EEA Crypto Risk Statement

Last updated: July 30, 2025

This Coinbase Crypto Risk Statement (“Statement”) is presented to you, as a Coinbase customer residing in the EEA and receiving services from Coinbase Luxembourg, S.A. (“CB Lux”, “we” or “us”), either (i) at the time of opening your Coinbase account, or (ii) if you already had a Coinbase account before September 2022, when you next log into your account. The Statement can be accessed in the future on the Coinbase website at https://www.coinbase.com/legal/eea/risk-statement.

This Statement provides you with a summary of certain risks regarding crypto transactions and crypto services that you should be aware of.

Crypto assets are highly speculative investments – and you may lose some or all of your money. If you are new to crypto, consider investing only a small amount of money. And before you invest, do your research to understand the risks. Coinbase maintains a section of its website dedicated to helping people educate themselves about crypto - please refer to https://www.coinbase.com/learn to learn more. 

CB Lux seeks to help its customers understand the risks involved with crypto assets as crypto asset transactions and services may not be suitable for everyone. However, the risks set out in this Statement may not be exhaustive and you should carefully consider whether crypto transactions and the crypto services which we provide are appropriate for you in light of your knowledge, experience, financial objectives, financial resources and other relevant circumstances.  Crypto asset transactions and services may not be appropriate for you, particularly if you use funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. The volatility and unpredictability of the price of crypto assets relative to fiat currency may result in significant loss over a short period of time. The following is a brief, non-exhaustive summary of certain factors and special risks you should take into account.

Crypto assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value.  In the EEA, crypto assets are categorised as e-money tokens, asset-referenced tokens, and other tokens which do not fall into the previous categories. E-money tokens and asset-referenced tokens intend to maintain a stable value. However, this might not be guaranteed and there may be a risk of de-pegging in exceptional circumstances. Other tokens, such as exchange tokens and utility tokens are traditionally more volatile than fiat currencies and the value of many crypto assets are derived by market forces of supply and demand, which creates the potential for permanent and total loss of value should the market for a crypto asset disappear entirely. 

Federal, provincial, territorial or foreign governments may restrict the use of crypto assets, and regulation within and outside of the EEA in this regard is still developing, and changes in regulation and government policies can impact on the value and the legality of and access to crypto assets.

Crypto assets also utilise novel and complex technology and failures or malfunctions in these technologies can impact on the value as well as integrity of crypto assets.

A summary of assets that are available for trading, transfer, and custody on the Coinbase platform (which may or may not be available to you, based on your location) can be accessed here: https://www.coinbase.com/browse.

Before a crypto asset is supported by CB Lux, it undergoes a review, which includes analysis of both (i) the technology relating to the asset (including its reliability and security) and (ii) relevant legal and compliance considerations (including whether it complies with applicable requirements under the EU Markets in Crypto Assets Regulation (MiCAR)).

In the event CB Lux ceases to support a crypto asset, it has established policies and procedures to halt the trading of that crypto asset and where necessary, allow customers an appropriate amount of time to liquidate their positions on Coinbase in respect of that crypto asset or transfer the crypto asset off Coinbase whenever possible.  

The following is a brief summary of some of the risks involved in trading crypto assets:

(1) Blockchain Technology is Novel - as a relatively new open source technology, it is expected that there will continue to be technical developments in blockchain technology, which could impact the value of a crypto asset. It is not certain whether the economic value, governance or functional elements of crypto assets will persist over time.

(2) Price Volatility, Liquidity and Global Demand Concerns - the crypto asset markets are sensitive to new developments. Since trading volumes are still maturing, any significant changes in market sentiment (e.g. adverse media or tweets from high profile individuals) can induce large swings in volume, liquidity, and subsequent price changes. Crypto asset liquidity and prices on trading platforms have been volatile and subject to influence by many factors, including public speculation on future appreciation in value, swings in investor confidence, operational interruptions at exchanges and the future growth of alternative crypto assets that may gain market share.

Additionally, the price of crypto assets is driven by the supply and demand of global markets and so if demand is reduced, then the price of a given crypto asset will also reduce.  Investors should be aware that there is no assurance that crypto assets will maintain their long-term value in terms of purchasing power in the future or that the acceptance of crypto assets for payments by mainstream retail merchants and commercial businesses will continue to grow. In certain market circumstances, it may be challenging or impossible to buy or sell a specific crypto asset at a reasonable price, for example if trading is suspended for that crypto asset due to a particular market or regulatory event or due to changes to the crypto itself. The trading of crypto assets on public trading platforms has a limited history.

In addition, certain addresses on the various blockchain networks hold a significant amount of the currently outstanding asset on that network. If one of these addresses were to exit their positions, it could cause volatility that may adversely affect the price.

