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Coinbase Transparency Report — — Q1-Q3, 2021

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Coinbase Transparency Report -Q1-Q3, 2021

By Paul Grewal, Chief Legal Officer

Coinbase is proud to publish our third Transparency Report. This report covers the period between January 1 through September 30, 2021*. As Coinbase continues to grow and offer services in new markets, the number of legitimate information requests we receive from law enforcement agencies and other government agencies will increase accordingly. As such, moving forward, we will publish these reports on an annual basis.

The goal of these reports, which we began publishing in 2020 (our two prior reports can be found here and here), is to keep our customers informed about requests for customer information we receive from government agencies and law enforcement — how many we have received, where they come from, and our approach in responding to them. While transparency reports are common in the technology industry, we believe financial institutions should similarly publish these reports on a regular basis, and we encourage them to do so.

At Coinbase, the safety of our customers is very important to us, and we respect the key role of law enforcement and government agencies in pursuing bad actors who engage in prohibited activity or seek to abuse our platform. At the same time, protecting the financial privacy of our customers is a fundamental part of our commitment to being the most trusted place to engage with cryptocurrency. This report shares data on the requests for information that Coinbase receives from government and law enforcement agencies around the world and provides a view into how government policies and actions intersect with customer privacy.

Coinbase Transparency Report

Period: January 1, 2021 — Sept. 30, 2021

Coinbase currently serves more than 73 million customers worldwide. We regularly receive and respond to requests from law enforcement and government agencies seeking customer account information and financial records in connection with civil, criminal, or other investigative matters. These requests can include subpoenas, court orders, search warrants, or other forms of formal legal process. We have an obligation to respond to such requests if they are valid under financial regulations and other applicable laws.

Each request is carefully reviewed by a team of trained experts using established procedures to determine its legal sufficiency; where necessary, we will narrow or push back on requests that appear overly broad or vague. The charts below provide data on the number of requests that we have received and how we have responded to them, broken down by country. As we continue to enhance our processes, we will be publishing this report annually, subject to certain limitations.

Key Takeaways:

  • There were a total of 5,562 requests in the first three quarters of 2021, and ~51% of requests came from outside of the United States.
  • ~84% of requests are from the U.S., U.K., and Germany.
  • Countries that sent requests for the first time in 2021 include Latvia, Greece, India, Turkey, Bosnia, Hungary, and Russia.
  • The number of requests we received in the first three quarters of this year represents a ~27% increase from the total number of requests we received in all of 2020.

FAQs:

Does this report include data about requests received by all Coinbase entities/services?

This report includes data about requests related to our various products and services including coinbase.com, coinbase.com/exchange, coinbase.com/prime, and custody.coinbase.com.

What does it mean if my country is not listed on the report?

We only include countries where (i) our services are available, and/or (ii) Coinbase received a government or law enforcement request.

What is a government information request?

A variety of laws allow the government and law enforcement agencies of a given country to request the disclosure of customer information for civil, administrative, criminal, and national security purposes, including as part of an investigation.

What information does Coinbase provide in response to government and law enforcement requests?

Depending on the nature and scope of the request, Coinbase may produce certain customer information, such as name, recent login/logout IP address, and payment information; this type of information may be subject to requests by government and law enforcement agencies when a customer uses one of our applications or our website, as described in our privacy policy.

Before we consider disclosing information in response to a government or law enforcement request (such as a subpoena, court order, or similar legal process), we review each request on an individual basis. If we believe a request is over-broad or vague, we seek to narrow it and provide a more appropriately tailored response, and in some cases we object to producing any information at all (such as if the request is legally insufficient).

Does Coinbase challenge or reject government requests?

Coinbase may challenge government and law enforcement requests, depending on the particular circumstances of each request. Under certain circumstances, we may ask the government or law enforcement agency to narrow their request.

Who reviews government requests for user information at Coinbase?

