Coinbase has been on a tear for the past 12 months. Even amid a grueling downturn in Bitcoin markets, the firm, valued at a hefty $8 billion, has continued to forge ahead, keeping its nose to the proverbial grindstone. But, at last, the prominent startup has stumbled, albeit rather uncharacteristically.
Coinbase Drops 30 Employees
Save for a 10 to 15 customer service employee purge in late-2018, caused a result of logistical concerns rather than financial mismanagement, Coinbase has largely been safe from the recent crypto layoff spree, which saw ShapeShift, Bitmain, Huobi, and countless others drop staffers en-masse — until now anyway.
Per a recent report from The Block, published on Tuesday, the Silicon Valley fintech darling recently shuttered plans to launch a new trade matching engine. As a result, Coinbase has laid off 30 employees, a move which is purportedly shocking as the firm was dead set on launching this new offering, which would have given institutional investors more flexibility and accessibility.
It is important to note that 30 employees, in the context of the industry goliath that is Coinbase, isn’t all too notable, as the company reportedly hires over 500. But the move did come as a shock to those laid off, with one former employee remarking that he/she “can’t believe this is happening.”
This layoff will also see the firm’s institutional-centric Chicago office close, which is notable, especially considering that this city is deemed somewhat of a second home for big names in finance, namely JP Morgan and Northern Trust. Funnily enough, just weeks ago, Paul Bauerschmidt of Coinbase’s Chicago office remarked that his division planned to “release something later this year,” making this layoff an utter U-turn.
Coinbase itself doesn’t seem to be fazed, however. A representative told The Block:
“Coinbase moves quickly to build new products and offerings to meet the rapidly evolving crypto ecosystem. We’re proud of our speed of execution. We are a culture that is committed to repeatable innovation, knowing full well that not everything we attempt will succeed. We continue to grow our institutional team and build on our foundation of products.”
So if the company intends to continue to build out its institutional arm, what’s with the sudden closure of this key facet? Well as some suggest, it may have much to do with the firm’s financial status. True, the company did secure $300 million in late-2018 in a round that valued it at $8 billion, but profits still seem to be on the low side of things.
As analyst Larry Cermak points out, Coinbase’s revenue was $520 million in 2018, which sounds impressive until you consider the fact that figure is down 44% year-over-year. Moreover, the firm projected to score $1.3 billion in revenue, meaning that the actual sum is over 60% less than its target.
— Larry Cermak (@lawmaster) April 18, 2019
Looking To Bolster Its Business Model
Projections for fiscal 2019 weren’t made public, but the firm is looking to desperately boost its revenue. Earlier this month, for instance, the firm launched a crypto-powered, Visa-backed debit card in the U.K. This new system will allow customers to purchase goods in-store and online and withdraw cash from ATMs with Bitcoin, Ethereum, Litecoin, among the other popular digital assets supported by Coinbase in the region.
While it isn’t clear how much interest Coinbase has seen for Coinbase Card just yet, but the debit card industry is rumored to have very high margins, for both the service provider and the issuer.
In related news, Coinbase has continued to add an array of digital assets to its roster of products. Over the past few months, the firm has added Stellar Lumens (XLM), Ripple’s XRP, Augur (REP), EOS, and Maker (MKR), giving the exchange a slight yet noticeable uptick in volume.
And, the company recently opened its doors to in-house Tezos staking through its custody branch, which gives institutions more incentive to store their XTZ on the platform.