Coinbase: Brian Armstrong says exchange is cutting costs and focusing on subscriptions

Brian Armstrong wants Coinbase to get rid of its “American lens” and either “the most regulated” in the field of crypto-currency.

Battered by the crypto-currency bear market, Coinbase is cutting costs and changing its revenue model, according to CEO Brian Armstrong.

In the second quarter of this year, Coinbase saw a 60% drop in revenue and reported a net loss of $1.1 billion. In an interview with CNBC published Tuesday, Armstrong reflected on the crypto exchange’s decade-long history and plans for the future.

An important point to remember? Armstrong wants to move away from trading fees as the primary source of revenue, explaining that while these fees bring in revenue during bull markets, that cash flow dries up when bearish sentiment sets in.

“We are now investing so much in subscription and service revenues” said Armstrong about his plans for the future.

“We realize that the cost of negotiating… [seront] still a big part of our business ten years from now, or even twenty years from now, but I’d like to get to a place where more than 50 percent of our revenue comes from subscriptions and services.”

He said that currently, 18% of Coinbase’s revenue comes from subscription services.

What types of subscriptions will Coinbase offer in the future? “There are a number in the works” said Armstrong, referring to subscription-based staking services and other offerings.

The exchange offers cloud services and a separate subscription product, Coinbase One, which is still in beta but offers higher-level customer support and other benefits.

As Coinbase moves away from a reliance on fees, Armstrong also believes the company needs to move away from a U.S.-centric perspective.

“Looking back, we may have applied a little too American a lens to the global landscape, and I would actually say that may be a mistake we’ve made in the last couple of years,” he said. “We are in the process of changing that.“

Today, Coinbase offers crypto-currency buying and selling services in a handful of countries – primarily the developed nations of North America and Europe – but it is not yet a truly global exchange.

Armstrong said Coinbase – which was founded in 2012 – has already gone through four bear market cycles. So while he says he’s not particularly scared, Coinbase already laid off 18% of its staff earlier this year and will be cutting costs in an effort to plan for a bear market that lasts 12-18 months or longer.

When asked if more layoffs could be on the horizon, Armstrong said never say never, but added that the first round of layoffs “was designed to be a one-time event.“

As Coinbase looks to keep things on track, it has other problems to worry about.

A customer is suing the exchange for $5 million for alleged securities violations and because Coinbase’s services allegedly broke down during times of economic volatility, leading the trader to be unable to manage his funds.

A trio of Australian financial researchers, meanwhile, allege that Coinbase is a hotbed of insider trading, estimating that 10 to 15 percent of 146 new crypto-currency listings studied involved insider trading. (Coinbase has previously stated that it has a “zero tolerance“for these illegal behaviors and that it was conducting investigations”when appropriate.”).

“We want to be the most compliant, regulated and reliable product available” said Brian Armstrong.