Crypto Exchange Coinbase Feels The Pinch And Will Cut Costs, CEO Says
As crypto exchange Coinbase faces industry obstacles and economic pressures, the company is examining its operations in greater detail.
On Wednesday, Brian Armstrong, CEO of Coinbase, stated in an interview with CNBC’s Kate Rooney that the cryptocurrency exchange is now considering slashing costs.
Coinbase’s shares has shed more than 70% of its value this year as a result of the “crypto winter” triggered by the price declines of bitcoin and ethereum.
Wednesday’s trading price for Coinbase shares is approximately $72.00, up 0.6% from Tuesday.
In the second quarter of 2022 alone, the San Francisco-based crypto exchange endured a 60% decline in revenue and a $1.1 billion financial loss.
Coinbase Not Surprised By Crypto Slump
According to Armstrong, the slump is not surprising, given Coinbase has had four downturns in the decade since he founded the company.
“We are just ten years old. This one just so happens to coincide with the deteriorating macro situation,” Armstrong explained.
Armstrong stated in an interview with CNBC that the company is aiming to minimize expenditures associated with marketing, Amazon Web Services, and other external contractors.
Armstrong added that he intends to move away from crypto trading fees as the cryptocurrency exchange’s primary source of income, pointing out that while such fees generate some earnings during bull markets, this cashflow evaporates during bear markets.
In June of this year, Coinbase terminated 18% of its workers, citing, among other quickly changing economic conditions, the necessity to manage expenses and the possibility of a recession.
Ditching The Dependence On Transaction Fees
As Coinbase shifts away from its reliance on transaction fees, Armstrong believes the business must also abandon its U.S.-centric perspective.
Armstrong stated that in terms of mergers and acquisitions, Coinbase is “closely studying every deal that is now taking shape.”
The CEO also stressed that prices are “in the cycle, and it’s not just about pricing” despite the fact that the exchange has not experienced a significant price decline.
Coinbase Vs. SEC
In recent months, the US Securities and Exchange Commission has placed Coinbase at its crosshair.
The SEC charged a former Coinbase product manager with fraud and opened an investigation into whether the platform illegally permits users to trade unregistered digital assets.
Gary Gensler, chairman of the SEC, has stated that “many of these underlying tokens have the characteristics of securities” and must be regulated as such to safeguard investors.
Armstrong stated that he is pleased to be working with the regulator.Source