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The Wall Street Journal: Coinbase builds $4 billion cash pile as cushion for tighter regulation, cryptocurrency risks

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Coinbase Global In. in its first months as a public company has built a $4 billion cash stockpile as it benefits from a trading frenzy and prepares for closer regulatory scrutiny.

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has socked away cash in part to weather a host of business risks in the crypto industry, according to Chief Financial Officer Alesia Haas. The company stress-tests its balance sheet to ensure it has adequate funds on hand to prepare for a stricter regulatory regime, possible cyberattacks or potential trading declines, according to Ms. Haas. It also maintains additional cash as insurance against risks it hasn’t yet identified, she said.

Securities and Exchange Commission Chairman Gary Gensler said this month that he intends to regulate cryptocurrency trading and lending platforms to the maximum extent possible. Coinbase is paying close attention to Mr. Gensler’s public statements, Ms. Haas said. “We do believe that regulation can be an enabler and not a burden,” she said.

Don’t miss: SEC Chair Gensler says crypto ‘rife with fraud, scams and abuses,’ threatens national security.

Coinbase could also face new tax-reporting requirements under the roughly $1 trillion infrastructure bill in Congress. The bill would require crypto exchanges to report customers’ trading gains to the Internal Revenue Service, similar to how securities brokers report on their clients’ transactions. Coinbase has many systems in place to comply with the measure, according to Ms. Haas, who said she expects the compliance costs to be immaterial.

An expanded version of this report appears at WSJ.com.

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