Coinbase likely to commoditize crypto services with a subscription model

  • Coinbase’s CEO said that they can’t rely alone on trading fees to be a major part of their revenue.
  • In the long term, the company plans to bring subscription services to retail as well as institutional players.

U.S-based popular cryptocurrency exchange Coinbase has been finding different ways with which they can boost the company’s top line and revenue. As per the latest reports, the firm is planning to introduce a subscription model in the future in order to commoditize its services.

The latest proposal has come from none other than Coinbase CEO Brian Armstrong. He spoke regarding opening a new stream of revenue via a subscription model. The latest development comes as Coinbase announced a dismal second-quarter performance earlier this month.

As the crypto markets crashed during Q2 2022, Coinbase’s net losses widened to more than $1 billion. With a large number of investors exiting the market during this period, Coinbase saw a 64 percent drop in revenue. Of course, there’s no immediate plan from Coinbase to move to a subscription model. But Armstrong said that they would likely consider it for the future. Speaking to CNBC, the Coinbase CEO said:

Everything we are building others will eventually build it and it will become more commoditized. We are realizing that trading fees is not going to be that thing. It’s still going to be a major part of our business. Ten years from now, even 20 years from now, I would like to get to a place where it’s more subscription and services.

Brian Armstrong shares companies plans

Coinbase has been certainly feeling the heat of the crypto market slowdown this year. The COIN stock has collapsed more than 80 percent from its all-time high. Coinbase’s CEO said that the market correction is out of their control, however going ahead, they would be focusing on things that they can control.

Armstrong said that the company will focus on managing its costs, on the core products that the company is building, and investing in the future, and thus emerge stronger from the wider market correction. To push all these things, the company has raised $3 billion in debt last year at a very attractive rate, says Armstrong. Coinbase currently holds more than $6 billion on its balance sheet.

Brian Armstrong preferred to not disclose any undergoing deals by the crypto exchange. He also commented on the uncertainty in the global macro environment. Coinbase has been considering reducing the staff as the company has been open about it in the past.

Armstrong said that this downturn isn’t unusual for them since they have been in the industry for the last ten years. He expects the crypto winter to last 12-18 months, however, Coinbase is preparing for an even longer winter cycle. Moreover, the Coinbase CEO also remains positive on a longer time frame 5-10 years from now.

Coinbase has also been going through some regulatory headwinds recently. The U.S. SEC has accused Coinbase of listing security tokens. However, Coinbase has outrightly rejected the allegations.

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