Coinbase CEO Says Exchange Is Cutting Costs, Focusing on Subscriptions

Badly battered by the crypto bear market, Coinbase is cutting costs and shifting its revenue model, says CEO Brian Armstrong.

In Q2 of this year, Coinbase saw a 60% drop in revenue and reported a $1.1 billion net loss. In an interview with CNBC published Tuesday, Armstrong reflected on the crypto exchange’s decade-long history and plans for the future.

One big takeaway? Armstrong wants to move away from trading fees as its main source of revenue, explaining that while such fees bring in revenue during bull markets, that cashflow dries up when bearish sentiment takes hold.

“We’re investing today so much in subscription and services revenue,” Armstrong said of his plans for the future.

“We’re realizing that trading fees… [are] still gonna be a big part of our business ten years from now, even twenty years from now, but I’d like to get to a place where more than 50% of our revenue is subscription and services.”

He said that currently, 18% of Coinbase’s revenue comes from subscription services.

What kinds of subscriptions will Coinbase offer in the future? “There’s a number in the works,” Armstrong said, hinting at 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 higher-level customer support and other benefits.

As Coinbase moves away from fee dependency, Armstrong also believes the company needs to move away from a U.S.-centric outlook.

“Looking back, we may have applied a little bit too much of a U.S. lens to the global landscape, and I would actually say that might have been a mistake that we made over the last couple of years,” he said. “We’re changing that.”

Today, Coinbase offers buy and sell services for crypto in a handful of countries—primarily developed nations in North America and Europe—but it’s not a truly global exchange just yet.

Armstrong said that Coinbase—which was founded in 2012—has been through four bear market cycles already. So while he says he isn’t particularly fazed, Coinbase has already laid off 18% of its staff earlier this year and will be cutting costs in an effort to plan for a bear market that lasts 12-18 months or longer. 

When asked if more layoffs could be on the horizon, Armstrong said “you never want to say never,” but added that the initial round of layoffs “was designed to be a one-time event.”