According to Coinbase CEO Brian Armstrong, the crypto winter is likely to extend for another 12 to 18 months, so investors should be cautious.
Despite the weakening global economy, Coinbase is still considering cost-cutting measures and changing its business model, CEO Brian Armstrong said in an interview with CNBC.
In the second quarter, Coinbase’s sales fell more than 60%, reporting a loss of $1.1 billion. But the CEO claimed that the current downturn is not exceptional, as his business has gone through four difficult cycles in the decade since its inception.
Currently, the macroeconomic environment is similar to the previous ones his business has faced:
“I think one of the reasons Coinbase has been so successful over the last ten years is that we try not to focus on just the short-term ups and downs.”
The CEO realized that they needed to avoid transaction fees, the platform’s primary source of income. In bull markets, he continued, these are a pretty big source of income for the business, but they will dry up when the market plunges into winter as it is now. As a result, Coinbase is gradually phasing out its activities by “subscriptions and services”:
“We realize transaction fees… [are] going to be a big part of our business in 10 years or even 20 years from now, but I wanted to create a scenario where more than 50% of revenue is from subscriptions and services, with 18% of revenue.”
Armstrong simply quoted “Stake and many other services” when asked what kind of subscriptions he could offer at the end.
Armstrong considers it a mistake to focus solely on the US market for too long. Coinbase provides cryptocurrency services outside of the US in a few other countries, primarily in North America and Europe, but is not yet a fully global exchange.
After the election, Coinbase will receive regulatory clarification to challenge the SEC, Armstrong said. He was also enthusiastic:
“We’ve actually talked to regulators, and I think that’s a good sign. And our shared goal is to help promote regulatory clarity globally.”
The CEO of the interview also talked about remote working and company culture. Although founded in San Francisco, Coinbase does not yet have an official headquarters, and all its staff works remotely. According to Armstrong, the telecommunications model helped recruit, but undermined learning, growth, innovation and trust. That’s why Coinbase advocates a plan to meet staff at least quarterly personally.