Coinbase CEO Brian Armstrong has revealed that he expects the cryptocurrency winter to last approximately 12 to 18 months. But he also said he was preparing for the possibility that it might take longer. Here are the details…
Coinbase CEO comments on the cryptocurrency space
While Bitcoin has lost almost 55 percent year-to-date, Coinbase’s stock reported a net loss of 0.41 percent in the second quarter. On the other hand, it reported net income of $1.61 billion in the previous quarter. Shares of the crypto exchange platform have dropped more than 70 percent to date, according to Dow Jones market data. Still, Armstrong said the drop in the market wasn’t “unusual” for the company, according to a CNBC interview on Tuesday. “As a company, we went through four cycles like this. We are only 10 years old,” he said. “This coincides with the collapse of the broader macro environment,” Armstrong said.
Armstrong said the crypto exchange is looking for ways to cut costs. According to the CNBC interview, it aims to reduce costs associated with marketing, external vendors and Amazon Web Services. In June, Coinbase laid off 18 percent of its employees, citing rapidly changing economic conditions, the need to manage costs, and the company’s previous overhiring.
Armstrong also said that the company aims to “get to a place where more than 50% of our revenue is subscriptions and services,” as increased competition among crypto exchanges could drive down trading fees. “I think there will be margin compression, eventually it has to happen at some point,” Armstrong said. Because everything we build, you know, others will eventually build it and become a little more commoditized,” he said. Coinbase’s subscription and services accounted for 18% of its revenue in the second quarter, up from just 4% two years ago.
What plans do they have for the future?
“We are investing a lot in subscription and service revenues today,” Armstrong said of his plans for the future. “We realize that transaction fees… will be a big part of our business ten years from now, even twenty years from now, but I want to get to a place where more than 50% of our revenue is earned from subscription services,” he said. What types of subscriptions will Coinbase offer in the future? “These are in the works,” Armstrong said, referring to subscription-based staking services and other offerings.
The exchange offers Cloud services and a separate subscription product, Coinbase One, which is still in beta but provides a higher level of customer support and other benefits. As Coinbase moves away from its fee dependency, Armstrong believes the company needs to move away from a US-based look. “Looking back, we may have applied a little too much US lens to the global landscape. In fact, I’d say this may have been a mistake we’ve made over the past few years. We are changing that,” he said. Today, Coinbase offers trading services for crypto in many countries, primarily developed countries in North America and Europe. However, it is not yet a fully global stock market.
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