Coinbase has a trained team of lawyers, analysts, and other experts who review and evaluate each government and law enforcement request individually to assess its legal sufficiency and determine an appropriate response.

Does Coinbase provide governments with direct access to customer information?

Coinbase does not give any government in any jurisdiction (including law enforcement, or other government agencies) direct access to customer information on our or any third-party’s systems.

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* Data for the remainder of 2021 will be captured in our next report, to be published in 2022.

(2) Coinbase receives various criminal, civil and administrative requests from regulators and agencies in various countries seeking information about specific accounts and transactions. This Transparency Report reflects data related to these requests; it does not include customer initiated requests for information or productions required as part of routine regulatory examinations.


Coinbase Transparency Report — — Q1-Q3, 2021 was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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Why Gold Is Beating Bitcoin In 2022

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Bitcoin continues to underperform as a general “risk-off” sentiment has investors driving toward gold as a safe haven asset.

Not Risking It

Concerns about the Russo-Ukrainian war continue. The U.S. inflation struggles at a four-decade high and Fed rate hike fears prevail. The uncertainty extends to the world economy as a recession is expected instead of a recovery. The IMF’s managing director Kristalina Georgieva called it “a crisis on top of a crisis.”

“The war is a supply shock that reduces economic output and raises prices. Indeed, we forecast inflation will accelerate to 5.5 percent in advanced economies and to 9.3 percent in emerging European economies excluding Russia, Turkey, and Ukraine. ” The IMF stated last week.

Reuters recently quoted Commerzbank analyst Daniel Briesemann, who talked in a note about the factors that have “lent buoyancy to gold in recent days,” mentioning the “strong buying interest on the part of ETF (Exchange Traded Fund) investors” and news about the Ukraine war.

“Russia appears to be preparing to launch a major offensive in the east of the country – that is generating considerable demand for gold as a safe haven,” the analyst said.

This summarizes the “risk-off” sentiment at the moment. As expected, equities suffer as investors are selling risky assets and purchasing the ones negatively correlated to the traditional market. Thus, the crypto space is struggling alongside de stocks market and gold is rising.

Bitcoin Outperformed By Gold

Data from Arcane Research’s latest weekly report notes that it has been a gloomy year for the “digital gold.” In the first three weeks of 2022, Bitcoin sank 25% and it is still down by 18% in the year despite its slight recovery.

Similarly, Nasdaq records a 19% decline in the year, having underperformed against bitcoin “by a small margin,” notes the report, adding that “This is surprising given that bitcoin has tended to follow Nasdaq, albeit with higher volatility.”

The general fear over geopolitical and macroeconomic uncertainty has given gold the safe-haven asset spotlight once more. The asset outperformed all the other indexes seen below with a 4% gain.

Physical gold outperforming “digital gold” in 2022 | Source: Arcane Research

Meanwhile, the currency market is performing with “the same risk-off patterns.” The Dollar has been proving its “risk-off” dominance as the US Dollar Index (DXY) is up 7%. The Chinese yuan has taken a hit over concerns about the country’s “zero-covid” policy –which creates issues for the global supply chain– and the slowing down Chinese economy. In contrast, investors have been running to the US Dollar for safety.

Bitcoin supporters usually refer to the coin as “digital gold” alleging it is a safe haven asset, and this narrative had held well while BTC had been “uncorrelated with most other major asset classes,” but the tide is shifting with the 2022 scenario as investors are rather placing the coin “into the risk-on basket”.

A previous Arcane Research report indicated that bitcoin’s 30 -day correlation with the Nasdaq is revisiting July 2020 highs while its correlation with gold has reached all-time lows.

A pseudonym traded noted that “As Bitcoin adoption goes on and more institutional investors enter the market, the correlation of BTC and stocks becomes more and more tight. That is a paradigm that the crypto world struggled to come to terms with in the past but is now more real than ever. A healthy stock market is good for Bitcoin.”

