Coinbase Global, Inc, U.S.’s largest crypto exchange landed under the scrutiny of the SEC over different allegations. However, the digital asset platform recently filed its interim financial reports which illuminate new assets called “Customer crypto assets”.
Coinbase filling shows new items
Frances Coppola in a Twitter post mentioned that the SEC’s new accounting guidance for digital assets platforms has some significant implications. She highlighted that Coinbabse’s latest filings show that its balance sheet is highly inflated.
She highlights that the financial report shows a quarterly net loss of more than $1 billion. The net cash reported over $4.6 billion in the past six months. It reported modest losses of more than $600K.
However, Coppola suggested that Coinbase is not in trouble as it still has $12 billion of customers and its own cash. It also disclosed that its balance sheet has grown by 5 times since December 2021.
According to Coinbase’s filing, the customer crypto assets valuation stands at around $88.45 billion. It is matched by a new “Crypto asset liabilities”. Coppola states that this new category of assets is by far the biggest item on the balance sheet. Meanwhile, the footnotes mention that these items are”safeguarding assets” and “safeguarding liabilities”.
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Will this increase user protection?
The expert states that Coinbase explains that as of June 2022, the crypto platform has taken all users’ assets onto its own balance sheet. It mentioned that the company was registering customer cash balance on its sheet. However, now it is also noting customer crypto holdings.
This signals that Coinbase is no longer hosting wallets and providing a platform for transactions. It is now taking custodial responsibility for each user over its platform.
Coppola asserts that the SEC seems like not satisfied with keeping customer assets off the balance sheet. In order to protect users from the risks like fraud, theft, or any technological failure, the commission decides to make exchanges or agents liable for everything. The company will have to bear the losses if anything happens to crypto assets.