According to the company’s CFO, monies have been put aside for regulatory compliance, investment, and trade slumps.
According to a Wall Street Journal article, Coinbase has amassed $4 billion in cash to cover regulatory compliance costs and anticipated market swings.
Regulatory Costs Will Be Covered by Funds
In an interview, Alesia Haas, Coinbase’s Chief Financial Officer, disclosed that the firm had put aside $4 billion in funds in case it encounters tougher restrictions in the future.
Two sets of regulations, according to Haas, might have an impact on regulation. The first is a new set of SEC regulations aimed at crypto exchanges. The second is a recent measure that imposes tax reporting obligations on cryptocurrency brokers, widely panned by the crypto community.
While the new rules may put more restrictions on Coinbase, Haas claims that the costs of compliance would be “insignificant,” and that regulation may be an “enabler rather than a burden.”
Coinbase Could Make Use of Reserves in Other Places
Coinbase also wants to have cash reserves, according to Haas, so that it can weather times of lower trade and compensate for cyberattacks. She said that the cash would also be used to assist Coinbase to expand its services and make investments in the event of a “crypto winter.”
The reserve was most likely made feasible by Coinbase’s recent fast expansion. Coinbase generated $1.8 billion in sales and $740 million in profit in Q1 2021, allowing them to fund the $4 billion reserve.
Since July 2018, Binance, Coinbase’s main rival, has maintained its emergency fund. However, unlike Coinbase‘s reserve, that fund is only dedicated to paying and insuring customers.