.jpg)
In light of all of the volatility in the industry, we believe our year-end shareholder letter provides a good opportunity to reflect on what Coinbase is, and perhaps more importantly, what it is not.
We founded Coinbase with a conscious choice that we would be the most trusted, and easiest to use crypto platform. Our products enable millions of consumers, institutions, and developers around the world to discover, transact, and engage with crypto assets and web3 applications. We have built reliable infrastructure, a durable business model, and a strong balance sheet. We have prioritized prudent risk management and emphasized transparency with customers, market participants, and government authorities, all to help encourage the cryptoeconomy’s development. That transparency is punctuated by our decision to make Coinbase a publicly traded company, embracing the attendant disclosure and regulatory requirements.
Throughout our history, we have routinely worked with industry and legal experts, as well as global regulators and policymakers, to develop products that are safe for consumers and compliant within the countries that we operate. Given the nascency of crypto and evolving regulatory landscapes, we have certainly not been perfect. But when we identify issues, we work to remediate as quickly and thoroughly as possible - most recently evidenced by our January 2023 settlement with the New York Department of Financial Services (NYDFS). We remain committed to working with global regulators and policymakers to drive prudent regulation to this emerging asset class.
We have rigorous processes to evaluate assets to list on our Spot Market and the majority of assets we review have not met our listing criteria and therefore have been rejected. We have avoided offering high leverage products to consumers which has both protected consumers and helped us avoid credit risk. We do not operate as a market maker that trades against our customers, and we do not issue exchange tokens. We do not believe we have violated any securities laws: Coinbase staking products are not securities, USD Coin (USDC) is not a security. The list goes on. We expect 2023 to be a year of regulatory focus and we believe our strong foundation will make us a net beneficiary of this new environment. Our business decisions do not always match competitive offerings, or result in maximizing near term growth or profit - but rather they are intended to maximize safety for customers, legitimacy for the cryptoeconomy, and longevity for Coinbase.
These principles can all be seen in our 2022 results and how we managed the company through a tumultuous year. Our Q4 results were consistent with our outlook, including coming in well within our full-year Adjusted EBITDA loss guardrail we conveyed in February 2022. In the latter half of 2022, we pivoted and began reducing expenses which has culminated in a materially lower expense run rate beginning in Q1’23.
In addition to focusing on financial performance, we also increased engagement with global policymakers and regulators, and took significant steps in building industry leading partnerships to serve as important building blocks for the future. In short, we are proud of our ability to execute, and position our business as a regulated and legitimate market leader. The journey ahead will have its challenges, but our grit, determination, and resolve have been strong for 10+ years and we are excited for the future.
