Crypto exchange Coinbase feels the pinch and wants to cut costs, CEO says
As crypto exchange Coinbase faces industry hurdles and financial pressures, the company is examining its operations in more detail.
On Wednesday, Coinbase CEO Brian Armstrong stated in an interview with CNBC’s Kate Rooney that the cryptocurrency exchange is now considering cutting costs.
Coinbase’s stock has lost more than 70% of its value this year as a result of the “crypto winter” triggered by the fall in the prices of bitcoin and ethereum.
Wednesday’s trading price for Coinbase shares is about $72.00, up 0.6% from Tuesday.
In the second quarter of 2022 alone, the San Francisco-based crypto exchange endured a 60% drop in revenue and a financial loss of $1.1 billion.
Coinbase not surprised by crypto decline
According to Armstrong, the decline is not surprising, given Coinbase has experienced four downturns in the decade since he founded the company.
“We are only ten years old. This happens to coincide with the worsening macro situation,” explained Armstrong.
Armstrong stated in an interview with CNBC that the company aims to minimize expenses related to marketing, Amazon Web Services and other external contractors.
Coinbase CEO Brian Armstrong. Image: Fortune.
Armstrong added that he intends to move away from crypto trading fees as the cryptocurrency exchange’s primary source of revenue, pointing out that while such fees generate some earnings during bull markets, this cash flow evaporates during bear markets.
In June of this year, Coinbase laid off 18% of its workers, citing, among other things, rapidly changing economic conditions, the need to manage expenses and the possibility of a recession.
Avoid dependence on transaction fees
As Coinbase shifts away from its reliance on transaction fees, Armstrong believes the business must also abandon its US-centric perspective.
Armstrong stated that when it comes to mergers and acquisitions, Coinbase is studying “nearly every deal that’s taking shape.”
The CEO also emphasized that prices are “in the cycle, and it’s not just about pricing” despite the fact that the stock exchange has not experienced a significant drop in prices.
Coinbase vs. SEC
In recent months, the US Securities and Exchange Commission has put Coinbase in the crosshairs.
The SEC charged a former Coinbase product manager with fraud and opened an investigation into whether the platform illegally allowed users to trade unregistered digital assets.
SEC Chairman Gary Gensler has stated that “many of these underlying tokens have the characteristics of securities” and must be regulated as such to protect investors.
Armstrong stated that he is happy to work with the regulator.
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