The CEO of Coinbase advertises subscriptions to contain the dependence on trade fees

The CEO of Coinbase advertises subscriptions to contain the dependence on trade fees

Coinbase is looking for paths to maintain profitability despite the collapse activities that are coming, with CEO Brian Armstrong expected to take the crypto bear market for up to 18 months-or even longer.

In a (n Interview with CNBC said his company looking for long -term Perspectives instead of concentrating on the short -term narrative on the markets.

"It is never as good as it seems that it is never as bad as it seems," Armstrong told CNBC about questions about the macroeconomic views. "We try not to concentrate on short -term heights and depths, we just zoom out."

digital assets approach a five -month drop in prices after a crash at the end of March. Together with the stock markets, they were hit by significant macroeconomic factors such as rising interest rates, inflation and the effects of war in Ukraine.

While unemployment remains low, the goods costs have risen considerably in the past 18 months Wage growth remains flat most developed economies, which means less money in the buttocks and a lower individual purchasing power.

"Krypto had the double impact of credit cases and a loss of trust due to the bankruptcy of Celsius and Three Arrows Capital," Jon de Wit, CIO of the crypto trade company Zerocap, told Blockworks.

"These conditions will undoubtedly put all crypto companies to the test, but especially those who have difficulty diversifying their sources of income."

Coinbase hopes to survive the storm by carrying out cost reduction measures and changing the way it generates income, said Armstrong, which currently depends on fees that come from trade activities in good times

In the times when market activity breaks - which is reinforced by generally falling reviews of digital assets - the income drives up. The quarterly finishes have shown that the stock market giant has become slower in recent months.

This in turn has caused problems for the share price. The Coinbase shares have fallen by more than 70 % in the previous course of the year, despite a healthy increase of 60 %, which was partially inspired by a lucrative partnership with Blackrock, which was announced at the beginning of this month.

The income of coinbase reflects the decline in crypto trade

Coinbase reported sales of $ 803 million in the second quarter of this year and thus missed the higher forecasts of the analysts by $ 50 million

In fact, the company's evaluation correlates something with Bitcoin. In November the stock reached its highest level since its direct listing when Bitcoin hovered for his own record high.

Armstrong told CNBC that Coinbase suffered similar to its competitors, with macroeconomic factors being outside the company's control. Armstrong said what it can influence, were products, cost management and ensuring that it has enough capital to survive downtime.

"Coinbase shares are closely with crypto and we expect short-term market recreations to continue a correlation with high beta," said de Wit. He added that every long-term accumulation would be a game with the market-leading institutional, developer and web3 products of the stock exchange.

and the shock of diversified sources of income could not come early enough.

The reported income show those of the stock exchange The income from Trade fees declined by 30 % by compared to the previous quarter to $ 2.17 billion, as a retailer after the collapse of Terra and a credit crisis that triggered a liquidity crisis in overexposed crypto companies.

"One thing we do is to shift more of our income over time, away from the trade fees, to what we call subscriptions and services," said Armstrong and added that these services have grown to a share of around 18 % of the total income of the stock exchange.

While Armstrong remains optimistic about the long -term profitability of Coinbase, short -term problems must be addressed if the trust of investors is to be restored and new customers are to be won.

"Coinbase was best positioned to make profits in the last bull run," Jason Sheman, Director of Operations at Bitcoin.com, told block works.

"This market will correct, but the immense competition through Dex’s will make it almost impossible to reproduce the same success and the reason why you try to reduce the risk through subscription models," said Sheman.

Staking and legal disputes

all of this, while Coinbase is confronted with a variety of legal counter -winds. Coinbase confirmed last month that the US Securities and Exchange Commission (SEC) examined the listing process of the stock exchange in addition to its staking programs and other profitable products.

Coinbase denied that there is anything to do with securities, but the markets were skeptical because the coin shares fell by 14 % according to the first words of the supervisory authority.

If it would be important, Armstrong told CNBC that he would reduce the participation of Coinbase in the staking market or even delete the activity completely from its range of offers if they were forced.

In addition to the growing pressure, the former product manager of Coinbase, Ishan Wahi, sees the SEC charged with a plan for insider trade in connection with a plan that led to win between June 2021 and April 2022 in the amount of $ 1.1 million

Nevertheless, Coinbase had to re-establish its efforts to reduce costs, including reducing its workforce by 18 % in June, since it was prepared for a "crypto winter" and a recession in the traditional markets.

The exchange is not alone. Several others were forced to reduce costs and reduce staff.

But short -term uncertainty means that the stock exchange must change its business model dramatically and find new ways to generate income from which Armstrong seems to be ready.

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