Meanwhile, the general sentiment of traders seems to be bearish, with many saying that the coin could visit the $30k level soon.

Bitcoin
Bitcoin trading at $39k in the daily chart | BTCUSD on TradingView.com

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Attendees talk the future of NFTs

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The crypto community headed to Nassau in the Bahamas this week for the inaugural Crypto Bahamas conference.

Like most conferences, panels fill up the agenda and on Wednesday the topics at Crypto Bahamas ranged from NFTs to crypto in sports and to asset allocation in Web3. During one particular conversation, titled Evolution of NFTs: Culture, Utility and Regulation, panelists had some insightful musings on the NFT market.

To put the Crypto Bahamas conference into context, Sam Bankman-Fried’s cryptocurrency exchange FTX moved its headquarters from Hong Kong to the Bahamas in Sept. 2021. It recently inked a multi-year partnership with Anthony Scaramucci’s investment firm SkyBridge Capital, and its events arm SkyBridge Alternatives, or SALT. They jointly presented the conference.

That’s why the NFT panel consisted of multiple perspectives from Tristan Yver, head of strategy at FTX U.S., Joseph Doll, attorney at Fenwick law firm, Roham Gharegozlou, the chief executive officer at Dapper Labs, and Sarah Hammer, the managing director of The Stevens Center for Innovation in Finance at The Wharton School. Zack Guzman, writer for the Meta-owned newsletter platform Bulletin, moderated.

Gharegozlou pointed out how new the NFT market truly is when “most people have only been thinking about it for a year and a half,” making valuations “very immature.” As the CEO of Dapper Labs, the company behind NBA Top Shot,  Gharegozlou recognized that “utility, rewards and the how you value and NFT is primarily based on the strength of that of the community.”

He added that a good way for an NFT collection to build a strong community is to have multiple tiers of scarcity. In the case of NBA Top Shot, at the higher price end there is extreme scarcity, but there are also millions of “common” moments so that people can “get their first NFT and see how it feels without breaking the bank.” 

Tristan Yver echoed that the current valuation and pricing model for NFTs is based on a collective perception on value based on the amount of people willing to buy an asset for a certain amount. He anticipated a “movement away from this consensus view to a more unique singular view where people buy things that resonate with them rather than what resonates with a larger community.”

Joseph Doll chimed in to say that “communities need to be thoughtful about democratizing access.” There are some “massive” barriers to entry to certain projects, he said, including not being early enough or not having enough capital at the time. He questioned, “That’s not what crypto is about, right? It’s kind of about the exact opposite of that.” Democratization, he suggested, can come in the form of derivative projects at better price points.

Another important point brought up by Yver was the reality of scams, especially on Discord and Twitter. He said that “we need to move past security aspects to be able to really bring in the next large mass of users.” He recommended talking among family and friends or asking a Discord moderator to make sure “you click the right link when minting that NFT” because “wallet security sucks right now.”

Gharegozlou even said that Elon Musk, the new owner of Twitter, should use Web3 to fix Twitter’s fraud problem, just as Discord should use Web3 authentication and verification as well. “Once NFT’s are the sort of identity bridge across all these different social networks, identity and assets, authenticity, provenance,” then the system can be more resilient he added.

When asked what “main alpha” the audience should bear in mind, Doll said to engage with and be part of these NFT communities even if it’s “scary,” because getting scammed is a “part of the journey.”

Sarah Hammer, who leads the Cypher Accelerator at Wharton business school, said that the school is launching an incubator specifically for NFT projects in partnership with Dapper Labs because the “NFT model is a business model for the future.” She emphasized that the greatest way to grow and innovate in the space is to increase education efforts in order to get more people learning and working together.

Related: Goldman Sachs reportedly eyes FTX alliance with regulatory and public listing assistance

Recently the Bahamian government allowed residents to use digital assets, including the world’s first central bank digital currency, or CBDC, to pay for taxes in 2022.