Coinbase CEO Warns To Be Careful For A Long Crypto Winter

According to Brian Armstrong, CEO of Coinbase, the crypto winter is likely to extend another 12 to 18 months, therefore investors should exercise caution.

According to CEO Brian Armstrong in an interview with CNBC, despite the weakening global economy, Coinbase is still considering cost-cutting measures and altering its business model.

CEO Brian Armstrong’s words

In the second quarter, Coinbase’s sales fell by more than 60% and it reported a $1.1 billion loss. However, the CEO claimed that the current downturn is not exceptional since his business has gone through four difficult cycles in the past ten years since its inception.

The macroeconomic climate right now is similar to previous ones his business has faced as well:

“I think one of the reasons why Coinbase has been so successful over the last 10 years is because we just try not to focus on the short-term ups and downs.”

The CEO has realized that they should avoid transaction fees, which are the platform’s primary source of income. In a bull market, he continued, these represent a sizable source of revenue for the business, but by the time the market dips into winter like it is now, they will dry up. As a result, Coinbase is gradually refocusing its operations to include “subscriptions and services”:

“We realize transaction fees… [are] still going to be a big part of our business in 10 years even 20 years, but I wanted to create a scenario where more than 50% revenue comes from subscriptions and services, which account for 18% of revenue.”

Armstrong only cited “staking and many other services” when asked what kinds of subscriptions it might eventually offer.

Armstrong thinks it has been a mistake to solely concentrate on the US market for a long time. Coinbase provides cryptocurrency services outside of the US in a few other nations, primarily in North America and Europe, but it is not yet a completely worldwide exchange.

Armstrong thinks that after the election, Coinbase will obtain regulatory clarification in an effort to challenge the SEC. He was also enthusiastic:

“We have actually negotiated with the regulators and I think that is a good sign. And our shared goal is to help promote regulatory clarity globally.”

The CEO of the interview also spoke on remote work and company culture. Although it was established in San Francisco, Coinbase does not yet have an official headquarters, and all of its staff members work remotely. According to Armstrong, the telecommuting model has helped with recruitment but has hurt learning, growth, innovation, and trust. Coinbase is therefore advocating a plan to personally meet with staff at least once every three months.

The evolution of Coinbase during the course of the year

The biggest crypto exchange in the US is generally having trouble. The stock price of COIN has consistently bottomed out since the Q1/2022 financial report with a 53% decline in net revenue. Coinbase decided to fire 1,100 people and shut down the Coinbase Pro platform by the end of 2022 in order to reduce costs and increase profitability. In order to prepare for a difficult winter in the upcoming 12 to 18 months and beyond, the corporation has promised to continue making expense reductions.

Not stopping there, the instability was also caused by the previous Coinbase Product Manager being detained for insider trading, which prompted the US Securities and Exchange Commission to take a number of legal measures (SEC). accused the exchange of including 9 security tokens.

Prior to the revelation of Coinbase’s partnership with BlockRock, the largest asset manager in the world, during the FUD storm at the beginning of this month, COIN experienced a strong increase. However, it has leveled off and is currently trading at about $71.18.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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