Coinbase has been negatively affected by the ongoing bear market, and the exchange plans to cut costs.
Coinbase’s CEO Brian Armstrong told CNBC’s Kate Rooney in an interview on Tuesday that the cryptocurrency exchange plans to cut costs. The company’s shares are down by more than 70% as the crypto winter continues to affect its operations.
Armstrong added that the downturn is not unusual, as the company has been through four down cycles in the 10 years since he started the cryptocurrency exchange. He said;
“We have this saying internally, I like to repeat a lot, which is, you know, it’s never as good as it seems, it’s never as bad as it seems. I think one of the reasons Coinbase has been so successful in the last 10 years is we just try not to get focused on short-term ups and downs.”
Coinbase laid off 18% of its staff earlier this year, and Armstrong said it had to be done to ensure the company continues to operate. He added that while the layoff was a one-time thing, anything could happen.
Armstrong said Coinbase is planning to cut costs related to marketing, external vendors and Amazon Web Services.
He added that Coinbase is also planning to convert as many fixed costs into variable costs as possible. Binance.US recently made it possible for its users to trade some cryptocurrencies for zero fees.
Armstrong said fees would eventually erode as they have in the stock brokerage industry. However, it hasn’t gotten to that point yet. He added that;
“I do think there’s going to be margin compression, eventually, it has to happen at some point because everything that we’re building, you know, others, eventually you’re going to build it, and it’ll become a little bit more commoditized. I’d like to get to a place where more than 50% of our revenue is subscription and services.”
The Coinbase CEO further revealed that the company is actively engaged with the United States Securities and Exchange Commission (SEC), a move he considers a good thing. He said;
“You know, we’ve been in actually engaging with regulators, and I actually think it’s a good thing. And our overall goal is really to help drive regulatory clarity on a global scale.”
Coinbase is facing strong competition in the United States from the likes of Binance.US and FTX.US as the exchanges continue to build and capture more market value.
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