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Coinbase has been one of the exchanges badly affected by the 2022 bear market. The exchange has now announced it will cut costs and change its business model to reflect these changes.
Coinbase plans to cut costs
A few weeks back, Coinbase released its financial results for the second quarter of 2022. The financial results show a 60% decline in the company’s revenues. Coinbase also reported a $1.1 billion net loss.
Coinbase’s CEO, Brian Armstrong, appeared in an interview with CNBC, discussing the exchange’s history and plans for the future. The executive also plans to shift its business model by not having trading fees as its primary source of revenue.
Armstrong said that while trading fees generated immense revenue for the exchange during a bull market, the cash flow drops when a bearish trend is reported. He also said that the exchange paid more attention to subscription and service revenue.
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According to Armstrong, trading fees would continue to be a big part of the business for a decade or more. However, the exchange planned to reach a point where over half its revenues would be generated from subscriptions and services.
He also added that currently, Coinbase generates 18% of its services from subscriptions. The company wanted to expand the number of subscriptions available in the future. These future services could include subscription-based staking alongside other offerings.
Some of the subscription services that the exchange has currently launched include the Cloud services and Coinbase One, which is currently in beta.
The Exchange focus more on global operations
As the exchange pursues independence, Armstrong is optimistic that it will shift away from a US-centralized model. He admitted that over the years, the exchange had used the US regulatory framework as the lens under which it would regulate the rest of the market.
Coinbase is currently regulated in a few countries, most of which comprise the US and other European nations. However, it is yet to earn the status of a global exchange. Armstrong said that Coinbase had been through four crypto bear cycles.
A few months back, Coinbase announced it would cut its staff by 18% to survive the ongoing bear market. Armstrong further said that the layoffs were a one-time thing but admitted that there was no definite way of knowing what would happen in the future.
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