The new process begins with a form for issuers to submit assets for listing at Coinbase, which we will evaluate against our digital asset framework. The application form and the digital asset framework will be regularly updated, and our form will indicate the latest version of the framework we are evaluating against.
Coinbase Digital Asset Framework
Every day, projects around the world are issuing new blockchain assets of all types. We’re striving to give quality projects access to quality customers who have chosen Coinbase as their preferred platform to buy, sell, store and use cryptocurrency.
Coinbase Mission & Values
Open Financial System
Open financial system is defined as being available to everyone and not controlled by a single entity.
Innovation or Efficiency Gains
New or improved technology which helps solve a problem, creates a new market, addresses an unmet market need, or creates value for network participants.
A measure of how easy it is for members of a society to participate in the economy. The technology enables individuals to have more control over their own wealth and property, or the freedom to consume, produce, invest, or work as they choose.
Equality of Opportunity
This technology is accessible to use by anyone with a smartphone or access to the internet. It contributes to the broader mission of building the on-ramps to Finance 2.0.
The network is public, decentralized, and enables trustless consensus.
Security & Code
Assessment of engineering and product quality.
Open-source code, well-documented peer-review, and testing by contributors separate from the initial development team on GitHub, etc.
There is a working alpha or beta product on a testnet or mainnet.
Security & Code
Demonstrable record of responding to and improving the code after a disclosure of vulnerability, and a robust bug bounty program or third party security audit.
Assessment of short-term operating expectations and decision making.
Founders and Leadership
Able to articulate vision, strategy, use cases or drive developmental progress. Has a track record of demonstrable success or experience. If information is available, Coinbase will apply “know your client” standards to publicly visible founders or leaders.
Assessment of the engineering team and their track record of setting and achieving deadlines.
Business & Operations
History of interacting with the community, setting a reasonable budget and managing funds, and achieving project milestones. Thoughtful cash management is a key driver of the project’s long term viability.
Specialized Knowledge and Key People
The project leadership is not highly centralized or dependent on a small number of key persons. Specialized knowledge in this field is not limited to a small group of people.
Assessment of long-term operating expectations and decision making.
There is a structured process to propose and implement major updates to the code, or there is a system or voting process for conflict resolution.
Future Development Funding
There is a plan or built-in mechanism for raising, rewarding, or allocating funds to future development, beyond the funds raised from the ICO or traditional investors.
Justifies the use case for a decentralized network and outlines project goals from a business and technology perspective. While a white paper is important for understanding the project, it is not a requirement.
Assessment of a network’s potential barriers to scaling and ability to grow and handle user adoption.
Clear timeline with stages of development, reasonable project milestones, or built-in development incentives.
Network Operating Costs
The barriers to scaling the network have been identified, or solutions have been proposed or discussed. The resource consumption costs for validators and miners are not the main deterrents to participation.
There are examples of real-world implementation or future practical applications.
Type of Blockchain
The asset is a separate blockchain with a new architecture system and network, or it leverages an existing blockchain for synergies and network effects
Legal & Compliance
Can Coinbase legally offer this asset?
US Securities Law
The asset is not classified as a security using Coinbase’s Securities Law Framework.
The asset would not affect Coinbase or Coinbase’s ability to meet compliance obligations, which include Compliance Obligations, Anti-Money Laundering (AML) program and obligations under government licenses in any jurisdiction (e.g. Money Transmitter Licenses).
Integrity & Reputational Risk
Would listing the asset be inconsistent with Coinbase policy?
The asset, network, application or fundamental nature of the project does not constitute a Prohibited Business under Appendix 1 of the user Agreement.
How liquid is this asset?
Global Market Capitalization
How does the market capitalization compare to the total market capitalizations of other assets?
Trade velocity, or turnover, is a significant part of market capitalization. This is a measure of how easily the asset can be converted to another asset.
For service or work tokens, new supply is created through consensus protocols. If the supply is capped, then a material amount of the total tokens should be available to the public.
Where is this asset available to trade?
Total # of Exchanges
The number of exchanges that support the asset.
The asset is not limited to a single geographic region and is available to trade on decentralized exchanges.
Fiat and Crypto Pairs
Fiat and crypto trading pairs exist.
Exchange Volume Distribution
If secondary markets exist, then volume should be relatively distributed across exchanges.
What is driving demand for this asset and does it lead to stronger network effects?
Customer demand is carefully considered, however, any asset which is created from a fork, airdrop, or automated token distribution is subject to a separate set of criteria.
Developers and Contributors
Growing developer base and measured progress as defined by the number of repositories, commits, and contributors.
Dedicated forums are available where developers, supporters, users, and founders can interact and build a community and offer transparency into the project. The team provides regular updates or is responsive to feedback.
There are investments from venture firms or hedge funds which have experience working with crypto companies or projects. The project has corporate partnerships, joint ventures, or dedicated consortiums.
Rudimentary assessment of a growing network effect.
Change in Market Capitalization
The market capitalization has grown after the network has activated, demonstrating increased demand for the asset after the project’s launch.
Growing # of nodes on the underlying blockchain. The project has a globally distributed node network, meaning operating nodes are not contained in a single country or geographic region.
Transactions, Fees & Addresses
Growing # of transactions and fees paid over time. Growing # of asset or token holders, which is an indicator of asset distribution.
Are the economic structures designed to incentivize all parties to act in the best interest of the network?
Type of Token
It is a service, work, or hybrid token. Tokens backed by fiat or other physical assets are categorized as US securities and will not be considered at this time.
There is utility from obtaining, holding, participating, or spending the token. The team identifies a clear and compelling reason for the native digital asset to exist (i.e. the main purpose is not fundraising).
Inflation (Money Supply)
There is an algorithmically programmed inflation rate which incentivizes security and network effects. Or, if the total supply is capped, then a majority of the tokens should be available for trade when the network launches.
Rewards and Penalties
There are mechanisms (such as transaction fees) which incentivize miners, validators, and other participants to exhibit ‘good’ behavior. Conversely, there are mechanisms which deter ‘bad’ behavior.
Token Sale Structure
A small subset of what we believe are best practices for ICOs and indicators of the token’s future ability. If the token did not have a sale, this section is not applicable.
There is a focus on stringent security protocols and best practices to limit scams, hacks, and theft of funds.
Best efforts by the team to allow a fair distribution of tokens (i.e. setting initial individual purchase caps to limit the risk of small number of investors from taking a majority of the supply).
The ownership stake retained by the team is a minority stake. There should be a lock-up period and reasonable vesting schedule to ensure the team is economically incentivized to improve the network into the future.
The team should be available and responsive to questions or feedback about the product, token sale, or use of funds across multiple forums.
The team should sell a fixed percentage of the total supply, and participants should know the percentage of total supply that their purchase represents, or have a clear understanding of the inflation rate.
Ethics or Code of Conduct
White paper or project website should have an ethical or professional code of conduct.