindful of which features to scale where and when. | neutral |
And we look at a host of different signals in these different countries and regions, including GDP; crypto volumes, both fiat to crypto and crypto to crypto; currency stability; and we look actively to kind of pursue both M&A and partnerships to help accelerate our path into those different geographies. | neutral |
Alesia, do you want to talk about the latter part of that question? | neutral |
So thank you for the question on Japan and Germany. | neutral |
We had shared in our Q2 shareholder letter, that we have just received licenses in both of these markets, and so they were long-awaited launches for us. | positive |
Just to pull back, it's difficult to enter regulated markets as you go through a long license application process with the regulators. | negative |
So sometimes we don't know exactly when we will launch. | negative |
As a result, when we launch in those countries, it is an MVP product. | neutral |
It's the first kind of foothold in a country. | neutral |
And so what we see in Q3 is we don't have a meaningful update to provide you in terms of those launches, but our goal is to develop very similar products in those markets that we have in the U.S., reduce customer friction, offer delightful onboarding experiences and customer [rails]. | neutral |
And that's what we're building towards in those markets to really be able to then market and grow those customer pace. | neutral |
So not yet material, but we hope to have news in the coming quarters. | neutral |
So with that, we'll now transition and take a few live questions from our analysts. | neutral |
So Celine, I'll turn it over to you for the first question, please. | neutral |
(Operator Instructions) We have our first question coming from the line of Kenneth Worthington with JPMorgan. | neutral |
The cryptocurrency markets have had a nice move in recent months and recent weeks. | positive |
Do you think that the drivers of this interest in the cryptocurrency markets and ecosystem today, and I think you guys mentioned Web3 a number of times in the prepared remarks, are different from the drivers that drove interest in the ecosystem late last year and even earlier this year? | positive |
And maybe at a higher level, how is the interest in the ecosystem evolving for retail and corporate investors as cryptocurrencies evolve from the fringe towards more of the mainstream? | neutral |
I can share my high-level thinking on this. | neutral |
And then Alesia or Emilie, if you have any thoughts as well, please jump in. | neutral |
I mean so I think if you go back really 3, 4, 5 years, a lot of these cycles in crypto were more speculative in nature. | neutral |
People were buying it because this was now a scarce digital good and then they thought it would be valuable in the future. | neutral |
And there were some people using it for payments and things like that, but it wasn't the primary driver. | neutral |
What's exciting now -- and by the way, people would always ask me back then, this is like 2015, 2016, always asking me, "What is the use case going to be here," right? | positive |
Luckily, nobody is really asking me that question anymore. | neutral |
I mean we're now seeing these tons of use cases where like NFTs and games, and you're seeing staking and borrowing and lending and Coinbase Card. | positive |
And I think as Alesia shared at the beginning, I think almost half of our customers now, our active customers, are doing something other than trading crypto. | neutral |
So I would say that I would hesitate to speculate on what is driving momentum because I think we try to take a long-term view of this. | neutral |
And I'm a little bit less concerned about what's the recent rally or whatever. | neutral |
We're always trying to think a little bit longer term. | neutral |
But to me, the most important thing is how do we drive more people actually using crypto for more things. | neutral |
We're now seeing that in the numbers. | neutral |
And I have to imagine that that's driving a lot of this recent growth. | neutral |
It's becoming less of a speculative thing. | neutral |
So Alesia, Emilie, do you want to add? | neutral |
I would just connect the dots perhaps a little bit. | neutral |
When we see the growth of NFTs, that has great tailwind effect to then the Ethereum, blockchain, the Ethereum assets. | positive |
And then we've seen new development on Solana, which then has benefits for those underlying protocols. | positive |
And so I do think it's just the activity in headline and innovation that we're seeing that is driving a lot of the overall crypto market count growth. | neutral |
I think that's definitely the case on the retail side. | neutral |
And on institutional, what I think we're continuing to see is new types of institutional investors decide to make an allocation to crypto. | neutral |
And what we see there is an adoption curve that starts with Bitcoin, typically then moves to Ethereum but is quickly then picking up to other crypto assets. | neutral |
And we're seeing those investors looking for allocation to DeFi, finding ways that they can make that in the growing innovation of crypto broadly. | positive |
So lots of different drivers, but it does feel different, as Brian said, that it feels less speculative and more driven by utility and broader adoption of crypto and in more traditional use cases. | positive |
We have our next question coming from the line of Lisa Ellis with MoffettNathanson. | neutral |
This quarter, we've seen the launch of crypto ETF in the U.S. Can you talk a bit about how ETFs are affecting Coinbase or may in the future? | positive |
And I guess maybe the broader question is, can you elaborate a bit on how Coinbase is thinking about partnering versus competing with some of the traditional asset managers that's crypto investing mainstream? | negative |
It is Alesia, maybe I'll start and then Brian and Emilie, feel free to add on. | neutral |
So first of all, we're actually all here cheering for the approval of the Bitcoin ETFs. | positive |
And we think that it will benefit trading volumes just broadly in a crypto ecosystem and add to broader adoption as there are some institutions that don't have the ability to invest in underlying spot. | positive |
That said, we think it's a different market. | neutral |
So crypto spot markets are 24/7 global. | neutral |
There's never a dull moment in them. | neutral |
But an ETF market obviously follows the traditional securities time line. | neutral |
And so it's not 24/7, and there'll be different traits that one can put on in each of those markets. | neutral |
So we think that they'll both attract different investors and different use cases. | positive |
Obviously, the Bitcoin ETFs will also benefit the broader spot market, and we have the ability to provide custody solutions and are actively having conversations of how we can support the broader ETF adoption. | positive |
And while our business today is entirely spot, we do have ambitions of launching a futures trading business in the future and apply for approval to do so in the U.S. So we're excited about the potential for that future growth of our own business as well. | positive |
So in general, again, very positive. | positive |
We're excited for the growth of the crypto economy and that will bring more users into the space. | positive |
We have our next question coming from the line of Pete Christiansen with Citi. | neutral |
Brian, I appreciate your color on the question regarding policy that, that doesn't necessarily have to be under a completely different umbrella but certainly a separate regulatory framework. | neutral |
But I guess how do you think about that in the context of having some cohesion with the traditional finance world on a regulatory front? | neutral |
I mean you have to get fiat dollars into crypto somehow. | neutral |
How are you thinking about a policy maybe should be formed around that notion? | neutral |
I mean so Coinbase is certainly acting as a bridge between the traditional financial system and this new cryptoeconomy. | neutral |