(3) De-pegging – in the EEA, e-money tokens and asset-referenced tokens are intended to maintain a stable value and have a reserve of assets which covers the permanent right of redemption that token holders have against the issuer. However, the stable value of the token may not be guaranteed and there is the possibility that these tokens may, in exceptional circumstances, experience a loss of value and de-peg from the underlying reserve assets. Additionally, the reserve assets may have a shortfall which might result in holders not being able to exercise their full redemption rights against the issuer, and therefore experience loss.

(4) Blockchains may Temporarily or Permanently Fork - when a modification to that software (i.e. the software that powers certain crypto blockchains) is released by developers, and a substantial majority of miners consent to the modification, a change is implemented and the blockchain network continues uninterrupted. However, if a change were to be introduced with less than a substantial majority consenting to the proposed modification, and the modification is not compatible with the software in operation prior to its modification, the consequence would be what is known as a "fork" (i.e. a split) of the blockchain. One blockchain would be maintained by the pre-modification software and the other by the post-modification software. The effect is that both blockchains would operate in parallel, but independently. A fork may occur, and affect the viability or value of a crypto asset. CB Lux may choose not to support any future fork of the underlying blockchain of the crypto assets available on our platform, in which case you may not have any rights to the new crypto assets that may be created as a result of that fork.

For further detail on “forks”, please refer to clause 5.28 (Operation of Crypto Asset Protocols) of your User Agreement with CB Lux.

(5) The Cryptography Underlying the Crypto-networks is Imperfect - flaws in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for users, exposed users' personal information and/or resulted in the theft of users' digital assets. Over time, the cryptography underlying a crypto asset could prove to be flawed or ineffective. This could negatively affect the value of crypto assets you trade with Coinbase.

(6) Regulatory Uncertainty - the regulation of crypto assets continues to evolve in the EEA and in other jurisdictions.  Regulation may develop that restricts how crypto assets are offered, admitted to trading, or designed; introduce reserve assets requirements such as composition and concentration requirements; restricts the use or holding of crypto assets; or otherwise influences the availability or demand for crypto assets, which may affect the liquidity and/or price of crypto. Furthermore, banks and other financial institutions may refuse to process funds for crypto asset transactions, process wire transfers to or from crypto asset trading platforms, crypto asset-related companies or service providers, or maintain accounts for persons or entities transacting in crypto assets.  This might result in you holding crypto assets which you are unable to convert into fiat currency to use.

(7) Systemic Risk - if anyone gains control over 51% of the computing power (hash rate) used by a blockchain network, they could use their majority share to double spend their crypto assets. If such a “51% attack” were to be successful, this would significantly erode trust in public blockchain networks to store value and serve as a means of exchange, which may significantly decrease the value of crypto assets.

(8) Electronic Trading and Network Connectivity - there are risks associated with using an internet-based trade execution software application including, but not limited to, the failure of hardware and software.  For example, if your internet connection or equipment failed, you may be unable to make or receive transfers of crypto assets. In addition, you may be unable to place an order, your order might not be executed according to your instructions, or your order might not be executed at all. This might cause a financial loss when the market for a particular crypto asset suddenly drops.  ​​Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.  In addition to normal market risks, you may experience losses due to one or more of the following: system failures, hardware failures, software failures, network connectivity disruptions, and data corruption.

(9) Cyber Security Threats - the nature of crypto assets may lead to an increased risk of fraud or cyber attack. A breach in cyber security refers to both intentional and unintentional events that may cause CB Lux to lose proprietary information or other information subject to privacy laws, suffer data corruption, or lose operational capacity or suffer a loss of custodied customer crypto assets. This in turn could cause CB Lux to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.  In addition, cyber security breaches of our third-party service providers can also give rise to many of the same risks associated with direct cyber security breaches.

CB Lux has established and maintains robust policies and procedures to manage and mitigate risks associated with cyber security threats.

CB Lux will not in any way deal in your crypto assets unless specifically instructed by you.

(10) Slashing risks, no guarantee of rewards, and lock ups when staking crypto assets – some networks subject staked crypto assets to “slashing” if the transaction validator representing those crypto assets incorrectly validates a transaction. This means that staked assets are at risk of loss. The protections which you may have over slashing risks are subject to your agreement with Coinbase. There is also no guarantee that you will receive rewards for your staked crypto. Some networks require staked crypto assets to be “locked” (restricted from sale or transfer) for a period of time before the crypto assets can be unstaked. In addition, it may take time (days) for the unstaking process to complete. This means that you might not be able to unstake your crypto assets during the lock up period, and when unstaking is possible, you might not be able to make use of your crypto assets as quickly as you would like.

(11) No Investor Compensation Scheme – crypto assets purchased and held in an account with Coinbase may not be protected by investor compensation schemes which might otherwise protect investments in traditional investment products and services. 

(12) Fees - CB Lux generates substantially all its revenue from transaction fees in connection with the purchase, sale, and trading of crypto assets by its customers. Transaction fees are either a flat fee or a percentage of the value of each transaction.